Rental income taxed at 5%: how Georgian tax really works for an Italian owner

In short: Georgia taxes residential rental income at a 5% flat rate with no deductions, real estate capital gains at 0% after 2 years of ownership, and applies a 20% flat tax on a territorial basis (PwC Tax Summaries, Jan 2026). In Italy the flat rental tax is 21%, rising to 26% from the second short-let property. And raising a national tax in Georgia requires a referendum.

What do you actually pay? A 50 sqm flat in Batumi

Take the indicative rent for a 50 sqm flat: $540/month gross ($10.8/sqm/month, Galt & Taggart Sep 2025).

In Georgia: 5% flat → $27/month in tax on the rent.

In Italy (21% flat rental tax): $113/month. At 26%: $140/month.

The gap shows up every single month, and it is why the tax figure is the first thing an income-focused investor should look at — before the price per square metre.

<table>

<thead>

<tr><th>Item</th><th>Georgia</th><th>Italy</th></tr>

</thead>

<tbody>

<tr><td>Residential rental income tax</td><td>5% flat, no deductions</td><td>21% (26% from the 2nd short-let unit)</td></tr>

<tr><td>Tax on $540/month of rent</td><td>$27/month</td><td>$113/month (21%) · $140/month (26%)</td></tr>

<tr><td>Real estate capital gains</td><td>0% after 2 years (5% before)</td><td>Taxable if sold within 5 years</td></tr>

<tr><td>Personal income tax rate</td><td>20% flat, territorial basis</td><td>23/33/43% plus surtaxes</td></tr>

</tbody>

</table>

<p><em>Sources: PwC Tax Summaries Georgia (Jan 2026) · Georgian Tax Code · L. 199/2025 (Italian Budget Law 2026) · Galt &amp; Taggart 2025. Indicative rent, not guaranteed.</em></p>

Capital gains: time works in your favour

Sell after 2 years of ownership and the gain is taxed at 0%. Sell earlier and it is taxed at 5%. In Italy the gain is taxable if you resell within 5 years of purchase (Georgian Tax Code; PwC Jan 2026).

How does the territorial principle work (and Small Business Status)?

Georgia's 20% flat tax follows the territorial principle for individuals: as a general rule, foreign-source income is not taxed in Georgia. If you also move a business, Small Business Status is worth assessing: 1% on turnover up to GEL 500,000 per year.

Can Georgia raise taxes overnight? No — the constitution says so

The Organic Law on Economic Freedom (Art. 94 of the Constitution) requires that introducing a new national tax or raising a rate ceiling go through a national referendum, with limited exceptions (excise duties, temporary emergency increases). Primary source: matsne.gov.ge. It is a structural guarantee very few countries offer.

The honest caveat

These figures describe the general framework: they do not replace personal tax advice. Tax residence, double taxation treaties and your specific position change the outcome. And every yield quoted is gross: gross is not net.

Read more

• Property taxes in Georgia
• All verified data
• How to invest in Batumi
• Mistakes to avoid

Let's talk

If you want to understand how this tax framework applies to your case, message me on WhatsApp.

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Sources: PwC Tax Summaries Georgia (Jan 2026) · Georgian Tax Code · L. 199/2025 (Italian Budget Law 2026) · Organic Law on Economic Freedom, matsne.gov.ge · Galt & Taggart 2025.

I'm Giorgio Subba and I live between Italy and Georgia: my story.