Taxation in Georgia for income from asset trading (including cryptocurrency)
Georgia has a territorial taxation of the Personal income tax. (Tax code of Georgia, Article 82)
Which means that income tax (20%) is paid only on the Georgian Source income.
The article 104 of the Tax Code defines what is Georgian source income.
In case of capital gain from selling shares, it is considered as a Georgian sourced (by the same 104 article) if the shares sold are from Georgian company. If a capital gain is from the selling shares of non-Georgian company, then income is not Georgian sourced and thus is not taxed here.
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.
Conclusion: Capital gain from selling shares and selling crypto assets are tax exempt for the TAX RESIDENTS OF GEORGIA
To get tax free income from trading on a financial market, you need to become a tax resident of Georgia.
How one can get tax residency of Georgia?
There are two ways to get it:
1. Spend more than 183 Day in Georgia.
2. Be a High Net Worth Individual (HNWI)
The first option is quite self-explanatory, just by living in Georgia half of the year will automatically make you a Georgian Tax resident.
As for High Net Worth Individual, Georgia has a special program for those who want to become Georgian tax residents, without spending 183 days in the country. In fact, without spending even a day here (why would someone not want to spend a day here?!!).
So, who exactly is a High Net Worth Individual for Georgia?
- A High Net Worth Individual is a person with a proven wealth of GEL 3,000,000(approximately EUR 970 000) or an annual income during previous three years of more than GEL 200,000 (EUR 72,000).
- Have in Georgia assets that are valued for at least 500 000 USD (Cash, real estate, cryptocurrency etc)
- In addition, a High Net Worth Individual should possess a Georgian residence permit (work visa) or have an annual income from a Georgian source of no less than GEL 25,000 (EUR 8,250).
What’s the easiest way to Get HNWI tax residency in case I am not able to travel to Georgia?
- You send us prove that you possess wealth of GEL 3 000 000 or prove that you had an income of more than GEL 200 000 during last three years. (Any document that proves will work, but anything you send should be either apostilled or certified by the independent audit) – With this we meet their first requirement
- You prove that you have in Georgia assets that are valued for at least 500 000 USD (Cash, real estate, cryptocurrency etc.)
- You also send us Power of Attorney for setting up a company in Georgia (It can be an individual entrepreneur or an LLC). We register the company and open a bank account for it. You are able then to declare income to/from this company as a Georgian souce income. With this we meet the second requirement of having income from Georgian sources at least 25 000 GEL.
Once both requirements are met, again using the power of attorney and all the certified documents we apply on behalf of you for tax residency. Wait 7 days and if everything done properly, you become a tax resident of Georgia. And the Revenue Services issues a tax residency certificate for you.
What’s the easiest way to Get HNWI tax residency in case I want to come to Georgia?
If you come to Georgia, would be beneficial to get a working visa and so Georgia ID card, that comes with the visa. This will help you in the future with Georgian banks.
- You bring with you the prove that you possess wealth of GEL 3 000 000 or prove that you had an income of more than GEL 200 000 during last three years. (Any document that proves will work, but anything you send should be either apostilled or certified by the independent audit) – With this we meet their first requirement
- You can deposit $500,000 USD in a Georgian bank, purchase property, transfer cryptocurrency to a Georgian crypto exchange, or any combination of these. The only requirement is to demonstrate that you have a total of $500,000 USD stored in Georgia – With this we meet their second requirement
- We register the company and open a bank account for you. Someone (your client, or dummy client) pays at least 50 000 GEL on that account. Based on this government will give you one year working visa (aka residence permit). It comes with a Georgian ID residency card. With this we meet the third requirement of possessing a Georgian residence permit (work visa)
Once both requirements are met, with all the certified documents you apply for tax residency. Wait 7 days and if everything done properly, you become a tax resident of Georgia. And the Revenue Services issues a tax residency certificate for you.
I am happy with my existing tax residency. Can I just use Georgian bank account?
Yes and No. Here’s why:
There are banks in Georgia that open accounts easy. They open account using the power of attorney sent by you. Without any questions asked. The problem with them is that most of them do not issue a debit card if you do not visit them in person. Or will require certain amount of term deposit from you for the exchange of debit card. However, a digital debit card is available that can substitute a real card, for payments.
Other banks will give you hard time before opening account. Will ask many different questions and only if they’ll like your profile, will onboard you. If you go through this tough process, they are good to work after. They will issue a debit card and might give it to the person who will have your power. Who will then forward it to you by DHL.
Available banks are Bank of Georgia (Opens account without many questions. In case of success, they will give a debit card without personal visit), TBC BANK (Opens account without many questions. In case of success, they will give a debit card without personal visit), Tera Bank (opens account without questions, but in many cases does not give debit card without personal visit), Liberty Bank (Asks many questions. In case of success, they will give a debit card without personal visit).