@khinkali OK, thanks for clarifying. I'll also keep researching this about Georgia. I would not be doing much 'operating' of a foreign company whilst there if trading as a natural person. But I would not want to risk having to pay corporation tax on︀ revenues that the company receives whilst I am there. If both of these points come︁ good then Georgia could work.
CFC rules in Georgia
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I'd like to ask︁ a clarification about CFC vs PE rules. You mention CFC covers undistributed assets and Georgia︂ has no CFC rules. But that due to PE you cannot run a foreign company︃ from inside Georgia and be free of Georgian tax.
I've heard somewhere that corporation tax︄ only applies to Georgian companies if money is taken out. Is this correct? Does this︅ only apply if you actually take a dividend? If someone operated a company from within︆ Georgia whilst tax resident there, but did not actually take any payment from the company,︇ would the company still need to pay corporation tax in Georgia?
If not, then one︈ could live in Georgia and operate a foreign company for a year or two provided︉ they weren't being paid an income from it. But I might have been misinformed.
I've heard somewhere that corporation tax︄ only applies to Georgian companies if money is taken out. Is this correct? Does this︅ only apply if you actually take a dividend? If someone operated a company from within︆ Georgia whilst tax resident there, but did not actually take any payment from the company,︇ would the company still need to pay corporation tax in Georgia?
If not, then one︈ could live in Georgia and operate a foreign company for a year or two provided︉ they weren't being paid an income from it. But I might have been misinformed.
In case you talk about fiat:
If you studied this thread from the first page up until the last you will have figured out that there is no concern around trading personal accounts, as long as it is not High Frequency Trading (HFC) and as long as you do not live from the monies such an︀ account produces.
The following website is from the Internet Archive -> GALT & TAGGART (second paragraph of second column) . This is just one example of many.
They recently launched︁ an "enhanced" new website and stopped advertising tax benefits in preparation for an alignment with︂ EU- and OECD rules (GE starts CRS in 2023).
Up until about a year ago︃ one large Georgian Bank even gave out small booklets to its "wealth clientele" with practical explanations regarding Taxes & Banking/Brokerage. The tax code has not changed much since︄ then ... .
At least my posts were intended to tell people to keep it︅ reasonable. The Georgian tax code and the legal system of this country are immature at︆ best. If you overstretch it you become a target and it will take you a︇ long way (and a whole lot of money) to get things straight.
As long as︈ you only do a few transactions every month + keep it simple + can proof︉ that you do not use the proceeds for your daily living expenses (i.e. keep them︊ outside of GE in your personal bank/brokerage account) I do not see a problem.︋
If you studied this thread from the first page up until the last you will have figured out that there is no concern around trading personal accounts, as long as it is not High Frequency Trading (HFC) and as long as you do not live from the monies such an︀ account produces.
The following website is from the Internet Archive -> GALT & TAGGART (second paragraph of second column) . This is just one example of many.
They recently launched︁ an "enhanced" new website and stopped advertising tax benefits in preparation for an alignment with︂ EU- and OECD rules (GE starts CRS in 2023).
Up until about a year ago︃ one large Georgian Bank even gave out small booklets to its "wealth clientele" with practical explanations regarding Taxes & Banking/Brokerage. The tax code has not changed much since︄ then ... .
At least my posts were intended to tell people to keep it︅ reasonable. The Georgian tax code and the legal system of this country are immature at︆ best. If you overstretch it you become a target and it will take you a︇ long way (and a whole lot of money) to get things straight.
As long as︈ you only do a few transactions every month + keep it simple + can proof︉ that you do not use the proceeds for your daily living expenses (i.e. keep them︊ outside of GE in your personal bank/brokerage account) I do not see a problem.︋
@Bagpacker Thanks for sharing this and your thoughts in this thread, really helpful.
In my case I would be trading mostly crypto. I have crypto both personally and in companies. Not HFT, just 1-3 trades per week, sometimes with leverage.
From all the above, it sounds like trading a personal crypto portfolio would not be taxed. (even if taking a small amount for living expenses?). Likewise trading crypto in a foreign company but not distributing profits would also not incur taxes in Georgia.
If this is all possible I would consider doing this in Georgia for two or three years, living modestly and grow capital,︀ not distributing profits until a later date when I might move to a more favourable︁ jurisdiction for that or stop managing the company.
I might be missing something, but it︂ sounds compliant at this point in time. I could use some professional advice.
In my case I would be trading mostly crypto. I have crypto both personally and in companies. Not HFT, just 1-3 trades per week, sometimes with leverage.
From all the above, it sounds like trading a personal crypto portfolio would not be taxed. (even if taking a small amount for living expenses?). Likewise trading crypto in a foreign company but not distributing profits would also not incur taxes in Georgia.
If this is all possible I would consider doing this in Georgia for two or three years, living modestly and grow capital,︀ not distributing profits until a later date when I might move to a more favourable︁ jurisdiction for that or stop managing the company.
