Georgia Tax Residency

Georgia is one of few countries where you can attain low-tax residency status without having to resort to offshore options. This applies to both businesses and individuals alike. Additionally, Georgia’s territorial tax system means that the government won’t tax you on foreign-sourced income.

Obtaining Georgian Tax Residency gives the following advantages:

• There is no personal income tax on money earned outside of Georgia, including gain. (Please, bear in mind that generally only passive income is deemed foreign sourced**)
• 1% taxes for persons earning up to 500 000 GEL per year (a certificate of “small business entrepreneur” is necessary; the advantage does not apply to all company operations)
• 5% taxes on residential property rentals and/or earnings from resale comparable properties
• No VAT on the sale of four apartments within four years.
• 0% personal income tax on capital gained via crypto resale (neither VAT applies to such transaction)
• Capital gains are not taxed.
• There are also modest flat tax rates of 20% on Georgian income, 5% on dividends, 18% VAT on domestic transactions, and 1% on a property owned in Georgia.
• Simple access to Georgia’s financial system. Georgian residents receive much the same treatment from banks as Georgian citizens. As a result, you may skip lengthy compliance and KYC procedures.
• Common Reporting Standard (CRS) data sharing – Although Georgia does not now participate in the CSR initiative, this will change in the near future. However, if the customer is a Georgian tax resident, no information will be transmitted.
• Double Tax Treaties (DTA) – Georgia has approximately 56 DTAs, meaning if you have tax residency in Georgia and earn income from any DTA member country, you will not be taxed twice by local tax authorities.

** NOTE: “Foreign source income” does not include any revenue transferred from overseas to Georgia. In the case of services, the rule is the inverse of what the phrase “foreign source” implies. In particular, a service performed by a Georgian resident to a foreigner (i.e., when the service cost is paid from outside Georgia) is typically regarded as a Georgian source. Fortunately, passive income (dividend, pension, interest, capital gain) of Georgian tax residents from overseas, for example, is termed “foreign source income” and is exempt from personal income tax in Georgia.

Avoid Double Taxation

It’s important to note that having a tax resident status in Georgia does not necessarily mean you no longer have tax residency in another country. It is likely that you are still considered a tax resident in another state until you take steps to terminate that status. Simply being an automatic tax resident in Georgia does not automatically cancel your tax residency in your previous country. You may need to take specific actions in certain countries to do so. At the end of each tax year, there is usually a deadline for revoking prior tax residency, so it’s important to check that deadline to avoid being taxed in two countries.

If you have been in Georgia for over 183 days, there is no legal way to cease being a tax resident. Your only option at that point is to determine whether your previous country has a Double Taxation Agreement with Georgia or if you have the right to revoke your tax residency because you were not physically present in your previous country for the required length of time.

If your country doesn’t have a double tax agreement with Georgia, you may need to pay taxes in both countries on all of your income, with no rebate. A solution to this could be to end your tax residency in your previous country before the yearly deadline, making you only a tax resident in Georgia.