Moving from Germany to Georgia for the tax rate is the easy part to research. Registering an Individual Entrepreneur and getting Small Business Status takes days, and the 1% is real. What almost nothing written for a German audience covers properly is the other half: German tax law does not release a departing national the moment they board a flight, and section 2 AStG can keep taxing certain income for up to ten years afterward if the destination taxes too lightly. Georgia does. This guide works through what German law actually requires before the 1% is legally yours.
What EUR 80,000 of freelance income actually costs, here and there
A single German freelancer with no children and no church tax, earning EUR 80,000 in self-employment profit, pays roughly EUR 22,464 in income tax under the 2026 tariff published by the Federal Ministry of Finance, an average rate of about 28.1%. Add roughly EUR 252 of solidarity surcharge and the mandatory health and long-term-care insurance almost every self-employed German carries, close to the maximum at the 2026 contribution ceiling of EUR 69,750, and the all-in bill comes to about EUR 37,400, close to 47% of what was earned.
| Germany (2026, single, no church tax) | Georgia (IE + Small Business Status) | |
|---|---|---|
| Income tax | ~EUR 22,464 | ~EUR 800 (1% of turnover) |
| Solidarity surcharge | ~EUR 252 | None |
| Mandatory health + long-term-care insurance | ~EUR 14,700 (capped) | None required by IE status itself |
| Total, all-in | ~EUR 37,400 (~47%) | ~EUR 800 (~1%) |
That gap is the entire reason this guide exists, and it is also exactly why German tax law does not let it happen for free.
Does Georgia's 1% actually apply to you
The 1% only applies to Georgian-source income, and for services that generally means work physically performed inside Georgia, not billed through a Georgian registration while you sit in Berlin or Munich. We cover the mechanics in full in Georgia's 1% tax and in the honest answer on paying it without living in Georgia. A German national who registers a Georgian IE but keeps working from a German address has not moved anything for tax purposes: residency has very likely not changed under the tests below, and the 1% never enters the picture. Section 2 AStG, the provision that does the real work in this guide, only becomes relevant once residency has genuinely ended.
What Germany does when you leave
Unlimited German tax liability (unbeschränkte Steuerpflicht) turns on two tests in the Abgabenordnung, and neither is satisfied by a form. Wohnsitz (domicile), section 8 AO, exists wherever you maintain a dwelling under circumstances indicating you will keep and use it; selling it or ending the lease with no reserved right to use it is what closes this. Gewöhnlicher Aufenthalt (habitual abode), section 9 AO, treats any continuous stay of more than six months as habitual abode from its start, with a narrow exception for visits, recreation or medical treatment under a year. Abmeldung, deregistering at the Bürgeramt, is neither test: it is a civil formality, and a person can complete it, keep a Hamburg flat available, and remain resident under section 8 AO regardless of what the population register shows.
Once residency has genuinely ended, two provisions in the Aussensteuergesetz decide what Germany still claims. Section 6 AStG taxes a deemed sale of shareholdings of 1% or more in a corporation, at market value on your last day of residence, if you held unlimited liability for at least 7 of the preceding 12 years, payable since the 2022 reform over seven annual instalments rather than deferred indefinitely. This only catches real shareholdings you already hold before leaving; a Georgian IE registered afterward is not a corporation and section 6 has nothing to do with it.
Section 2 AStG, the provision that actually decides whether the move holds up, applies to a German citizen unlimitedly tax liable for at least 5 of the preceding 10 years who moves to a low-tax jurisdiction while keeping substantial economic interests in Germany, GmbH shareholdings, German real estate, or a German business still under their control among them. Where those conditions are met, Germany keeps taxing defined categories of German-source income as if the person had never left, for the departure year plus the following ten.
The statute defines low taxation against a fixed reference case: an unmarried person with EUR 77,000 of taxable income, taxed under Germany's ordinary progressive rates. Section 2 AStG engages unless the taxpayer can prove their actual foreign tax burden reaches at least two thirds of that German figure. Georgia's 1% of turnover comes nowhere close under any realistic reading. For a German national who meets the 5-of-10-year condition and keeps substantial economic interests at home, section 2 AStG is squarely engaged for up to ten years after departure. This is the single fact a German mover needs settled before relying on the 1%.
Germany has no Georgia-specific blacklist; it relies on the EU list of non-cooperative jurisdictions, which currently names ten and does not include Georgia, plus the case-by-case comparison inside section 2 AStG itself.
Germany's CFC regime, Hinzurechnungsbesteuerung under sections 7 and following AStG, attributes a foreign company's profit to a controlling German-resident shareholder, but only where German law classifies the foreign form as a corporation. A Georgian IE has no separate legal personality, so it generally does not engage. A Georgian LLC is a separate legal person and squarely what the regime is built to reach if a German resident controls it and its income falls into a passive category.
Germany and Georgia have had a double taxation agreement in force since 21 December 2007, confirmed on Georgia's Ministry of Finance treaty list, with the standard tie-breaker order of permanent home, centre of vital interests, habitual abode, then nationality. It resolves a genuine residency dispute, but it does not switch off section 2 AStG, which is domestic law, and it does not touch the source-of-income question above.
Most self-employed Germans outside the regulated professions are not compulsorily enrolled in the state pension scheme, so there is often nothing to unwind there. Statutory health insurance is close to universal and stops once German tax and social residence genuinely end. Georgia's Small Business Status carries no equivalent mandatory charge, and whether its funded pension scheme applies to a foreign IE holder depends on residency and categorisation, worth confirming directly.
The steps, in order
- Decide the fate of any German dwelling before you leave. Selling it or ending the lease with no reserved right to use it is what closes the Wohnsitz test under section 8 AO.
