Tax Treaty Application is a practical and procedural service ensuring the realization of rights provided by Double Taxation Avoidance Treaties (DTTs). Many taxpayers mistakenly believe that the existence of a treaty automatically implies receiving benefits. In reality, Georgian tax legislation imposes strict administrative requirements, non-compliance with which leads to the cancellation of benefits and penalties. This service focuses on fulfilling these exact requirements: filling out forms, validating residency certificates, adhering to deadlines, and communicating with the tax authority. This is particularly important for non-residents receiving income from Georgia (dividends, royalties, interest) who wish to benefit from reduced Withholding Tax (WHT), as well as for Georgian residents who want to credit tax paid abroad.
The service includes specific administrative and legal steps:
- Communication with Tax Agent: Preparing necessary documentation for the payer of income (agent) so they do not withhold tax or withhold it at a reduced rate.
- Administration of Residency Certificates: Obtaining a Tax Residency Certificate from a foreign tax authority, its apostille/legalization, and notarized translation into Georgian.
- Preparing Refund Claims: Preparing and submitting a claim to the Revenue Service for the refund of tax already withheld.
- LOB (Limitation on Benefits) Test: Checking if the person meets the requirements of the "Limitation on Benefits" article of the treaty (to avoid Treaty Shopping).
- Beneficial Owner Confirmation: Collecting evidence that the recipient of the income is its beneficial owner and not an intermediary.
- Representation in Tax Disputes: Appealing in case the tax authority denies the application of the treaty.
In practice, this service is used daily. For example, a Georgian bank pays interest to a foreign financial institution; the bank needs a valid residency certificate to avoid taxing the payment at 5%. If the certificate is not presented or is expired, the bank is obliged to withhold the tax. Another example is a foreign company selling shares in a Georgian company to another non-resident; it needs confirmation that the Georgia-Country treaty exempts capital gains from taxation in Georgia. Also, a Georgian consultant who provided services to an Italian company requests a certificate from Italy to avoid paying tax there.
The legal basis is the Tax Code of Georgia and specific bilateral treaties. The procedural part is regulated by the Order of the Minister of Finance of Georgia No. 996 "On Tax Administration." This order details what form of document (hard copy or electronic) is acceptable, within what timeframes it must be issued (usually for a specific tax year), and when an apostille is required. Recently, special attention has been paid to the "Beneficial Owner" concept, based on OECD commentaries.
The process begins with a document audit. The specialist checks the correctness of the foreign certificate (date, name, signature of the authorized body). If the document is incorrect, a new one is requested. Then the document is presented to the tax agent (before payment) or the tax authority (for refund after payment). The specialist fills out the relevant forms on the electronic portal (RS.ge) and monitors the process until the final result is obtained.
Legal.ge connects you with professionals who know the bureaucratic details. Tax treaty application requires precision — one incorrect date or signature can be grounds for denying benefits. Experts on our platform ensure that your documentation is in perfect order and that you enjoy all the rights you are entitled to under international law.
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