Visa and ResidencyLife in Georgia

Tax Residency in Georgia in 2024 – Here’s How and Why

Why would someone need to be a tax resident of Georgia? What are the advantages of Georgian tax residency?

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Tax in Georgia

There are some good reasons to seek Georgian tax residency:

  1. Your locally generated income tax is one of the lowest in the world. (though of course we aren’t drawing comparisons to already useless classic offshore jurisdictions).
  • Personal income tax (Salary) – 20%
  • Social security (pension fund) – 2%
  • Dividend – 5%
  • Income from renting real estate – 5 %
  • Individual Entrepreneurs pay only 1% from revenue
  • No Capital Gain Tax
  1. You are exempt from paying taxes on your foreign income (mostly passive income). The tax code of Georgia states that income (including gain) being received by a resident natural party and not belonging to Georgian source income shall be exempt from taxation.
  2. Tax free Crypto gains Obviously when the tax code of Georgia was designed, crypto currencies did not exist back then. In order to explain whether capital gain from selling crypto assets is taxed in Georgia or not, the Public Decision of the Ministry of Finance of Georgia was issued in June 28, 2019. The part B of the decision qualifies income from crypto asset sales as a non-Georgian source income and thus does not taxes it in Georgia.
  3. Access to the Georgian banking system. As time passes it gets more and more difficult to open a fully functional bank account in Georgian banks. But as you become Georgian resident, it is not a problem anymore. Once you are in, banks treat you as a local. Hence, you can avoid heavy compliance and KYC procedures. Which can in many cases be so strict as to make them impossible to pass, even for an ice-cream selling business.
  4. Exchange of information by banks. Although Georgia does not yet participate in the Common Reporting Standard program, this situation will change. Sooner or later Georgia will eventually join the program, and banks will exchange information about their nonresident clients. However, no exchange of information will take place if the client is a Georgian tax resident.

Enough advantages?

Now, how can one get residency?

There are two ways to obtain tax residency:

  • Spend 183 days or more in Georgia in any continuous 12-calendar-month period ending in that tax year.

OR

  • Georgian residency can be accorded to a High Net Worth Individual. In this case you do not have mandatory time to spend in Georgia.

The first option is quite self-explanatory, just by living in Georgia half of the year will automatically make you a Georgian Tax resident. There’s no need to show any rental agreement, utility bills or similar proof of spending 183 days in Georgia. Simply the stamp in the passport can do the job. Once the time comes, you can request the tax residency certificate from the Revenue Services of Georgia.

As mentioned, tax residency can be granted even in the case when you don’t spend 6 months in Georgia. That’s possible thanks to the High Net Worth Individual tax residency program.

So, who exactly is a High Net Worth Individual?

A High Net Worth Individual is a person with a proven wealth of GEL 3,000,000 (approximately EUR 750 000) or an annual income during previous three years of more than GEL 200,000 (EUR 50,000).

In addition, a High Net Worth Individual can possess a Georgian residence permit (work visa) and an annual income from a Georgian source of no less than GEL 25,000 (EUR 8,000).

An individual satisfying at least one of the two necessary conditions can become a tax resident of Georgia and receive the above-mentioned advantages.

In addition to the tax benefits, the Advantages of Georgian tax residency can also be potential benefits to those earning income in countries with which Georgia possesses bilateral tax treaties. And 55 countries possess bilateral tax treaties with Georgia.

For example, in some cases a treaty partner country may not tax dividends received by a Georgian tax resident. Even if those dividends come from a source in the treaty partner country.

If you’re considering whether to apply for Georgian tax residency, you should first take a close look at the bilateral tax treaty between Georgia and the country where most of your income is earned. If that country recognizes tax residency in Georgia, it’s possible that a large part of your income will not be taxed in any country.

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