- Watch continuous stays back in Germany afterward. More than six months in one stretch creates gewöhnlicher Aufenthalt under section 9 AO from its start, regardless of intentions.
- Do not treat Abmeldung as the finish line. File it once the real change has happened, not as a substitute for it.
- Check whether you hold 1% or more of any corporation before you leave. With 7 of the last 12 years of unlimited liability, section 6 AStG values those shares as sold on your last day of residence.
- Map your remaining German economic ties honestly. Shareholdings, real estate, or a German business you still control keep section 2 AStG's 5-of-10-year test live for up to ten years.
- Choose an IE over an LLC if CFC exposure is a live concern, since an IE generally sits outside the regime while a Georgian LLC controlling passive income does not.
- Register a Georgian Individual Entrepreneur and apply for Small Business Status, either in person or under power of attorney through remote company registration.
- Confirm the work is genuinely performed in or from Georgia, since the 1% only reaches Georgian-source income in the first place.
- Keep filing for the section 2 AStG window and any section 6 AStG instalment confirmations for years after the departure return.
Timeline and cost
Registering a Georgian IE and getting Small Business Status is fast: a few days in person, or two to three weeks under power of attorney. The German side takes longer: confirming Wohnsitz and gewöhnlicher Aufenthalt, valuing any section 6 shareholdings before departure, and mapping section 2 AStG exposure against your actual German ties. Budget weeks, not days, for that half.
The verdict for a German national
Georgia works with conditions for a German national, and the conditions are not cosmetic. Genuinely end your Wohnsitz and gewöhnlicher Aufenthalt, hold no shareholdings that trigger section 6, and either have no substantial economic interests left in Germany or can show your foreign tax burden clears the two-thirds threshold, and the 1% is legally yours. Leave an apartment "just in case" or a German-source income stream you assumed the Georgian registration would shelter, and section 2 AStG can keep taxing you as a German resident for a decade regardless of what Georgia charges.
This is the most legally dense guide we publish for exactly that reason.
We'll work through your section 2 AStG exposure, your section 6 exit tax position if you hold qualifying shares, and whether your income is genuinely German-source or Georgian-source, before you register anything here. Written summary included.
See what it costs
For the same analysis built for a British departure, see our guide on moving from the UK to Georgia, and for how Georgian-source income is actually defined, see Georgian-source income rules. A free consultation is the fastest way to find out where your own situation actually lands before you commit to either side of the move.
Key takeaways
- Settle the fate of any German dwelling and your presence pattern before you file anything. Wohnsitz and gewöhnlicher Aufenthalt, not Abmeldung, are what the Finanzamt actually checks.
- Map your remaining German economic ties, shareholdings, real estate, a business you still control, before assuming section 2 AStG does not apply to you.
- Value any qualifying shareholdings against the section 6 AStG 7-of-12-year test before you leave, since the tax is calculated as at your last day of residence.
- Choose an IE over an LLC if CFC exposure under sections 7ff AStG is a live concern.
- Confirm the work is genuinely performed in or from Georgia before relying on the 1% rate at all.
Frequently asked questions
Does moving to Georgia automatically end my German tax residency?
No. Unlimited German tax liability ends only when you no longer have a Wohnsitz under section 8 AO and are not present under circumstances creating a gewöhnlicher Aufenthalt under section 9 AO. Deregistering at the Bürgeramt is a separate civil process and proves neither on its own.
What is section 2 AStG and why does it matter more than Georgia's own rules?
It is Germany's extended limited tax liability provision. Where a German citizen unlimitedly tax liable for at least 5 of the last 10 years moves to a jurisdiction taxing substantially below Germany's level while keeping substantial economic interests at home, Germany can keep taxing defined German-source income for up to ten years after departure, regardless of anything Georgia charges.
How is "low taxation" defined under section 2 AStG, and does Georgia's 1% pass or fail it?
The statute compares the foreign tax burden against a fixed reference case: an unmarried person with EUR 77,000 of taxable income. Unless the taxpayer proves their actual foreign tax burden reaches at least two thirds of the German figure on that income, the destination counts as low-tax. A 1% turnover tax does not come close, so Georgia fails this test by a very wide margin.
What is section 6 AStG and is it the same thing as section 2 AStG?
No, they are separate provisions that can both apply. Section 6 AStG is a one-time exit tax on qualifying shareholdings of 1% or more, triggered by ending unlimited tax liability after 7 of the last 12 years of German residence. Section 2 AStG is an ongoing extended liability on certain income for up to ten years afterward.
Does German CFC law reach a Georgian IE or an LLC?
It depends on the structure. Hinzurechnungsbesteuerung attributes the income of a foreign corporation, decided through a comparison of the foreign entity's legal form against German company types. A Georgian IE has no separate legal personality, so it generally sits outside the regime. A Georgian LLC is a separate legal person and can be reached if a German resident controls it and its income falls into a passive category, which is fact-specific and worth checking before choosing that structure over an IE.
Is Georgia on Germany's tax haven blacklist?
Germany does not maintain a separate Georgia-specific blacklist. Georgia is not on the EU's list of non-cooperative jurisdictions, which currently names ten. The relevant test for a German national is the case-by-case low-tax comparison inside section 2 AStG itself, not a published list.
Does the Germany-Georgia tax treaty stop section 2 AStG from applying?
No. The treaty, in force since 2007, resolves which country wins the residency question when both have a claim in a given year and caps certain withholding rates. Section 2 AStG is domestic German anti-avoidance law, entirely separate from the treaty, and the treaty does not switch it off.
Do I still need to file German taxes after I've genuinely left?
Very likely for a period. The departure year needs a German return for the resident portion. Where section 6 AStG applies, annual confirmations keep the instalment plan intact, and where section 2 AStG applies, any German-source income within its scope needs declaring for each of the ten years it covers.