Tax residency In Georgia Country
All what you should know

Tax residency In Georgia Country: All what you should know - Happy Georgia
Tax residency In Georgia Country: All what you should know - Happy Georgia
Obtaining a Tax residency In Georgia Country helps you reduce your tax burden radically. Low-tax Georgia is one of the best places to achieve this goal. Attractive tax rates for foreigners, a territorial tax system, Georgia does not tax passive foreign incomes, and more than 60 Double Tax Avoidance are all advantages for those who want to get a Tax Residency in Georgia Country. Please find below information about the tax residency in Georgia Country for individuals and its implications for your business abroad. This information is provided as general information according to Georgian Tax Code regulations. Tax issues are sometimes complex and need a deep investigation of each case and particular situation.

Tax Residency In Georgia Country: The Rule n°1

Suppose you spend 183 days or more in Georgia (physically present in Georgia) within 12 months. In that case, you automatically become a Georgian Tax Resident. for the year in which the 183rd day occurred (Article 34 (2. A), Georgian Tax Code). This legal provision of the Georgian Tax code applies to any person within the borders of Georgia. After 183 days, you are legally liable to file a tax declaration and pay taxes Georgian Tax Code Article 34 (2).

How To Bypass The 183 Days Of Presence To Get Tax Residency In Georgia Country

You get tax residency via a special process that bypasses the 183-day physical presence rule, such as the High Net Worth Individual program.

Do you Want To Get A Tax Residency in Georgia Country?

Are you already a tax resident in Georgia? Do you want to become a tax resident in Georgia? Georgia is a very interesting Jurisdiction from a tax point of view. It is one of the lowest taxed jurisdictions in the world: 15% CIT, 5% Dividends, 20% flat tax rate on personal income, special statutes such as the SBS Small Business Status 1% tax with a limit of 500 000 GEL turnover per year or the VZ Status for IT Industry 0% CIT & 0%VAT. Please get in touch with one of our tax advisers. Happy Georgia will help you with organizing your taxes or business in Georgia.

Potential Benefits Of Tax Residency In Georgia Country

If you spend more than six months in Georgia (183 Days +) within 12 months, you are legally a tax resident In Georgia.
  • You can benefit from your Georgian tax resident status to lower your current annual tax bill.
  • Becoming a tax resident in Georgia, you will probably avoid double taxation in your current Country of tax residence.
  • You can minimize taxes for the rest of this tax year.
  • Getting a tax residency in Georgia Country means that you will likely not be a tax resident elsewhere, provided that you won’t stay in this Country for more than 180 days. Then, you can enjoy the lowest tax rates in Georgia, as low as 1%, if well structured.
Obtaining a Tax residency in Georgia Country does NOT automatically cancel your previous tax residency somewhere else (in your last tax residency country). Most likely, not. Be cautious; revoking this previous tax residency may take time. You need to check these issues; otherwise, you could be taxed in both countries.

Double Taxation Avoidance Treaties Between Georgia And More Than 60 Countries Worldwide.

To avoid taxing your income in several countries, Georgia has signed Double Taxation Avoidance with more than 60 countries to prevent this double taxation issue.

Tax Residency In Georgia Country: Check The DTA Agreement

It is probably the first thing to do before considering getting a tax residency in Georgia Country. Check here if your current Country of tax residency has a Double Taxation Agreement with Georgia. If so, you could avoid being taxed on the same income twice.

Cancel Your Previous Tax Residency

If not, you could be liable to pay personal income tax in both countries. The best solution in this case, and if you want to benefit from the Georgian tax regime, one of the lowest tax countries in the world, Georgia, is to cancel your previous Country of tax residence. In that case, you will only be a tax resident in Georgia. If you are in Georgia for more than 183 days, we kindly remind you that you are automatically a tax resident in Georgia. So if you don’t cancel the previous Country of tax residency, the only solution to avoid paying too much taxes in both countries or avoiding all taxes in your last tax residency country is to check the DTA (double taxation agreement) between Georgia and your previous tax of residence. If you were not physically present in your last Country for more than six months (this is usually the required period in most countries worldwide), in this case, you would be able to cancel your second tax residence for the current or previous tax year. Regarding tax issues abroad, fiscal issues are sometimes complex between two countries. Suppose you would like to get a tax residency in Georgia country. In that case, we advise consulting a local tax adviser from those countries where you have a tax residency before moving to Georgia to check if a tax residency in Georgia will be profitable. Happy Georgia will help you with your Georgian tax issues according to your specific situation.

Work Performed Outside Georgia vs. Work performed while you’re not in Georgia.

According to the Georgian Tax Code, your work performed outside the Georgian territory can or cannot be taxed. It depends.

Work performed from Georgia.

