Taxation of UK LLP in Georgia

[John Andrews]

Does anyone have any info in regards to how Georgian tax authorities view UK LLPs - do they see it as transparent or opaque?

Can a Georgian tax resident form a UK LLP with two nominee shareholders and pay out the profits to his personal account in Georgia?

Is there any tax to be paid on this income in Georgia? Does Georgia have CFC rules for individuals and/or laws against hybrid mismatches?

 

[Offshorenerd]

Im also interested in experiences with this. Has anyone here used this setup before?

 

[avalanche]

mange38 said:
Does anyone have any info in regards to how Georgian tax authorities view UK LLPs - do they see it as transparent or opaque?

Can a Georgian tax resident form a UK LLP with two nominee shareholders and pay out the profits to his personal account in Georgia?

Is there any tax to be paid on this income in Georgia? Does Georgia have CFC rules for individuals and/or laws against hybrid mismatches?
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Should be no CFC. You are not supposed to pay taxes on your foreign sourced income.

 

[John Andrews]

so tax residency in Georgia + UK LLP == tax free (online) business?

 

[avalanche]

mange38 said:
so tax residency in Georgia + UK LLP == tax free (online) business?
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I'm not a tax advisor but supposed to be yes.

 

[khinkali]

avalanche said:
Should be no CFC. You are not supposed to pay taxes on your foreign sourced income.
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There is no CFC in the ownership or control sense used by some other countries so living in Georgia you could take tax free profits from an offshore entity.

Income earned by a non resident company through a permanent establishment or by carrying on activities in Georgia is taxable in Georgia.

So you're not taxed but the business might be, subject to what constitutes economic activity and any relevant double taxation agreements.

 

[JohnLocke]

You may check with which countries Georgia has a DTAT (double taxation avoidance treaty) here Double Taxation Avoidance Treaty so you may get a better picture about your options.

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[bnpsu]

"Residents of Georgia are taxed on their worldwide income, whereas foreigners have to pay tax on their income derived from a Georgian source"

Does this mean if you stay more than 183 days, you become a reseident of Georgia?

 

[JohnLocke]

That the exact same rules as you have in most countries in Europe and I think as well in the USA.

You will not become a resident of Georgia but you may be forced to pay tax there unless your home country will require you to pay tax there. It's something you want to clarify with your local tax advisor before you proceed. In certain cases you can risk that both countries will require you to pay tax for the same amount 🙁

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[khinkali]

bnpsu said:
Does this mean if you stay more than 183 days, you become a reseident of Georgia?
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183 days makes a natural person (human) tax resident. Different rules apply to judicial person (e.g. a company)

A natural person can be tax resident without being legally resident; for example people from a number of countries can visit for 365 days at a time without a residence permit or other permission to live here.

 

[bnpsu]

khinkali said:
183 days makes a natural person (human) tax resident. Different rules apply to judicial person (e.g. a company)

A natural person can be tax resident without being legally resident; for example people from a number of countries can visit for 365 days at a time without a residence permit or other permission to live here.
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I see - so for example, if you use a 3 month visa and keep going back to BVI as a tourist, you may end up being a tax resident there, even without residency or work permints?

 

[khinkali]

Yes, tax residency for a natural person is currently based on days in the country. But unlike many countries, Georgia doesn't tax foreign sourced income for natural person tax residents. If you have passive investments abroad then Georgia shouldn't care.

The issue would be if you are engaging in "economic activity" in Georgia. Or if you run an offshore business from Georgia, then the business might be taxed. This can be the case whether you are tax resident or not.

 

[avalanche]

bnpsu said:
"Residents of Georgia are taxed on their worldwide income, whereas foreigners have to pay tax on their income derived from a Georgian source"

Does this mean if you stay more than 183 days, you become a reseident of Georgia?
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what? Georgia is a rare country that still has territorial taxation meaning you can run your foreign org and reap revenues without paying a penny in Georgia. They have no CFC rule as well.

 

[avalanche]

khinkali said:
Yes, tax residency for a natural person is currently based on days in the country. But unlike many countries, Georgia doesn't tax foreign sourced income for natural person tax residents. If you have passive investments abroad then Georgia shouldn't care.

The issue would be if you are engaging in "economic activity" in Georgia. Or if you run an offshore business from Georgia, then the business might be taxed. This can be the case whether you are tax resident or not.
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Georgia has no CFC rule.

 

[khinkali]

avalanche said:
Georgia has no CFC rule.
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Yes Georgia has no CFC rule, so a natural person is not taxed on the revenue or earnings of an offshore company.

However, the *company* can be subject to Georgian tax if it has economic activity or a permanent establishment in Georgia.

 

[avalanche]

khinkali said:
Yes Georgia has no CFC rule, so a natural person is not taxed on the revenue or earnings of an offshore company.

However, the *company* can be subject to Georgian tax if it has economic activity or a permanent establishment in Georgia.
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Correct