Tax Residency in Georgia
one of the lowest tax rates in the world
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About Tax Residency in Georgia
Georgia has attractive tax rates for foreigners and also, a territorial tax system, where the government does not tax you in your foreign sourced income. But not every type of income that you receive from other country is foreign sourced. We’ll discuss this bellow.
Georgia has two kind of residency: Legal and Tax residency. In order to receive above-mentioned benefits, you must be a Georgian tax resident. You can be a legal resident without being a tax resident or the other way round. And of course, you can be both simultaneously.
As a tax resident of Georgia, you pay tax in that country. In addition, Georgia has around 56 Double Taxation Avoidance Treaty. That gives Georgian tax residents potential benefits for their incomes received from countries, which are member of this treaty. For example, if you have tax residency in Georgia and receive income from any member country of Double Taxation Avoidance Treaty, the local tax authorities will not tax you on your rental income abroad, dividends abroad, capital gains abroad, or any business that you possess abroad.
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.
To obtain tax residency in Georgia, you must meet any of the following criteria
Spend at least 183 days in Georgia
You must spend 183 total days physically present in Georgia in any 12 month period. After that you are automatically a tax resident of Georgia for the whole year. It does not need any application process or visit in any governmental institutions, it happens automatically. This rule applies to any person within the borders of Georgia.
Be a High Net Worth Individual
If you don’t want to spend 183 days in Georgia, there is another way of getting tax residency through High Net Worth Individual program. Person is a High Net Worth Individual if: 1) the value of his/her confirmed property is more than GEL 3 000 000 (approx.$900 000), or 2) his/her annual income exceeds GEL 200 000 (approx. $60 200) in all of the three years before the year he/she submits the application. High Net Worth Individual must have either a Georgian legal residency or Georgian nationality or, the applicant must verify that he/she receives at least GEL 25000 (approx. 7500 USD) annual income from Georgian source.
Benefits of Georgian Tax Residency
Low Tax Rates
Georgia has one of the lowest rates for personal and business taxes in the world. Taxes for different activities are as follow:
- Personal Income Tax (Salary) : 20%
- Revenue tax for Individual Entrepreneurs (with Small Business Status): 1%
- Revenue tax for Individual Entrepreneurs (with Micro Business Status): 0%
- VAT: 18% (applicable only to local transactions)
- Corporate Tax: 15%
- Income tax in dividend withdrawal: 5%
- Property Tax: 1% (only on property that you own in Georgia)
- Social security (pension fund): 2%
Double Taxation Avoidance Treaty
Georgia has active agreements with more than 55 countries for avoiding double taxation. See the list of countries with which Georgia cooperates within double taxation agreement. This treaty allows tax residents to avoid taxation from the country, from where they receive income. They pay taxes according to Georgian law only.
Exemption For Foreign Sourced Incomes
Territorial tax system offers advantages for income tax received from foreign source. This means government will tax you only for Georgian sourced incomes and not for foreign ones, when you have active Georgian tax residency. Please note, the tax code of Georgia defines which income is foreign sourced and hence tax free. Not all the income that is generated outside of the territory of Georgia is foreign sourced. Please contact us for consultation.
Easy Access To Georgian Bank System
As time passes it gets more and more difficult to open fully functional bank account in Georgian banks. Becoming Georgian tax resident solves the problem. Once you are a tax resident in Georgia, banks treat you as a local. You will avoid heavy compliance and procedures.
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Here’s How We Help You
Consultation before you start application
We think you should get an informed decision. Whatever you do should serve the goal you have. Based on the needs you have we will analyze the options and give you the right direction. Sometimes just getting tax residency in Georgia is not enough to achieve tax optimization for you. It might be a good idea is some cases to Get local company or become a sole entrepreneur (almost tax free). We’ll make sure that you make a well informed decision.
Assistance in collecting Documents
Our experienced staff will help in document collection process. We’ll provide full list of obligatory documents and gather them for you.
Personal Assistance during Application Process
Assistance applying for legal or tax residency in Tbilisi, in different governmental entities.
Monitoring and renewing your residency status
We will have contact with Georgian authorities during the process. In addition, monitor the process and renew your residency after one year if you wish for it.
Managing your Tax Liabilities
We offer management of your Georgian tax liabilities. After receiving Georgian tax residency, you must fulfill your tax commitments. If you don’t wish to manage all the paperwork process every month, we can help. With our vast experience, we will take care of your monthly obligations.
Steps For Getting Georgian Tax Residency For High Net Worth Individual
Getting Legal Residency in Georgia
Before you submit an application for Georgian tax residency, you must be a legal resident of Georgia or must have Georgian sourced annual income with the amount of at least 25 000 GEL. If you can not declare above mentioned income from Georgian source, than you must apply personally for legal residency in Public Service Hall in Tbilisi.
Obtaining Tax Residency
After receiving Legal Residency, a person can apply for tax residency in Revenue Service office, in Tbilisi. Here you must declare all obligatory documentation that proves your compliance with High Net Worth Individual status.
Keeping Residency Status
High net worth individual must renew his/her tax residency every year and he/she must resubmit documents for each application annually.
FAQ – Frequently Asked Questions
Why Would I Need To Be A Tax Resident Of Georgia?
You will gain plenty of advantages for your generated income.
For Whom Is High Net Worth Individual Program?
This program is perfect for digital nomads, expats, freelancers and individuals, who do not spent enough time in any country to obtain tax residency but want to avoid taxes in their country of citizenship
Does It Mean I Can Live Wherever I Want And Pay Taxes Under Georgian Legislation?
Getting a Georgian Tax residency does not mean you can live in any other county you wish and just not pay tax there. Tax liabilities can arise for many reasons in other countries, based on physical presence or managing a business there. You may owe taxes elsewhere, other than Georgia, and it will come down to the local laws of the other countries you visit.
What Is A Validity Time For A Georgian Tax Residency?
Tax residency in Georgia is valid for maximum one year. The country requires annual renewal. Statement must be applied for every year and obligatory documents must be resubmitted for each application.
Can I Gain Tax Residency Remotely, Without Visiting Tbilisi?
In some cases, yes, it is possible
What Is The Time Frame For Getting Tax Residency?
If the application is accepted without problems, you should be granted your tax residency within 7 working days. Otherwise, you will be notified of additional requirements and must provide additional information as requested within 30 days in order to complete the application.
What Are Foreign Sourced Incomes?
Georgian Tax Code says foreign sourced income is tax free when you are tax resident of Georgia. But, while you are in Georgia, the most of the incomes that you receive from other country are not considered as foreign sourced ones. Please contact us for consultation.
Foreign source income is passive income gained from abroad (royalties, dividends, etc.).
Which Incomes Are Tax Free When Having Georgian Tax Residency?
Foreign sourced incomes are tax free for a Georgian tax residents.
What Are Georgian Sourced Incomes?
Income that you receive during physical presence in Georgia, including:
– Income from foreign clients
– Earned from your foreign employer (If there is no double taxation agreement between Georgia and your employer’s country)
For every Georgian sourced income you must pay income tax according to Georgian legislation.
Can I Receive Tax Free Income From Foreign Countries?
If you register as an Individual Entrepreneur in Georgia and get Small Business Status, according to Georgian legislation, your revenue received from foreign countries will be almost tax free, taxable only for 1%. Consider, it must not be income in form of a salary, but any other revenue received from selling service or product. Please see detailed information about being individual entrepreneur in Georgia here.