Indeed, according to Tax law, personal income earned while working in Georgia would be taxed. For example, if you manage a business internationally or work remotely while you are physically present in Georgia, and if this work generates income, and if the money is derivated to Georgia (or not), that income would be considered Georgian source-income liable for tax.

Work Performed Outside Georgia

If this work is done while you are not physically present in Georgia, you should not be liable for tax on that income (Tax Code articles 82 and 104). However, the Georgian Tax code could lead to some different interpretations. All income earned while not physically present in Georgia but remitted to a bank account inside Georgia could be taxed for tax residents of Georgia. As you can see, and if you practice general tax laws worldwide, you may know many nuances relating to this issue. Answers are not simple in this field, never. We advise getting in touch with one of our tax advisers on this topic. The analysis of your current and particular situation would give us the main perspective and if your foreign sourced income will be liable for tax in Georgia.

Foreign Passive Incomes vs. Active Incomes provided by active work while physically in Georgia

If you receive passive foreign incomes and don’t perform active work while you are physically in Georgia, you would most likely not be taxed on that income (Tax Code, Article 130).
  • If you receive Airbnb income abroad.
  • If you are a Digital Nomad and Digital Entrepreneur who sells services and products worldwide.
  • E-commerce business owners.
  • Traders and crypto-traders.
  • Influencers who receive income from the brands they support.
  • If you receive dividends from a company where you are not active, as a manager or employee
  • Royalties owners
The list is non-exhaustive. All foreign-sourced passive income can benefit from Georgian territorial taxation. Otherwise, if you perform work and receive the revenue generated by this work while being physically present in Georgia, you would pay a flat 20% tax. MOTO: Most “foreign” income earned while physically present in Georgia, unless it is passive income, is considered Georgian source income due to work performed in Georgia. This income can be taxed. If you own a Georgian or a foreign business managed in Georgia, that business may also be liable to pay taxes in Georgia. But, this question is a separate matter from personal tax residency in Georgia Country. About these matters, a foreign business may be taxed even if you are not a personal tax resident of Georgia. Please consult one of our tax advisers.

Tax residency in Georgia Country: The notion of center of economic interests

Suppose you do not trigger tax residency in any other country, and you are a citizen of Georgia OR have stronger ties to Georgia (family, property, businesses, assets, etc.) than any other country. In that case, you may be considered a tax resident via domicile even if you don’t spend time in Georgia. Widely spread in most countries, the notion of the Center of Economic Interests must be carefully analyzed before applying for a Tax Residency in Georgia Country.

Your Responsibility As A Tax Resident In Georgia

Suppose you are a tax resident in Georgia and have any taxable income within the tax year that was not already taxed at the source in Georgia. In that case, you must register and file an annual declaration with the Revenue Service and pay taxes if necessary. Paying tax on that income in another country in the same year is not always sufficient; you may also owe tax in Georgia.

Annual Declaration For Tax Residency

If you have taxable income during the tax year in which you are a tax resident that has not been taxed at source in Georgia, you must file an annual return with the tax department and pay taxes on that income. Fill up an annual tax declaration with the revenue service by March 31st following the tax year you became a tax resident (Tax Code, Article 153). The tax year in Georgia runs from January 1st to December 31st.

Tiered Tax Vs. Flat Tax

If you come from a country with progressive tax rates, the flat 20% tax rate may allow you to pay less than elsewhere. Note, however, that there is no tax-free threshold in Georgia, so you pay the 20% from the first euros, USD (or lari) earned. For high earners, this flat 20% tax rate, regardless of your income, could substantially (even massively) reduce overall taxation for the ongoing fiscal year.

To Summarize The Tax Residency In Georgia Country

20% Is The Standard Tax Rate For Individual In Georgia

Suppose the tax rate in your current Country of tax residence is higher than 20%, and you want to benefit from a lower tax rate than the standard Georgian rate of 20%, structuring your business as an individual. In that case, the Small Business Status can be very interesting (1% tax only). An LLC will also be interested in receiving income, especially if you are in the IT field. The VZ status will allow you to receive income from this business activity and to be taxed only at 5% on profits.

You obtain a Tax residency in Georgia Country after 183 days of Presence

If you stay in Georgia for 183 days in 12 months, you may be legally required to register as a taxpayer in Georgia.

Be Cautious Before Getting A Tax Residency In Georgia Country

We kindly remind you that if your income has been taxed elsewhere, that does not mean it will be tax-free in Georgia. You must check the Double Tax Avoidance treaty between your previous tax residency country and Georgia. FYI, we provide you here with the link to the Georgian Tax Code Do you Need help or advice? Get a consultation with one of our tax advisers. Depending on your personal and business situation, we can determine the best solutions to reduce your taxes in Georgia.