I might be missing something, but it︂ sounds compliant at this point in time. I could use some professional advice.
@mastaplan for crypto you should look into Public Decision 201 from the Revenue Service. While it mostly talks about VAT and mining, it also says that profits from crypto are not subject to income tax for private individuals. Companies pay 20% on distribution.
If you are thinking in a UK sense, badges of trade are not just about the frequency of trading but also how organised you are about it. The idea behind the Georgian tax treatment is different. It's not so much "are you doing business?" by trading as "are you doing it in Georgia?". I've spoken to professionals who believe that crypto trading︀ is not Georgian source income, regardless of frequency.
But interpretations can change (like the recent,︁ retroactive interpretation of work needing to be done on Georgian soil to count for Virtual︂ Zone treatment, which rightly upset people). My feeling is that it's best to get a︃ binding ruling before deciding how long to stay here, but other people have suggested not︄ to worry because nobody in the Georgian tax office has any interest in people trading︅ crypto on foreign exchanges.
If you are thinking in a UK sense, badges of trade are not just about the frequency of trading but also how organised you are about it. The idea behind the Georgian tax treatment is different. It's not so much "are you doing business?" by trading as "are you doing it in Georgia?". I've spoken to professionals who believe that crypto trading︀ is not Georgian source income, regardless of frequency.
But interpretations can change (like the recent,︁ retroactive interpretation of work needing to be done on Georgian soil to count for Virtual︂ Zone treatment, which rightly upset people). My feeling is that it's best to get a︃ binding ruling before deciding how long to stay here, but other people have suggested not︄ to worry because nobody in the Georgian tax office has any interest in people trading︅ crypto on foreign exchanges.
Thanks for this. I'm mostly confident︆ that personal crypto trading would be OK in Georgia. I'm now trying to figure out︇ the best company setup since I will also have crypto stored in a company and︈ might also buy property through a company. If the rules begin to change I can︉ always go somewhere else.
About UK badges of trade, I've gone over this guidance from︊ HMRC and it doesn't give much confidence either way. They say 'only in exceptional circumstances'︋ would it be considered 'trading.' I think they prefer it to be treated as investment︌ rather than trading because losses are less flexible. I'm banking on reporting mine as investment︍ profits too. I'm not aware of any cases yet where they have disputed this and︎ made someone pay income tax on their crypto trading, but the guidance is only a️ couple of years old. It would set a scary precedent if they began taxing people as though it was income.
About UK badges of trade, I've gone over this guidance from︊ HMRC and it doesn't give much confidence either way. They say 'only in exceptional circumstances'︋ would it be considered 'trading.' I think they prefer it to be treated as investment︌ rather than trading because losses are less flexible. I'm banking on reporting mine as investment︍ profits too. I'm not aware of any cases yet where they have disputed this and︎ made someone pay income tax on their crypto trading, but the guidance is only a️ couple of years old. It would set a scary precedent if they began taxing people as though it was income.
If you don't have an office for trading and don't employ people you should be able to trade merrily in the UK with just CGT, especially if you have any other type of employment. Like you mentioned, it doesn't normally help HMRC to move you from CGT to income tax. Also any gains since you last traded a coin don't attract CGT if you then move away for five tax years.
For the company set up, your preferred exchanges might come into it. Some exchanges︀ are more hassle with company KYC. Also some exchanges can be picky about jurisdiction. UAE︁ seems limited; Cyprus or Gibraltar better supported and still quite low tax.
If you trade︂ from a foreign company and do the work in Georgia, then you create a PE︃ here as discussed above. But if you generate undistributed profits and then move somewhere like︄ Cayman or Dubai to cash out in the following year, did you owe any GE︅ taxes? I don't remember anyone asking this before. Not that Georgia is necessarily able to︆ enforce, but still I am intrigued. The Tax Code of Georgia seems to be offline︇ at the moment; maybe that's a sign too. 😉
For the company set up, your preferred exchanges might come into it. Some exchanges︀ are more hassle with company KYC. Also some exchanges can be picky about jurisdiction. UAE︁ seems limited; Cyprus or Gibraltar better supported and still quite low tax.
If you trade︂ from a foreign company and do the work in Georgia, then you create a PE︃ here as discussed above. But if you generate undistributed profits and then move somewhere like︄ Cayman or Dubai to cash out in the following year, did you owe any GE︅ taxes? I don't remember anyone asking this before. Not that Georgia is necessarily able to︆ enforce, but still I am intrigued. The Tax Code of Georgia seems to be offline︇ at the moment; maybe that's a sign too. 😉
That's good to know. I also only trade with about 20% of my holdings so it would be a bit harsh for them to argue income tax and base︀ it on the cost basis of my whole portfolio which I mostly bought at much︁ lower prices.
I've stopped trading with my personal pot as I maxed out the CGT︂ allowance for this year. I am trading crypto within companies though and need to figure︃ a way to extract that.
