Advantages of Tax Residency in Georgia
Georgia was ranked 14thin the global chart Paying Taxes 2020 due to its warm tax and business climate. Being a tax resident in Georgia allows you to benefit from a number of advantages:
- Income received from foreign sources is tax exempt. This is especially important when receiving passive income (e.g. dividends) from companies incorporated outside of Georgia;
- If income is derived from a Georgian source, it is taxed at a rate of 15%. Please also consider a special reduced rate for small businesses – 1% on profit when registering as a private entrepreneur;
- No exchange or currency controls. Georgia has agreements with 56 countries for the avoidance of double taxation;
- Income from the sale of cryptocurrencies is considered income not from Georgian sources. This means that such income is not taxed in Georgia if you are a Georgian tax resident;
- Tax residency of Georgia allows you to receive tax-free income from trading on the financial market.
How a foreigner can become tax resident in Georgia
There are several ways to obtain tax residency in Georgia. The first option is to spend more than 183 days a year in Georgia (you automatically become a tax resident of Georgia). This option won’t suit you if you don’t really want to live in Georgia for such a period of time.
In this case, we offer a different way of acquiring the status of a tax resident of Georgia. You can apply for the status of a high net-worth individual (HNWI).
To become a tax resident in Georgia without having to live in Georgia for 183 days a year, it is necessary to meet two criteria:
- Having the status of a HNWI (as described in detail below);
- Holding a residence permit in Georgia. Alternatively, the applicant's annual income from a source in Georgia should not be less than 25,000 GEL (approximately 7,000 EUR).
To comply with the last requirement, you can form a company in Georgia or register as a private entrepreneur in Georgia and receive income in the amount of 25,000 GEL to your account. All you have to do is simply declare to the tax authorities that income has been received on the same month. In fact, this requirement can be easily fulfilled by transferring money from the personal account of the founder of the company to the corporate account of the company as a contribution to the share capital. Alternatively, cash can be deposited into the company's account at any branch of a Georgian bank.
Who is HNWI in Georgia and how to obtain this status for tax residency
A high net-worth individual or a person with a high level of personal equity is an individual who meets two criteria:
- The amount of personal wealth is not less than 3 000 000 GEL (approximately 830 000 EUR); or
- The annual income of such a person during the previous three years did not fall below 200,000 GEL (approximately 55,000 EUR).
In order to prove that you have 3 000 000 GEL of wealth you can provide a personal bank account statement or title documents for real estate. An auditor’s report is required confirming the market value of real estate.
To show that over the past three years the annual income exceeded 200,000 GEL, a personal bank account statements is required along with the tax returns and other documents confirming incoming transactions to your account (e.g. resolution of distribution of dividends).
Please note that the documents (statements or audit reports) must be apostilled.
How to get a residence permit in Georgia
You can obtain a residence permit in Georgia in several ways:
- Residence permit through the purchase of real estate in Georgia. The value of the property should not be less than 100,000 USD. Note that we can assist you with selection and purchase of real estate in Georgia. At the same time, we do not accept any agency commissions from the developers as this would mean conflict of interest between us and the client;
- A working residence permit assumes that you work for a company or own a company. In this case there should be at least 50,000 GEL at the company’s account for each non-resident employee. If you plan to get a residence permit as an employee, your salary must be at least five times higher than the subsistence minimum in Georgia;
- Residence permit for educational purposes - studying in accredited institutions of Georgia (higher educational institutions);
- Residence permit for family reunion. This may come in handy if one of your family members already has a residence permit in Georgia;
- Investments in the economy of Georgia (for example, investment in business) in the amount of at least 300,000 USD.
Please consider the first two options as the most relevant.
Procedure for obtaining tax residency in Georgia
- We provide you with a list of documents necessary to confirm your HNWI status;
- We provide you with a draft power of attorney for company formation in Georgia (or private entrepreneur) and opening a bank account in Georgia;
- We provide you with a draft of a separate power of attorney to represent your interests when dealing with the tax authorities of Georgia;
- You dispatch documents from items 1-3 above by international courier service to Georgia, where we translate them into Georgian;
- We help registering a company (or private entrepreneur) and opening a bank account;
- We make sure that you have an income from a Georgian source of 25,000 GEL, or apply for a residence permit (to obtain a residence permit you will need to come to Georgia in person);
- And finally, we apply for tax residency. Within 20 business days you get a notice that the Georgian authorities confirm your tax residency status for the whole year.
How Taxters can help
We will assist you with:
- Preparation of necessary documents and their submission;
- Company formation in Georgia and fulfilling the requirement of annual income;
- Communication with governmental and financial institutions;
- Translation of all documents into Georgian;
- Submission of all necessary applications and petitions to the Georgian Authorities;
- And finally – obtaining a tax residence certificate.
If you have any questions on how to become a tax resident of Georgia, please click the "Quick Consultation" button below.