Georgia is known internationally as a crypto-friendly jurisdiction, largely due to its liberal tax policy. Cryptocurrency taxation in Georgia is one of the most frequently discussed topics among investors and traders. It is important to understand that the "0% tax" rule does not apply to every situation or every person. The tax regime differs for individuals and legal entities, as well as by the type of activity (trading, mining, services). Qualified tax advice is essential to correctly classify your income and avoid unforeseen tax liabilities or penalties from the Revenue Service.
What Does Cryptocurrency Taxation Service Cover?
This service covers all aspects related to the taxation of income derived from virtual assets. Specialists offer:
- Status Determination: Analyzing your activity to determine whether you are an individual, an individual entrepreneur, or a legal entity for tax purposes.
- Tax Liability Calculation: Calculating taxes arising from specific transactions (e.g., selling crypto, staking, mining).
- VAT Analysis: Clarifying Value Added Tax issues for crypto services (e.g., exchange, commissions).
- Withholding Tax Issues: Analyzing taxation of payments made to non-residents.
- Tax Audit Support: Dealing with the Revenue Service in case of an audit or desk check.
- Mining Taxation Consulting: Explaining specific regulations regarding cryptocurrency mining.
Common Real-World Scenarios
Cryptocurrency taxation issues most often arise in the following cases:
- When an individual (resident or non-resident) sells cryptocurrency and wonders if they need to pay income tax on the profit.
- When a company receives payments in cryptocurrency for services rendered and needs to reflect this income in accounting and declarations.
- When cryptocurrency mining takes place, and the miner is interested in whether this counts as economic activity and what taxes apply.
- When a person receives a salary or dividends in cryptocurrency from a foreign company.
- When trading NFTs (Non-Fungible Tokens) and generating income.
Georgian Legislation and Regulations
Cryptocurrency taxation in Georgia is regulated by the Tax Code of Georgia. Crucial is the Letter/Clarification No. 201/29062 of the Minister of Finance of Georgia (2019), according to which income received by an individual from the supply of crypto assets is exempt from income tax. This is based on the principle that crypto assets do not constitute a "Georgian source" of income. However, for legal entities, the Corporate Income Tax (so-called Estonian Model) regime applies, where profit is taxed only upon distribution (15%). Also important are the provisions of the Tax Code of Georgia regarding VAT: cryptocurrency exchange operations (to fiat or other crypto) are generally exempt from VAT (analogous to financial operations), but other types of services may be taxed. Mining is usually considered the production of goods and may be subject to taxation.
Service Process
Working with Legal.ge specialists on taxation issues involves:
- Situation Analysis: Determining the client's status (individual/legal entity) and residency.
- Transaction History Review: Reviewing blockchain statements and exchange history.
- Tax Position Development: Preparing a written opinion on which taxes apply to the client in a specific situation.
- Risk Assessment: Identifying potential tax risks (e.g., if an individual's activity qualifies as "organized business").
- Reporting: Preparing and filing tax declarations if necessary.
Why Legal.ge?
Crypto taxation in Georgia is full of nuances that are not explicitly written in the law and are based on practical interpretations. On Legal.ge, you will find tax lawyers and auditors with practical experience working with crypto assets. They will help you take advantage of Georgia's liberal tax environment in full compliance with the law and avoid mistakes that could be costly.
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