I'll pay the CGT on gains made this tax year,︄ then be non-resident for 5+ years as of next tax year.
I will trade︈ mostly on FTX and Binance. If I could choose only one it would be FTX.︉ I've been sold HK but that doesn't seem a good fit for trading. I've also︊ been heavily sold Panama, but I'm not looking to 'disappear' or give the impression that︋ I am. I'm also told Panama can be tricky if buying property or transferring money︌ to a personal account.
FTX doesn't mention restrictions on UAE on their site. Obviously 0%︍ tax would help with compounding!
I also have crypto stored in UK companies as above︎ which I would need to extract somehow or take a hit on the tax in️ the UK when I pay out.
So I am still exploring options on the company front.
That's a good question. I had assumed not. If this was the case︀ then I wouldn't choose Georgia. I'll try to find out.
I've stopped trading with my personal pot as I maxed out the CGT︂ allowance for this year. I am trading crypto within companies though and need to figure︃ a way to extract that.
I'll pay the CGT on gains made this tax year,︄ then be non-resident for 5+ years as of next tax year.
I will trade︈ mostly on FTX and Binance. If I could choose only one it would be FTX.︉ I've been sold HK but that doesn't seem a good fit for trading. I've also︊ been heavily sold Panama, but I'm not looking to 'disappear' or give the impression that︋ I am. I'm also told Panama can be tricky if buying property or transferring money︌ to a personal account.
FTX doesn't mention restrictions on UAE on their site. Obviously 0%︍ tax would help with compounding!
I also have crypto stored in UK companies as above︎ which I would need to extract somehow or take a hit on the tax in️ the UK when I pay out.
So I am still exploring options on the company front.
That's a good question. I had assumed not. If this was the case︀ then I wouldn't choose Georgia. I'll try to find out.
@mastaplan if you think your portfolio will go up then surely you want to take the hit as early as possible?
FTX prediction markets would certainly be out of bounds for UAE due to strict gambling regulations. Otherwise you should be OK.
FTX prediction markets would certainly be out of bounds for UAE due to strict gambling regulations. Otherwise you should be OK.
That's the dilemma. I am thinking I can transfer it out of my UK company into a foreign company. Some say this is absolutely possible and assure me that most people do it 😉. Others say you would need to perform services to the UK company, which I could do. I am waiting on a consultant to come back to me on this. If none of this is at all possible I and︀ the others involved would be better off taking the hit now.
Thanks, sounds like UAE︁ corp + residence somewhere like Georgia might work then.
Thanks, sounds like UAE︁ corp + residence somewhere like Georgia might work then.
@mastaplan do I understand correctly that you want to transfer lots of crypto out of the UK and deduct the invoices from your new offshore company against your UK corporation tax?
"Hello Mr Tax inspector, I made £x from trading crypto but then I bought some very expensive Web design from my new Belize IBC so there's no taxable profit". "Oh that's OK then you don't need to pay anything". Simple! 😉
If there are others involved, and all friends, did you consider a Gibraltar private fund? 10% tax but I'm looking into it because it seem easier to set up.
"Hello Mr Tax inspector, I made £x from trading crypto but then I bought some very expensive Web design from my new Belize IBC so there's no taxable profit". "Oh that's OK then you don't need to pay anything". Simple! 😉
If there are others involved, and all friends, did you consider a Gibraltar private fund? 10% tax but I'm looking into it because it seem easier to set up.
I see your point 🙂 Depends how much is 'a lot' of crypto! At current prices we're probably not talking more than could reasonably be invoiced out if I continue to work for the company. Although it might be pushing it, and in six months the value could be a lot higher. On the other hand, taking out whilst resident in UK would be taxed at a much higher % than waiting until I am non-resident. Argh.
Since it has been discussed in this thread︎ at length I will put it here:
I came across a new offer from Bank️ of Georgia where they introduce stock trading (note the word "trading") in US-shares, directly through their online banking system. The interesting part is a broad based tax advice which they use as a marketing tool. You can find it here გზა სულ არის, არ გაჩერდე! (scroll down to the centre of the website and look up "Favourable tax conditions").
Of course, it would not be Georgia without a significant mistake stupi#21: The Georgian tax code does not distinguish between citizen and resident when it comes to capital gains!
Read this in context with my aforementioned post and you understand where they base their claim on.
I came across a new offer from Bank️ of Georgia where they introduce stock trading (note the word "trading") in US-shares, directly through their online banking system. The interesting part is a broad based tax advice which they use as a marketing tool. You can find it here გზა სულ არის, არ გაჩერდე! (scroll down to the centre of the website and look up "Favourable tax conditions").
Of course, it would not be Georgia without a significant mistake stupi#21: The Georgian tax code does not distinguish between citizen and resident when it comes to capital gains!
Read this in context with my aforementioned post and you understand where they base their claim on.
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