Innovative SME Status in Georgia

It is a Georgian innovation status for a qualifying category 3 or category 4 entrepreneurial company with substantial, documented research-and-development expenditure. It provides specific support mechanisms for qualifying R&D; it is not a general tax status for every software company.

A company registered under Georgia’s Law on Entrepreneurs may qualify if, for the previous financial year, its R&D expenditure was both at least 5% of revenue and at least GEL 100,000, it satisfies one of the statutory R&D evidence routes, it is a category 3 or 4 enterprise, and it meets the tax-debt, debtor-register, insolvency and liquidation conditions.

No. Ordinary software development, maintenance, implementation or consulting does not qualify merely because it is technical. The company must meet the financial thresholds and document qualifying R&D through one of the legal routes.

The work must be directed to research and development of an innovative product, process or service and recorded under the approved R&D expense guide, or fit the patent/deposited-software or purchased-R&D route. Routine delivery and support should be separated unless they independently meet the R&D test.

The provisions do not state a simple minimum number of months or years. They do require evidence from the previous financial year, including revenue, R&D expenditure and audited financial reporting. A newly incorporated company without that completed history will therefore usually not be ready to satisfy the application evidence.

There is no separate fixed minimum-turnover figure in the status test. However, the previous financial year’s qualifying R&D expenditure must equal at least 5% of that year’s revenue and must also be at least GEL 100,000. The company must also fall within enterprise category 3 or 4.

The status rules do not set a simple minimum headcount. Employee roles, time records, payroll and technical records can still be important evidence where the company relies on internally performed R&D.

Yes. Qualifying R&D expenditure is central. The company must use at least one accepted route: R&D connected with a patent or deposited computer program, qualifying R&D purchased from an accepted research organisation or R&D service provider, or its own qualifying R&D recorded under the official guide.

Foreign ownership is not listed as a disqualifying condition. The applicant must be a company registered under Georgian law and must satisfy the same company-category, R&D, financial and compliance tests.

A new company may build toward eligibility, but the application requires previous-financial-year R&D and financial evidence. Incorporation alone is not enough, and historic R&D expenditure should not be reconstructed without reliable accounting and technical records.

No. Innovative Startup Status is based on an innovative product, process or service plus a qualifying investment of at least GEL 100,000 or a qualifying GITA grant of at least GEL 150,000 within the relevant two-year period. Innovative SME Status instead uses the previous financial year’s R&D expenditure, enterprise category and R&D evidence.

The status does not create a blanket 0% or 5% tax regime. When dividends are distributed, the company may reduce the profit-tax taxable amount by three times qualifying previous-year R&D expenditure under the statutory mechanism. For reinvested profit, the implementing rules provide a possible grant equal to 20% of qualifying R&D expenditure, capped at GEL 100,000.

The Innovations Law does not give Innovative SME employees the special phased salary rates provided for Innovative Startup Status or the 5% salary rate provided for an R&D Service Provider Company. Payroll should be modelled under the rules that actually apply to the employer and employee.

No automatic dividend-tax or VAT exemption is created by the status. The R&D support mechanism and profit-tax calculation must be analysed separately from dividend withholding and VAT on the company’s supplies and purchases.

No. Company innovation status, immigration residence and the Georgian right to work are separate. A foreign shareholder, director or employee needs an independent immigration and work-right analysis.

The application is submitted to the Georgia Innovation and Technology Agency (GITA). After the statutory review and submission process, the status is granted by the Government of Georgia on the recommendation of the Ministry of Economy and Sustainable Development; GITA then records the company in the Innovation Register.

The application includes a recent company-registry extract, audited financial statements, a detailed R&D description and route-specific evidence. Depending on the route, this may include patent or deposited-software records, an assurance report on R&D expenditure, contracts and acceptance/payment evidence for purchased R&D, and confirmation that insolvency proceedings are not pending.

The status is granted without a fixed end date, but that does not mean compliance is permanent. The company must confirm previous-financial-year compliance to GITA no later than 30 April each year.

Yes. Grounds include failure to submit or satisfy annual confirmation, becoming a category 1 or 2 enterprise, abuse of the status or intentionally misleading the authority, and voluntary cancellation. The Government makes the cancellation decision under the statutory procedure.

Yes. We first review the company category, previous-year revenue and R&D expenditure, the proposed evidence route, accounting records, tax and debtor status, and the technical description. This helps determine whether an application is realistic before audit and filing costs are committed.

Yes. Formation can be the first step, but the company must then build genuine operations and the previous-financial-year R&D evidence required by law. We can structure the R&D recordkeeping from the start without promising status before the statutory conditions exist.

Do not relabel routine activity as R&D. We can compare an ordinary Georgian LLC, Innovative Startup, R&D Service Provider, Virtual Zone and International Company options and identify what would need to change prospectively for a future Innovative SME application.