Economic relations between the United States and Georgia are growing, attracting the interest of many US expats, investors, and Georgian businesses. However, from a tax perspective, this is one of the most complex areas. US-Georgia tax planning requires specialized knowledge because the United States has a unique tax system (citizenship-based taxation) and there is no modern, comprehensive Double Taxation Treaty between the two countries (the applicability of the old USSR treaty is a subject of legal debate). This creates specific challenges that only qualified lawyers can resolve.
For US citizens living in Georgia, and Georgian companies working with the US market, complying with the laws of both countries (including FATCA requirements) is vital. Legal.ge allows you to find specialists who will help you navigate this labyrinth.
What Does This Service Cover?
The US-Georgia tax planning service focuses on risk management and optimization:
- Tax Credit Management: Since relying on a DTT can be problematic, the focus is on unilateral tax credits (Foreign Tax Credit) and the Foreign Earned Income Exclusion (FEIE).
- Business Structuring: Proper classification of Georgian LLCs for US tax purposes (e.g., "Check-the-box" election) and vice versa.
- FATCA Compliance: Adhering to rules regarding the reporting of bank accounts and financial assets in Georgia and the US.
- Remote Work Taxation: Determining the tax status of individuals (contractors) working from Georgia for US-based companies (e.g., Small Business status).
- Investment Income: Analyzing the taxation of dividends, interest, and capital gains in both jurisdictions.
- Real Estate Taxation: Tax obligations related to the purchase/sale of real estate in Georgia by US citizens.
Common Scenarios
Typical scenarios where this service is essential:
- US Expats in Georgia: A US citizen moves to Tbilisi and continues working for a US company. They need to know how to pay taxes in Georgia and how to report this to the IRS.
- IT Outsourcing: A Georgian company provides software to US clients and needs to complete W-8BEN forms and resolve Withholding Tax issues.
- Investment from the US: A US investor establishes a subsidiary in Georgia and is concerned about GILTI (Global Intangible Low-Taxed Income) tax implications.
- Dual Citizenship: An individual holds passports from both countries and needs a full tax audit for both jurisdictions.
Georgian Legal Framework
The service relies on the Tax Code of Georgia, which defines residency and the source of taxation. From the Georgian side, US citizens are treated as foreigners or residents (based on the 183-day rule). The Agreement between the Government of Georgia and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA is also crucial, obliging Georgian banks to exchange information.
Regarding the avoidance of double taxation, the old USSR-US treaty (1973) is often discussed, but its status is complex. In practice, lawyers use mechanisms within the Tax Code of Georgia to credit taxes paid abroad and relevant sections of the US Internal Revenue Code (IRC).
Service Process
Working with specialists on Legal.ge involves:
- Status Determination: Assessing the impact of tax residency and citizenship.
- Income Classification: Correctly identifying the source of income (Georgia vs. US).
- Tax Strategy Development: Choosing the optimal method (Credit vs. Exclusion) to reduce tax burden.
- Documentation Preparation: Preparing declarations, W-8BEN forms, and other necessary documents.
Why Choose Legal.ge?
US-Georgia tax relations are a minefield. A wrong step can lead to heavy penalties from the IRS or the Revenue Service of Georgia. Legal.ge gives you access to lawyers who understand both Georgian and American tax principles and will help you navigate safely.
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