In the World Bank rankings, Georgia holds third place worldwide for the tax burden on businesses and regularly appears on lists of the most comfortable countries for expats. However, to take full advantage of living and working here, it makes sense to obtain the status of a Georgian tax resident. There are two ways to do this: by living in the country for 183 days within the last 12 months, or by joining the High Net Worth Individual program for wealthy citizens. The second option lets you speed up the procedure considerably.

What Tax Residency in Georgia Is

International law recognizes two types of residency: legal residence and tax residence — and it is important not to confuse them. For example, a foreigner may be only a tax resident, only a legal resident, or both at the same time. The first status is straightforward: the term legal residence refers to any lawful basis for being in the country, whether citizenship, a residence permit or a work visa.

Georgian tax residency, on the other hand, is the obligation of a foreign national (or a company they own) to pay taxes in the country in accordance with the law, as well as the ability to make use of various tax benefits.

To be clear once again: obtaining tax residency does not require applying for citizenship. The core purpose of the procedure is to optimize your tax burden, and it is available to all foreigners.

For instance, by obtaining this status in Georgia you can give up a similar status in another jurisdiction, or at least reduce your taxes through double taxation avoidance agreements (DTAAs) — Georgia has signed these with 58 countries, including EU states, the Middle East and the former CIS.

Tax Rates for Georgian Tax Residents

The main advantage of tax residency for international expats is the zero tax rate on foreign income. The state does not tax the following types of passive income:

• Dividends from foreign companies.
• Positive financial results from trading foreign securities, cryptocurrency and other assets.
• Pension payments, income from bank deposits or royalties.

The base personal income tax rate in Georgia is 20%. But it applies only to active income (trading income): for example, income from trading activities, entrepreneurship, contract work and so on. That said, the rate is easily reduced to 1% of turnover if you register a sole proprietorship in the country with small-business status. And if you open a sole proprietorship with micro-business status, you are officially exempt from income tax.

As for the other taxes, they are as follows:

• Corporate income tax for legal entities — 15% when profit is distributed. However, companies that are members of a virtual zone or free industrial zones are exempt from the tax (a 0% rate even on distributed profit), while international IT companies pay 5%.
• Property tax, including on Georgian real estate — up to 1%.
• VAT on transactions within Georgia — 18% (0% for payments from abroad).
• Tax on dividends and royalties — 5%. The same tax applies when renting out real estate.
• Pension Fund contributions — 2% (relevant for companies if they employ Georgian citizens).

Benefits of Tax Residency

1. Simplified access to Georgia’s banking system. This matters for both individuals and companies — foreigners increasingly run into difficulties when opening accounts. But once you obtain tax resident status, banks will treat you almost like a local, so KYC procedures become less strict.

2. The ability to avoid the automatic exchange of information between banks in Georgia and other countries — this option is available only to tax residents. Everyone else will face the consequences of the Common Reporting Standard program, which Georgia joined in 2022. You can read in detail about how CRS works in another of our articles.

3. Exemption from taxes on foreign income. If an individual who is a Georgian tax resident earns profit from a source outside the country, no payment obligations arise toward Georgian regulators. This makes it possible to legally shed part of your taxes and gives a huge advantage to people running international businesses.

4. Exemption from taxes on cryptocurrency transactions. This point follows from the previous one. In a separate ruling, Georgia’s Ministry of Finance determined that income from selling crypto counts as income from non-Georgian sources and is therefore not taxed either. Georgia’s attitude toward crypto assets is fairly friendly, and a business can quite legally buy and sell or exchange them after obtaining a license from the National Bank.

How a Foreigner Can Become a Tax Resident of Georgia

THERE ARE TWO WAYS:

Obtaining Status After 183 Days of Stay

If a foreigner has spent at least 183 days in Georgia over the last 12 months (whether within a tax year or a calendar year does not matter), they automatically become a tax resident for one year, in accordance with Article 34 of the Tax Code. This does not depend on the type of visa you entered the country on, nor on the source of your income (Georgian or foreign).

Residency for a High-Net-Worth Individual

If you are unable to stay in Georgia for six months during the year, you can obtain tax residency through the government HNWI (High Net Worth Individual) program. It is designed for wealthy individuals who meet three main criteria:

• They own assets worldwide with a total value of GEL 3 million (roughly $1.06 million), or they have received an annual income exceeding GEL 200,000 (around $70,000) over each of the last three years, not counting the year in which the tax residency application is filed.
• They own assets worth at least $500,000 located directly in Georgia — this requirement has been in force since May 2023. Any assets can count toward this: a business, real estate, bank deposits, stocks and bonds, as well as cryptocurrency.
• They hold a Georgian residence permit OR receive an annual income from a Georgian source of at least GEL 25,000 (about $9,000).

