Table of Contents of this Post
With increasing interest in the digital nomad lifestyle, more and more people are looking for a country where they can get their tax residency as easily as possible. In search of the tax residency, you should take into consideration how legit is the country where are you are residing in? More and more banks became aware of them, so to say, non-legit or trustworthy schemes executed through the countries that are solely made for offshoring purposes. You are considering offshore residency, think carefully. It might cause some problems with your banking options availability or overall credibility in the future. Here I am representing the possibility of claiming your tax residency in Georgia, the legit country, not an offshore jurisdiction as it is usually called. That makes Georgia even more attractive if you ask me.
Residency VS Tax Residency
First and foremost, let me clarify the difference between the residency and tax resident. Most of the people I work with are messing up these two concepts, hence I see the need for some definitions here. Work residency does not necessarily mean that you will be entitled to the tax residency. Acquiring Work residency is a relatively easier procedure. We have talked about this in a few previous blogs already. In short, once you comply with some pre-requisites you have entitled the work residency. As for tax residency, it is a separate procedure and you deal with the revenue house of Georgia, which is the authority operating under the Ministry of Finance.
How to obtain a tax residency in Georgia?
An interesting fact is that, as long as you are eligible for legally staying in Georgia, the Georgian government does not care about your residency. That’s right. You can run a business in Georgia without having residency. That is one reason that makes doing business in Georgia pretty easy. However, if you have a personal urge you can go ahead and obtain any type of residency that you are eligible for. As for tax residency, there are two ways to get Tax Residency in Georgia. In the first scenario, you have to live in Georgia for at least half a year and have a cash-generating activity here ( business or employment). Now, if you are more interested in the digital nomad lifestyle and are not necessarily looking for one place to settle, you want to travel to a different country and still have a tax residency another option for getting a Georgian Tax residency is Tax Residency for High Net worth individual. This is the scenario that we will figure out together later in this blog.
What does High-Net worth Individual (HNWI) mean?
Before we jump into the discussion, let’s define the term Nigh net-worth Individual and find out how does Georgian legislation defines this. According to the Ordinance of the Finance Minister of Georgia, an HNWI individual is someone with significant assets – Individuals with proven assets above GEL 3 million or an annual income of more than GEL 200,000 in the last 3 years.
Conditions for granting tax residency in Georgia
If you fall under the above-mentioned definition of HNWI here are some other conditions for you that you need to comply with. A person is granted residency in Georgia in the following Conditions.
A) a natural person is a person provided with significant property and has a residence permit / ID card of a citizen of Georgia; Or
B) a natural person is a person provided with significant property and certifies that he/she receives income of GEL 25,000 or more during the tax year from a source in Georgia.
In other words, in order to be able to be eligible for Georgian tax residency, you need to be an HNWI and you need to have Georgian residency or prove your income from Georgian source at least of 25000.
okay, Mari, I got you, but you would be a smart person if you also tell me, how is it possible to prove my income from a Georgian source?
What is Georgian-source income?
So, here is a new term on our radars – Georgian-Source of income. This list is somewhat long, let me represent some of the most relevant ones:
A. Income from employment in Georgia;
B. Income received from the supply of goods, work, and/or services produced in Georgia;
C. Income that may belong to a permanent establishment located on the territory of Georgia, including income that may be generated by the sale of the same or similar goods in Georgia, through the sale of goods through a similar permanent establishment; As well as income received from entrepreneurial activities in Georgia, which have an identical or similar character to the activities carried out through a permanent establishment;
D. Dividends received from a resident legal entity and income received from the sale of a partner’s share in such a legal entity;
E. Interest income received from the resident;
L. Income from real estate in Georgia and used in entrepreneurial activities, including income from the sale of a partner’s share in such property;
F. Income received from the sale of shares or shares of a partner whose assets are mostly directly or indirectly the value of the real estate in Georgia;
G. Other income received from the sale of property by the resident, which is not related to the entrepreneurial activity;
H. Income received from an enterprise or permanent establishment located on the territory of Georgia – for management, as well as for financial and insurance services (including reinsurance services) or on a contract basis with them;
I. Other income received from activities in Georgia;
Why do you need Tax-Residency?
Why would you even want to get tax residency? Why is this even relevant? If you ask yourself this question then this process is most likely not relevant for you. Just like we mentioned above, you don’t have to obtain it, you are not legally forced or obliged to obtain it. The tax residency is relevant for those individuals who come from the countries which tax their residents on foreign-source income. Georgia applies a territorial taxation system for example, in this case obtaining tax residency in another country is not relevant for us at all, since we are not taxed on foreign-source income tax anyways. However, what about the fact that you come from Germany for example, but do not live in Germany, without obtaining the tax residency, you still have to report your income generated outside of your Resident Country (Germany in our example) and pay some additional tax, that as we can all guess until now, nobody is happy about.
How to obtain tax-residency remotely ( online ) ?
And now, finally, to the happiest part. After all the clarifications we get to the point – how to apply for the residency. I will also emphasize in this chapter how to apply and obtain the Georgian tax residency online, remotely, without even visiting the country.
A person who does not have a residence permit in Georgia and is interested in obtaining a residence permit in Georgia, personally, through an authorized representative or agency submits an application for obtaining a residence permit and documents established by the legislation of Georga to the – Civil Registry Agency.
If a natural person is outside the territory of Georgia, through an authorized representative or agency, or through a diplomatic mission or consular post of Georgia, he/she shall submit an application to the Civil Registry Agency for obtaining a residence permit in duplicate and in accordance with Georgian legislation.
In other words, if you are visiting Georgia you need proof of your income from the foreign source, all translated and notarized in Georgia, and the proof of your income from Georgian source either your Georgian ID and then you can visit the Civil Registration Agency of Georgia and apply for the status there.
Exact steps for obtaining overseas tax residency online
Alternatively, you can apply for Georgian Tax-Residency remotely and online, without visiting the country and without traveling to Georgia. For that you will need to undertake certain additional actions:
a. Get your legal representative – that could be us, we can help you with the procedure.
b. Get Power of Attorney (PoA) – That needs to be apostilled or legalized together with your passport. We can prepare the one for you, alternatively.
C. Send the original version by post to your representative
Your representative undertakes the above-described steps on behalf of you.
Documents to be submitted for Georgian residency
We have two case scenarios here. Either way works. This was covered above but let’s make it even more clear. In order to obtain a residence permit in Georgia, a natural person must submit an application to the Revenue Service through the Agency:
A) ID/residence card and documents proving that the property of a natural person exceeds 3 million GEL or his annual income for the last 3 years exceeds 200,000 GEL; Or
B) Documents proving that the property of a natural person exceeds GEL 3 million or its annual income for the last 3 years exceeds GEL 200,000 and documents proving that a natural person receives GEL 25,000 or more from a source in Georgia during the tax year Income.
Need help with obtaining Offshore tax residency?
Georgian tax residency could be even a smarter option than your offshore tax residency. Georgia is often referred to as an offshore country, but it is actually not to me. Offshore countries have a bad reputation for larger institutions, as they are mainly used for over-the-counter transactions. Georgia is not black-listed right that. It is a country with a history. It has not for sure been made for offshoring purposes. So consider getting your tax residency here.
need help with getting your tax residency? Contact us! Send us your inquiry and then we will talk.
Hope it was useful,
Greeting from Georgia,
Mari
