Expat tax planning in Georgia rests on four questions: who counts as a resident and how days are counted, how a non-resident's income is taxed at source, which incomes are exempt, and when activity creates a permanent establishment. This page explains these four pillars on the basis of the Georgian Tax Code — the norms that govern every planning decision. We note in advance: the tax regimes of other states — including the United States models or the rules of the Schengen area — are not applicable in Georgia; only the Georgian Code operates here.
The starting point of planning — the residency rule
A natural person is treated as a resident of Georgia for the entire current tax year if he or she is actually present on the territory of Georgia for 183 days or more in any continuous 12-month period ending in that tax year. The day-counting rules matter just as much: time actually present includes time during which the person was in Georgia, as well as time during which the person went abroad specifically for medical treatment, rest, a business trip or study. At the same time, the following do not count as actual presence: time in Georgia under diplomatic or consular status, as an employee of an international organisation, in transit from one foreign country to another, or specifically for medical treatment or rest. A day of presence counts regardless of how long the person stayed that day. The status is determined separately for each tax period, and days counted in a previous period are not reconsidered in the next one.
Taxation of a non-resident's income at source
A non-resident's income from a source in Georgia that is not attributable to a permanent establishment is taxed at source without deductions. The rates are: royalty — 5 percent; amounts paid for international telecommunications and international transport services — 10 percent; income of non-resident sub-contractors in oil and gas operations — 4 percent; other amounts from a Georgian source — 10 percent; certain income of a person registered in a preferential-tax jurisdiction — 15 percent. Dividends and interest are taxed under their own norms, while salary and rental services follow the respective rate rules. Recalculation is an important option: a non-resident may file a declaration by 1 April of the year following the reporting year requesting the recalculation and refund of the withheld tax — in that case income is determined as the difference between aggregate income and deductible amounts.