How to Become a Tax Resident Under the HNWI Program

While a 183-day stay in Georgia does not require filing an application with the tax authorities, participants in the HNWI program must go through the full tax residency procedure.

To become a Georgian tax resident, a foreigner needs to:

1. Obtain a residence permit in Georgia by filing the relevant application at the House of Justice in Tbilisi. Note that this step can only be skipped if you are able to declare income of at least GEL 25,000 from a Georgian source.
2. File an application for tax residency, along with documents on your assets confirming your eligibility for the HNWI program. Tax resident status is granted within seven weeks if the documents satisfy the tax office. If the regulator has questions, it may request additional information — which must be provided within 30 days.
3. Renew the tax resident status once a year. The foreigner must repeat the document-filing procedure described above every calendar year.

In some cases you can take part in the HNWI program remotely, without visiting Tbilisi.

Who Benefits From the HNWI Program and What to Keep in Mind

The government tax residency program for wealthy citizens is suited to people who cannot spend enough time in Georgia but want to avoid taxation in their country of citizenship or residence. These include digital nomads, freelancers, owners of large businesses, startup founders and other expats.

At first glance it may seem that, once granted Georgian tax residency, a foreigner can travel and work all over the world — or live in their country of citizenship — while paying low taxes in Georgia. But that is not always the case. Simply obtaining the status is not enough to optimize taxes; it has to be used correctly. That is why, even before obtaining HNWI, we recommend:

• Checking whether your country of citizenship or presence has a double taxation avoidance treaty with Georgia (the list is available here).
• If there is no agreement, you can immediately register with the Georgian tax service as a sole proprietor with small-business status and pay tax at 1% on foreign income — this is available to all non-residents by default, but it applies only to payment for services or goods, not to salary.
• Checking the tax laws of other countries where you plan to live and work. Obligations can arise for various reasons: because of running a business, owning real estate, physical presence and so on.

It is also worth remembering that automatically obtaining residency in Georgia does not strip you of the same status in another country. You should take care of this in advance so as not to pay tax in two jurisdictions. For example, at the end of the tax year you can cancel your previous status by providing a certificate of Georgian tax residency as grounds in the other country.

Income Declaration Obligations in Georgia

Once a foreigner has spent 183 days in Georgia and obtained tax resident status, fiscal law requires them to file an annual income declaration by March 31 of the year following the year the status was acquired (Article 153 of the Tax Code).

To file the declaration, you first need to register with the tax office and obtain a Tax ID. After that, you can complete and submit the declaration online. Keep in mind that for failing to file the document or filing it late, Georgian law (Article 274 of the Tax Code) provides for penalties:

• Filing up to two months late — 5% of the tax amount.
• Filing more than two months late — 10% of the tax amount.
• In addition, late payment accrues a penalty interest of 0.05% per day (or 18.25% per year).

P.S. What You Need to Know About Income at the Payment Source

Earlier in the article we noted that Georgian regulators do not tax income from foreign sources (although tax residents must still declare it). But the Tax Code implies that not all income a foreigner earns outside Georgia can be considered foreign.

Foreign-source income is, first and foremost, passive earnings abroad. For example: royalties, dividends, interest on a deposit, profit from renting out real estate, capital gains — including from trading non-Georgian securities and cryptocurrencies. In other words, any activity that does not require the taxpayer’s active physical participation and presence.

If a foreigner earns income in a country that is party to a double taxation avoidance treaty, the Georgian tax authorities will not tax their business abroad either. As noted earlier, if there is no such agreement between the countries, it makes sense to register a sole proprietorship with small-business status in Georgia — foreign income will then be taxed at 1%.

Income from Georgian sources, however, is defined by law as profit earned during your physical presence in the country. This includes payment for services from a foreign client or employer if no double taxation avoidance treaty has been concluded with their country of residence. On every item of Georgian income, an individual must pay 20% income tax.

Summary

• Tax residency in Georgia can be obtained in two ways: by living in the country for 183 days in a year, or through participation in the HNWI program for wealthy citizens.
• For the HNWI program, the length of stay in the country is irrelevant, but the person must hold a certain volume of assets, obtain a residence permit or have income in Georgia.
• Tax residency lets you pay low taxes in Georgia, use business incentives and open bank accounts through an expedited procedure.
• The key goal of tax residency is tax optimization. Georgian status can serve as grounds for giving up an equivalent residency in your country of citizenship.
• This is relevant for many freelancers, digital nomads and entrepreneurs who want to take their business into the international arena and work in a country with a stable economy and a friendly tax policy.