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

In short: in Georgia, residential rental income is taxed at 5% with no deductions, and capital gains on resale are 0% after two years of ownership (PwC Tax Summaries, January 2026). The same rent in Italy would carry 21% flat tax, 26% from the second short-let unit. But that 5% is the whole story only if you are no longer an Italian tax resident.

Last updated: August 2026.

What do you pay on rental income in Georgia?

5% on gross rent, with no deductions (PwC Tax Summaries Georgia, January 2026). There are no expenses to offset: the taxable base is the rent collected, the rate is flat.

The absence of deductions is the detail almost everyone omits. Italy's ordinary regime taxes 95% of the rent, allowing a flat 5% for expenses; Georgia taxes 100%, but at 5%. On a rent of 100, you pay 5 in Georgia. Under Italy's 21% flat regime you pay 21.

What would you pay on the same rent in Italy?

The direct comparison, for a residential property:

Sources: PwC Tax Summaries and the Georgian Tax Code for Georgia; Law 199/2025, Italy's 2026 Budget Law, for Italy. Indicative rent, not guaranteed.

How much difference does it make on a 50 sqm flat in Batumi?

Take a 50 sqm apartment. The reference rent is $10.8/sqm per month on 30–60 sqm units (Galt & Taggart, September 2025): about $540 a month, or $6,480 a year in gross rent.

On that $6,480:

• Georgia, 5% → roughly $324 in tax, leaving $6,156
• Italy, 21% flat → roughly $1,361 in tax, leaving $5,119

A difference of about $1,037 a year on the same rent. Over ten years, a little over $10,000 — all else being equal, which in practice it never is.

Note what this example does not say. It does not say what you earn: gross rent ignores management, vacancy, utilities, maintenance and furniture. And it does not say what you will pay, because that depends on where you are tax resident.

Does the 5% still apply if you remain an Italian tax resident?

This is the question that decides everything, and almost nobody addresses it.

If you are an Italian tax resident, your income is taxed on a worldwide basis. Rent collected in Georgia must still be declared in Italy, where the flat-tax regime — designed for Italian property — does not apply to foreign property. A double taxation treaty between Italy and Georgia prevents paying the full tax twice, typically through a credit for tax already paid in Georgia. But the end result is not "5% and done".

If you are no longer an Italian tax resident, the picture changes. Georgia applies a territorial principle to individuals' foreign income, and the flat personal rate is 20%. Anyone moving a business to Georgia as well can look at Small Business Status: 1% on turnover up to GEL 500,000 a year (PwC, January 2026).

The practical point: 5% is a real figure on the Georgian side, it is not your total tax burden. Which scenario applies to you depends on where you actually live, how many days you spend there, where your centre of interests sits. These are assessments to make with an accountant who knows international taxation, before buying — not afterwards, once the property is already in your name.

I do not do this and cannot: I tell you how the framework looks and point you to the right professionals for your case.

Can they raise taxes overnight?

No, and this is not a sales promise: it is written into an organic law. The Organic Law on Economic Freedom (article 94 of the Georgian Constitution) requires that introducing a new national tax, or raising the ceiling of an existing rate, go through a national referendum, with limited exceptions (excise duties, temporary emergency increases of up to three years). Primary source: matsne.gov.ge.

It is a structural guarantee very few countries offer, and it counts for more than any low rate promised for next year.

And when you sell?

In Georgia, real estate capital gains are 0% after two years of ownership, 5% if you sell earlier (Georgian Tax Code; PwC 2026). It is one of the most favourable conditions among accessible coastal markets.

The same warning applies: if you are an Italian tax resident at the time of sale, the gain must also be assessed under Italian rules, which tax resale within five years of purchase.

Is the tax advantage enough to make a good investment?

No. Tax is a variable, not the variable. A property with weak returns taxed at 5% is still a property with weak returns.

And here is the uncomfortable part: Galt & Taggart flags oversupply in Batumi's primary market, with short-stay rental stock projected to double by 2029. If average occupancy falls, the 5% advantage is eaten quickly by a lower rent or more empty months.

The 5% pays off on the rent you actually collect. The right question is not "how much tax do I pay", it is "how much do I collect, and for how many months a year". And every yield you read, here and elsewhere, is gross: gross is not net.

What do you actually need in order to collect the rent?

On the Georgian side, buying is simple: freehold in your own name, a passport is enough, no mandatory local company, property registration in one procedure, one day (World Bank, Doing Business 2020). A Georgian bank account is needed to collect rent, and it should be opened with the paperwork prepared in advance, not improvised at the counter.

The real work is not in Georgia. It is understanding, before you sign, how that income fits your Italian tax position.

Read more

• Property taxes in Georgia
• How much an apartment in Batumi costs
• Buying property in Georgia from Italy
• All the verified data, with sources
• The mistakes to avoid

Let's talk

If you are weighing an income property in Batumi and want to know whether it makes sense in your case, message me on WhatsApp. You get me, not an assistant.

Sources: PwC Tax Summaries — Georgia, January 2026 (rental rate, capital gains, flat PIT) · Georgian Tax Code · Law 199/2025, Italy's 2026 Budget Law (23/33/43% income tax) · Organic Law on Economic Freedom, matsne.gov.ge · Galt & Taggart, Batumi Residential Real Estate 2025 (rents, oversupply, short-let stock) · World Bank, Doing Business 2020 (property registration).

Rates change: always check the framework in force when you buy. This article is the general picture with its sources, not tax advice.

I am Giorgio Subba, Italian, and I live in Batumi year-round: my story.