Defining Non-Residence and Its Criteria
Non-resident taxation in Georgia begins with the determination of status. Under Article 34 of the Tax Code a physical person is considered 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 period of 12 calendar months ending in that tax year. The same article provides that time spent abroad specifically for medical treatment, vacation, business travel or study counts as time actually present, and a day is counted as a day of presence regardless of its duration.
The exclusions are also defined: the time of presence does not include periods when the person was in Georgia with diplomatic or consular status, as an employee of an international organization, in transit from one foreign country to another, or for medical treatment and vacation. The status is determined for each tax period separately, and days for which the person was already counted as a resident in the previous period are not considered again. The law also contemplates granting residency to persons endowed with significant property and to foreign citizens, under a procedure determined by the Minister of Finance.
Permanent Establishment and Its Boundaries
Article 29 treats as a permanent establishment a defined place through which a foreign enterprise or a non-resident physical person carries on economic activity in Georgia in whole or in part. It is equated with a construction site, an assembly or installation object, rigs and ships used for the exploration of natural resources, the fixed base of a non-resident physical person, and also the place of management, a branch, a representation, a division, a bureau, an office, an agency, a workshop, a mine and other subdivisions. The management rule is particularly important: the management of a foreign enterprise by another person in its name for more than 3 months constitutes a permanent establishment.
The negative list is equally detailed: the activity of an independent intermediary, agent or broker does not create a permanent establishment under defined conditions; mere ownership, mere secondment of employees and mere control likewise do not. Nor is an establishment treated as permanent if it is used only for the storage or display of goods, for keeping stock for processing by another person, for the purchase of goods or collection of information, for preparatory or auxiliary activities, or for the preparation or signing of contracts.