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Crypto Tax Planning

Can a foreigner benefit from Georgia's 0% crypto tax without living there?

Yes, but you need to become a tax resident of Georgia. This can be achieved either by spending 183 days in the country or through the "High Net Worth Individual" program, which allows residency without physical presence if you meet specific wealth or income criteria. Once a resident, your foreign-sourced income (which crypto is often considered) is tax-exempt.

Is it better to trade as an individual or register a company?

For most individual traders, operating as a "Small Business" entrepreneur (1% tax on turnover) or an individual (0% if applicable) is more efficient than an LLC. An LLC pays 15% Corporate Tax upon profit distribution. However, an LLC might be necessary if you plan to attract investors, hire employees, or obtain a VASP license.

How does Double Taxation Avoidance (DTA) work for crypto?

If you are a tax resident of Georgia but live in another country (e.g., Germany), you might still be liable for taxes in your home country. Georgia's network of DTA treaties can protect you from paying tax twice, but the specifics depend on how the treaty defines "capital gains" and residency. We analyze your specific dual-residency risks.

What is the "High Net Worth Individual" residency program?

This program grants Georgian tax residency to individuals with proven assets over 3 million GEL (approx. $1.1M) or annual income over 200,000 GEL. It is ideal for crypto investors who want a tax-efficient jurisdiction but do not wish to live in Georgia full-time. It requires a strategic legal application to the Revenue Service.

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Effective management of crypto assets requires not only a good trading strategy but also smart tax planning. Georgia, with its unique tax system, creates ideal conditions for legal tax optimization. Crypto Tax Planning involves organizing business structures and transactions to maximize the benefits allowed by legislation (e.g., "Small Business" status with 1% tax or the 0% regime for individuals). This service is designed for high-net-worth investors, crypto entrepreneurs, and international companies looking to use the Georgian jurisdiction to reduce their global tax burden.

What Does Crypto Tax Planning Service Cover?

This is a strategic service that goes beyond simple reporting and includes:

  • Jurisdictional Structuring: Planning the use of Georgian residency (including the High Net Worth Individual program) for tax optimization.
  • Status Selection: Analysis of whether it is better to operate as an individual (0%), a "Small Business" (1% - for services), or an LLC (15% - on distributed profit).
  • Income Classification: Proper legal packaging of different types of crypto income (trading, staking, yield farming, airdrops) to achieve the best tax regime.
  • International Taxation: Utilizing Double Taxation Avoidance Treaties between Georgia and the investor's other country of residence.
  • Cash-out Strategies: Planning legal and bank-acceptable ways to convert cryptocurrency into fiat.
  • Corporate Structures: Creating holding structures to manage crypto assets.

Common Real-World Scenarios

Tax planning is critical in the following scenarios:

  • When an IT specialist or developer receives payment in cryptocurrency from a foreign company and wants to benefit from the 1% "Small Business" tax.
  • When a foreign investor considers obtaining Georgian tax residency (without physical presence) to tax crypto income at 0%.
  • When creating a crypto fund or investment company and selecting the optimal corporate form.
  • When a person plans to cash out a large amount of cryptocurrency and wants to settle source of funds and tax issues in advance to avoid problems with the bank.
  • When crypto assets are gifted or transferred via inheritance.

Georgian Legislation and Regulations

The planning process relies on the Tax Code of Georgia and its provisions on residency, source of income, and special tax regimes. Specifically, the "Small Business" status (Article 88 of the Tax Code) allows individual entrepreneurs to be taxed at 1% if their income does not exceed 500,000 GEL, although this regime does not apply to all types of activities (e.g., currency exchange), so precise qualification is needed. Also important is the Government of Georgia Ordinance on "Rule for Granting Tax Residency to High Net Worth Individuals", which allows a person to become a resident without the obligation of physical presence days if they meet property or income criteria. This tool is often used by global crypto investors.

Service Process

Crypto tax planning with Legal.ge experts involves:

  1. Initial Audit: Studying the client's current financial situation and goals.
  2. Modeling: Developing different tax scenarios (Individual vs Company vs Small Business) and comparing their financial impact.
  3. Structure Implementation: Registering necessary legal entities, obtaining status (e.g., Small Business), or preparing a residency application.
  4. Documentary Support: Preparing templates for contracts, invoices, and acceptance acts that comply with the chosen tax model.
  5. Ongoing Monitoring: Adjusting the strategy in case of legislative changes.

Why Legal.ge?

Incorrect tax planning can lead to not only financial losses but also legal liability. Legal.ge connects you with professionals who understand both traditional tax law and the specifics of the crypto economy. Specialists on our platform will help you create a legal, sustainable, and effective tax structure in Georgia.

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