Living in Georgia but want to operate through non Georgian company - possible?
- Thread starter georgianboy
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assuming PE is not issue
Still, where would you recommend incorporating?
Customers from u.s, UK, western europe
Still, where would you recommend incorporating?
Customers from u.s, UK, western europe
Well, in the absence of sourcing clients from Georgia you immediately have a reduced tax risk from Georgian Authorities. PE risks are therefore out of consideration. Georgia has no CFC rules last time I checked. You are only looking at management and control issues ( tax residency) which has a very low risk prevalence and can be easily reduced with proper structuring. Cyprus is an excellent option. If you would like to discuss it, I can PM you. Kindly let me know.
Could you explain a︈ bit more, as I see that taxation in Georgia is quite nuanced and confusing. There︉ are conflicting sources and definitions of what to calculate the tax.
+If you manage a︊ foreign enterprise (any legal business entity) remotely (from which jurisdiction does not matter) from within︋ Georgia territory while you are a tax resident in Georgia AND you do not have︌ economic substance in the foreign country (no local staff, office), that foreign enterprise has pay︍ tax in Georgia aka. 15% corporate tax. Why do you guys mention 20% tax here?︎
+When That foreign enterprise issue dividends to you from abroad, normally foreign dividend are tax️ free in Georgia only if you are truly passive shareholder but in this case when you are owner of it / performing service to be sold by that company while you are located in Georgia soil, then the dividend is considered as "Other income" by Georgian tax authority and will be taxed as 20% personal income tax in Georgia? I do not understand why you said dividend tax is 5% , afaik that 5% is applied to local company incorporated in Georgia only not offshore company
Here is number from https://expathub.ge/,
Georgia LLC: 15% corporate tax & 5% dividend tax
Georgia Virtual Zone Company:︀ 0% Corporate tax, 5% dividend tax, 0% VAT, 20% salary tax
Georgia International Company Status:︁ 5% Profit Tax, 0% dividends, 5% salary tax
+So overall with this setup: Georgia charges︂ CIT 15% + Dividend tax 20%. What is the point of this, no tax saving︃ benefit? Would it be easier to just choose the the route of Georgia Small Business︄ Status for Individual Entrepreneur with 1% tax, sending big invoice to your offshore company as︅ a Georgia-based individual entrepreneur and keep your Georgia turnover less than 165k USD/year. That offshore︆ company with no local susbstance also taxed 15% corporate tax by Georgia but we keep︇ its profit to minimal by invoicing its big invoice from Georgia.
+If you manage a︊ foreign enterprise (any legal business entity) remotely (from which jurisdiction does not matter) from within︋ Georgia territory while you are a tax resident in Georgia AND you do not have︌ economic substance in the foreign country (no local staff, office), that foreign enterprise has pay︍ tax in Georgia aka. 15% corporate tax. Why do you guys mention 20% tax here?︎
+When That foreign enterprise issue dividends to you from abroad, normally foreign dividend are tax️ free in Georgia only if you are truly passive shareholder but in this case when you are owner of it / performing service to be sold by that company while you are located in Georgia soil, then the dividend is considered as "Other income" by Georgian tax authority and will be taxed as 20% personal income tax in Georgia? I do not understand why you said dividend tax is 5% , afaik that 5% is applied to local company incorporated in Georgia only not offshore company
Here is number from https://expathub.ge/,
Georgia LLC: 15% corporate tax & 5% dividend tax
Georgia Virtual Zone Company:︀ 0% Corporate tax, 5% dividend tax, 0% VAT, 20% salary tax
Georgia International Company Status:︁ 5% Profit Tax, 0% dividends, 5% salary tax
+So overall with this setup: Georgia charges︂ CIT 15% + Dividend tax 20%. What is the point of this, no tax saving︃ benefit? Would it be easier to just choose the the route of Georgia Small Business︄ Status for Individual Entrepreneur with 1% tax, sending big invoice to your offshore company as︅ a Georgia-based individual entrepreneur and keep your Georgia turnover less than 165k USD/year. That offshore︆ company with no local susbstance also taxed 15% corporate tax by Georgia but we keep︇ its profit to minimal by invoicing its big invoice from Georgia.
I live︅ in Tbilisi. I have read the expathub.ge articles as well, but every time I ask︆ a fellow entrepreneur, they say Georgia doesn't tax foreign income/entities (which technically is wrong, I︇ know). I personally know owners of US LLCs who haven't paid taxes for 5 years︈ of more in Georgia without any issues.
For the people living in Georgia, do you︉ or know any one who actually pays taxes on their US LLCs in Georgia? I︊ think most people file their 5472s and 1120s and call it a day.
For the people living in Georgia, do you︉ or know any one who actually pays taxes on their US LLCs in Georgia? I︊ think most people file their 5472s and 1120s and call it a day.
