Georgia is a small country in the Caucasus region. It runs a very accessible residency program and has a de facto territorial taxation system for personal income. It also is one of the easiest places in which to acquire a second passport. This guide covers how to acquire residency using the work residence permit, how taxation and banking works in Georgia.
Residency options
Georgia is a country often overlooked, unknown even. If you tell someone that you live there, chances are the next thing you will be asked is if you live near Atlanta. That is a shame because it is a country that has much to offer, especially to those living a location independent lifestyle. For one, foreign-sourced income is generally exempt from local taxation. It is also incredibly easy to apply for residency and citizenship. While the Georgian passport is not top tier for visa-free travel, it can still offer interesting assets protection opportunities. Speaking of which, it normally takes five years to become eligible for citizenship and a passport but thanks to a clause in the constitution (Paragraph 2 of Article 12), citizenship can be granted as an exception to a foreign citizen who “has a special merit before Georgia or when granting Georgian citizenship to him/her is in State interests”. In practice, this means that you could become a citizen without having to wait five years if you can convince the government (or someone in it) that they can somehow benefit from it.
The residency program that is of interest to us is the “Work residence permit”. It is issued to those who are relocating to manage a local company. To apply, you will need to gather the following documents:
1. Copies of your passport
2. Duly filled application form
3. Copy of a document certifying the legality of your stay in Georgia (immigration visa D1/D2)
4. Payment receipt for the state duty tax
5. Photo 3×4 in size
6. Document certifying employment and entrepreneurial activity (labor contract or any other document certifying the employment). “if this document does not evidence the legal income of a foreigner, the income may be the amount on the bank account of a foreigner provided it is not less than twice the amount of average consumer living subsistence applicable in Georgia per month over the duration of residence permit”
7. Local personal bank account with a deposit of at least 3000 USD equivalent
The fee varies depending on how quickly you want an answer. I recommend going for the ten days option, it only costs 410 GEL. It is important to note that before getting started with the residency application, you will need to register a local company and open a bank account for that company.
The application process is fairly straightforward, you simply have to show up will all your documents at the local Public Service Hall. Once you have been approved, you will need to apply for a resident ID card, this is also done at the Public Service Hall. The fee to get the ID card on the same day is 65 GEL. You can find the nearest Public Service Hall here.
In most cases, the resident permit will be valid for one year. It can be renewed five times for a total of six years at which point you become eligible for permanent residency.
Taxation
Georgia is a de facto territorial taxation country for personal income. As such, residents and non-residents alike are only subject to taxation on their locally-sourced income. In practice, this means that it is possible to live in Georgia tax-free provided that best practice guidelines are followed and that a proper structure is in place. I have written a guide that covers what foreign sourced income means, you can read it here.
Compliance
A tax resident of Georgia is someone who is either present in Georgia for 183 or more cumulative days in any period of 12 consecutive calendar months ending in the subject tax year or a citizen of Georgia who applied to the GTA for residency status and whose application was approved. The income tax rate is a flat 20%. Foreign-sourced income is generally exempt from taxation at the personal level. All tax residents must file an annual return by the first of April (for the previous tax year). This can be done online using the E-services platform. Interestingly, those earning an income above a certain threshold are exempt from the 183 days rule. This means that in some cases, it is possible to qualify as a Georgian tax resident without having to physicially spend much time in the country annually.
Powerful tax strategies
You can find powerful tax strategies in The Freedom Surfer course, especially in module two and three.
Banking
Georgian banks are certainly not a suitable option for day to day banking. They are very much frontier banks, with all the pros and cons that comes with the status (mostly cons). They do offer interesting products for the adventurous, however, such as very high interest USD term deposits. They are also open to working with non-residents and offshore companies. Bank of Georgia, TBC and Liberty are the most reputable of the local banks. They all offer accounts and products in GEL, USD and in some cases, EUR.
Opening an account
While requirements vary from bank to bank, in most cases they are as follow:
1. Your passport.
2. Your permanent resident ID card (if you are a resident).
3. A proof of origin for the funds you are depositing with the bank.
Once you have prepared all due diligence documents, you will need to book an appointment with a bank officer who speaks English. At the appointment, you will be asked to present your due diligence documents along with the account opening deposit (bring it in cash, this will make things easier). During the appointment, do not forget to request access to the bank’s online banking facility.
International transfers
Transferring money into Georgia has become easier in recent years thanks to the rise of services like Wise and Revolut. Their rates usually beat the banks’ and they are far more secure than carrying large sums of cash. Speaking of which, you are allowed to bring as much as you want across the border but must declare any amounts in excess of 10000 USD (or equivalent).