Taxation of non-residents in Georgia is a complex legal area concerning individuals and legal entities that are not tax residents of Georgia but derive income from a Georgian source. Georgian tax legislation clearly distinguishes between the tax liabilities of residents and non-residents. For non-residents, it is critically important to know which income is considered Georgian-sourced and at what rate it is taxed at the source of payment. In many cases, non-residents are subject to "Withholding Tax" (WHT), meaning the payer of the income (agent) is responsible for paying the tax. However, there are many nuances, including the application of Double Taxation Treaties (DTT), which can significantly reduce or eliminate tax liability. Our platform allows you to find specialists who will help you navigate these complex regulations.
Non-resident taxation services cover a wide range of issues necessary for legal compliance. Key areas include:
- Identification of Georgian Source Income: Analyzing whether specific income (dividends, royalties, interest, service fees) is considered derived from Georgia.
- Withholding Tax (WHT) Administration: Calculating and declaring taxes on dividends (5%), interest (5%), and royalties (5-20%).
- Application of Double Taxation Treaties (DTT): Submitting tax residency certificates and practically implementing treaty benefits (lower rates or exemptions).
- Permanent Establishment (PE) Risk Assessment: Analyzing whether a non-resident's activity in Georgia creates a permanent establishment, which triggers full corporate income tax liability.
- Property Tax for Non-Residents: Calculating and declaring property tax on real estate owned in Georgia.
- Reverse Charge VAT: Issues related to VAT taxation on services provided by non-residents to Georgian purchasers.
In real life, non-resident taxation issues frequently arise. For example, a foreign company owning shares in a Georgian company receives dividends. It needs assistance to apply the DTT and avoid excess taxation. Another example is a foreign individual renting out an apartment in Tbilisi; they are obliged to pay income tax on this rental income, even though they are not a resident. Also common is the case where a foreign IT company provides remote services to a Georgian business, raising questions about the place of service supply and VAT. Another scenario involves a non-resident selling real estate in Georgia, which creates an income tax liability on the capital gain.
The legal framework is based on the Tax Code of Georgia, specifically Article 134 (Taxation of Non-Resident's Income at the Payment Source) and Article 104 (Income Derived from a Source in Georgia). A crucial role is played by International Tax Treaties (on the Avoidance of Double Taxation), which Georgia has signed with over 58 countries. According to the Constitution of Georgia and the Law on International Treaties, these agreements have superior legal force over domestic legislation. Non-residents must also consider Orders of the Minister of Finance on tax administration, which regulate the procedure for submitting residency certificates.
The process begins with a detailed study of the client's status and income type. The specialist determines if the non-resident has signs of a permanent establishment in Georgia. If dealing with passive income (dividends, royalties), the specialist requests a Tax Residency Certificate from the client's country to reduce the tax rate based on the DTT. Then, the tax is calculated, and if necessary, the non-resident is registered for tax purposes (assigned a tax ID) to file a declaration. In the case of real estate sale or lease, the relevant declaration is prepared, and tax payment is organized.
On Legal.ge, you will find specialists who understand the nuances of international tax law. Non-resident taxation requires deep knowledge not only of Georgian legislation but also of international conventions. Lawyers and tax consultants registered on our platform will help you avoid double taxation and ensure the full legality of your transactions. Trust Legal.ge specialists to protect your international business interests in Georgia.
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