Those owners of US LLC you know, do they just︀ register with Georgia Small Business Status for Individual Entrepreneur and keep their Georgia sole trader︁ income less than 165k to get 1% tax, correct? In fact, cost of living there︂ is low so not really need to declare as high a turnover as 165k on︃ Georgia paper at all I guess. And most of their real money is kept in︄ their US LLC biz account in brick and mortar USA bank (maybe not EMI like︅ Mercury)?
The ones I know haven't registered with Georgia at all. They don't file taxes︀ in Georgia. In their mandatory US filing of 5472s and 1120s, they do claim that︁ they manage the entities from Georgia. For immigration, they use their Canadian/UK passports and get︂ 360 days/year visa free access to Georgia.
I know that even Georgians skim on their︃ taxes, a lot. Like nobody pays the 5% income tax on rental income. I know︄ a lady who managers 25 properties and pays nada in taxes. But I would love︅ to hear from more expats who might have contradicting information. Has anyone ever gotten in︆ trouble over their taxes from foreign income?
I know that even Georgians skim on their︃ taxes, a lot. Like nobody pays the 5% income tax on rental income. I know︄ a lady who managers 25 properties and pays nada in taxes. But I would love︅ to hear from more expats who might have contradicting information. Has anyone ever gotten in︆ trouble over their taxes from foreign income?
That's interesting to know︁ how the situation is handled there in reality...could be quite different from written law...
I think maybe they use this treaty, it says these citizens can spend 1 year in︂ Georgia w/o visa...but I guess as longer stay than 1 year they probably have to︃ register (tax) residency or as natural person there unless they travel around different places frequently...︄
https://migration.commission.ge/index.php?article_id=160&clang=1If they do register then their income would be taxed either 1% or 20%︅ I think, as US LLC is pass-through entity and taxed as local income...but US does︆ not join CRS or report to Georgia they can get away easily with not revealing︇ their US LLC. I have same kind of setup so for this I understand.
Is international/Cross border banking transaction there as bad as people complain about it here? I guess︈ your friend must USD swift wire from US LLC bank account to the their Georgian︉ bank frequently...
I think maybe they use this treaty, it says these citizens can spend 1 year in︂ Georgia w/o visa...but I guess as longer stay than 1 year they probably have to︃ register (tax) residency or as natural person there unless they travel around different places frequently...︄
https://migration.commission.ge/index.php?article_id=160&clang=1If they do register then their income would be taxed either 1% or 20%︅ I think, as US LLC is pass-through entity and taxed as local income...but US does︆ not join CRS or report to Georgia they can get away easily with not revealing︇ their US LLC. I have same kind of setup so for this I understand.
Is international/Cross border banking transaction there as bad as people complain about it here? I guess︈ your friend must USD swift wire from US LLC bank account to the their Georgian︉ bank frequently...
Personal acc are not really restrictive in any currency if the amount is on the lower side.
USD coming from x to Georgia is fine too.
The issue most people refer to is with corp accs.
USD coming from x to Georgia is fine too.
The issue most people refer to is with corp accs.
If you go by the law, you could trigger tax residency (and hence taxes on global income) even without staying for 183 days in Georgia. Permanent Establishment would get triggered if you make any business decisions/manage operations from within Georgia. The point I was trying to make is that Georgia doesn't seem to care, or have resources to enforce any of this. Most the expats here are not super wealthy, they are more like English teachers who earn money online or run some dropshipping/shopify businesses. I think if︀ Georgia got too strict with them, they would just pack up and leave. Expats who︁ are in Georgia on the 360 day entry permits, just make a visa-run to a︂ neighboring country to renew and get another 360 day access.
Again, if︇ you go by the law, all the income of that LLC would be taxable as︈ personal income in Georgia. This isn't enforced or pursued by the authorities to the best︉ of my knowledge. Kinda like Thailand..they need the expats here otherwise their economy would lose︊ momentum.
Agreed. When I︌ opened my account at TBC, they gave me GEL, EUR and USD accounts at the︍ same time. When I wire money from US to Georgia, when the amount was over︎ 100k, they asked me for some details about the source of funds. I just make️ it a point to only transfer money from my personal foreign account to my personal account in Georgia. So source of funds would be "savings for personal expenses". All my future wires have gone thru without any issues.
From my early research, which is a few years old now, it's a pain to operate a Georgian entity. Tons of reporting and laws. I just decided not to dabble into that early on.
Again, if︇ you go by the law, all the income of that LLC would be taxable as︈ personal income in Georgia. This isn't enforced or pursued by the authorities to the best︉ of my knowledge. Kinda like Thailand..they need the expats here otherwise their economy would lose︊ momentum.
Agreed. When I︌ opened my account at TBC, they gave me GEL, EUR and USD accounts at the︍ same time. When I wire money from US to Georgia, when the amount was over︎ 100k, they asked me for some details about the source of funds. I just make️ it a point to only transfer money from my personal foreign account to my personal account in Georgia. So source of funds would be "savings for personal expenses". All my future wires have gone thru without any issues.
From my early research, which is a few years old now, it's a pain to operate a Georgian entity. Tons of reporting and laws. I just decided not to dabble into that early on.
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