Tax residency in Georgia: benefits and the terms and conditions applied in 2020

Tax residency in Georgia is one of the legitimate tax optimization opportunities, which are extensively explored and applied by businesses internationally. Thus, in order to become a tax resident of a particular country, an individual usually needs to stay in the territory of the given country for more than 183 consecutive calendar days. However, many countries are setting additional rules to facilitate foreigners’ access to more optimal taxation. And Georgia is no exception: here it will be possible to have faster turnaround of tax residency process, providing certain conditions are met.

How to obtain tax residency in Georgia

The standard conditions provide for granting the status of “tax resident” in Georgia require that an individual stays in the country for at least 183 days during any 12 consecutive calendar months. In this case the following circumstances are not taken into account in calculating the above-mentioned period of stay:

• when the individual stays in the country as a person with diplomatic or consular status or as a family member of such a person;
• when the individual stays in the country as an employee of an international organization or an officer employed in the civil service of a foreign state in Georgia or is a family member of such a person;
• when moving from one to another foreign state through the territory of Georgia;
• when the individual stays in the country for medical reasons or for holidays.

That is, to become a tax resident in Georgia, it is not necessary to obtain a residence permit or buy real estate. Nevertheless six months may prove to be a rather long period of time to obtain tax residency, especially if you pursue tax optimization objectives.

To that end, the country’s local legislation makes it possible to obtain tax residency in Georgia much faster with the help of the status of a “person secured with significant property”. The granting of the above status is regulated by Joint Order No. 991-250 of the Minister of Finance and the Minister of Justice.

Find out how export companies can benefit from optimized taxation regimes by operating in the free industrial zones of Georgia. 

Who is eligible for tax residency in Georgia?

Non-resident individuals and stateless persons who meet one of the following requirements can obtain the status of a “person secured with significant property”:

• availability of documentary evidence of ownership of property worth over 3,000,000 lari (about $ 975,600); or
• confirmation of an annual income in the amount of 200,000 lari (about $ 65,040) for the last 3 years.

But this is only the first set of conditions to be fulfilled; there is the second aspect requiring fulfillment of one of the following conditions by a person secured with significant property:

• the presence of a residence permit or identity card of a citizen of Georgia; or
• documented annual income of 25,000 lari ($ 8,130) from a source in Georgia.

Attention!!! It should be reminded that the fastest way to obtain a residence permit in Georgia is by means of purchasing real estate in the amount of $ 100,000 and above. In this case, the issuance of a temporary residence permit will take at least 10 calendar days, maximum – 30 calendar days. 

What documents are necessary to obtain tax residency in Georgia?

An application for tax residency in this small and quite hospitable country is subject to review by the State Revenue Service. Such application is submitted through the Service Agency of the Ministry of Finance. The application and the attached documents are required simultaneously in paper and electronic form.

In order to obtain Georgian residency, the persons secured with significant property, should enclose the following documents in the application:

• identity card (foreign passport) / residence permit and documentary evidence of the property worth from 3,000,000 lari (sale and purchase / donation / exchange agreements, extracts from real estate registers, deposit agreements, etc.) or a documentary proof that the person’s annual income for the last 3 year exceeds 200,000 lari (bank statements, lease agreements, deposit agreements, etc.); or 
• documents confirming the presence of property worth over 3,000,000 GEL (sale and purchase / donation / exchange agreements, extracts from real estate registers, deposit agreements, etc.) or that the person’s annual income for the last 3 years exceeds 200,000 GEL (extracts from bank accounts, lease agreements, deposit agreements, etc.), as well as documents confirming the presence of income from Georgian sources in the amount of 25,000 lari per year . 

The Revenue Service checks the documents received and, providing the set of documents is complete and accurate, forwards the application to the Ministry of Finance within 7 working days. If errors were found or some information/documents have been omitted, the applicant is given 30 days to eliminate the deficiencies.

The Revenue Service issues a certificate of tax residence of Georgia and automatically assigns a taxpayer identification number to the person. The latter is also formalized by means of a special reference sheet.

A stateless person or foreign citizen receives a 9-digit identification number. Their tax registration is carried out at the declared place of residence (indicated in the application).

Details of the certificate of tax residence of Georgia

The tax residence certificate of Georgia is a document of strict record. It is protected by security marks to prevent counterfeiting.

The face of the certificate in English and Georgian contains the following information:

• name of the state body that issued the certificate;
• tax year when the certificate had been issued;
• the individual who has obtained tax residency;
• the individual’s address ;
• taxpayer’s individual number;
• an indication that the person is a resident of Georgia for tax purposes;
• signature of the Minister of Finance;
• date of issue of the certificate, and the state emblem of Georgia and the emblem of the Ministry of Finance.

The reverse side includes:

• registration number of the Ministry of Finance;
• client’s reference number/

It is recommended to keep your tax residency certificate in a safe place to prevent its unauthorized access.

What are the advantages of tax residency in Georgia?

Tax residency in Georgia is lucrative option for foreign businessmen from the point of view of optimizing the fiscal burden on the income of individuals. Namely: if a tax resident of Georgia receives dividends from a company that is registered in another jurisdiction, these dividends are not taxed, even despite the fact that they had not been taxed in the country of payment, as in accordance with the Tax Code of Georgia, income received from foreign sources is not subject to taxation (Article 82 of the Tax Code of Georgia). 

Also, the status of tax residency makes it possible to use the agreements on avoidance of double taxation (DTT) concluded by Georgia, and the country has already ratified 56 DTTs as of September 2020. This is especially relevant if the country of the person concerned does not have agreements in place with the particular country, while Georgia has; or if the terms of Georgian agreements are more beneficial.

If you are interested to further explore opportunities that Georgia’s tax residency offers for business, feel free to contact us by e-mail: [email protected] or online chat and we will be happy to help.