Double Tax Treaties in Georgia

Our lawyers assist foreign individuals and companies in understanding how double tax treaties in Georgia apply to their income and business activities.

Quick Facts
What is a treaty for the avoidance of double taxation?	It defines an agreement established between 2 states, that has as the main object the avoidance of taxation of the same income in both states.
What is double taxation?	It refers to the taxation of the income that is obtained by an individual or company, in 2 different states, during the same financial year.
When do tax obligations appear in Georgia for a foreigner?	A person can become liable to taxation in Georgia on Georgian-source income even as a non-resident; he/she becomes a tax resident after spending min. 183 days in any 12-month period in the country.
Taxable income in case of a foreigner	Personal income, corporate income, capital gains
Entities that can be charged for their income in Georgia	All types of entities, such as commercial companies, non-profit organizations, institutions, individuals
Model for the Georgian double tax agreements (DTAs)	Double tax treaties in Georgia are designed based on the OECD model.
Types of income that are subject to DTAs	Double tax treaties in Georgia regulate the taxation of royalties, interest, income from salaries, dividends, immovable property, business, pension, etc.
The definition of a permanent establishment, according to DTAs	A permanent establishment refers to a place for doing business that is set up for a period of at least 6 months, 9 months or 12 months (there are different rules established by each of the double tax treaties in Georgia)
Methods applied for the avoidance of double taxation	Credit method, exemption method
Number of DTAs signed by Georgia (approx.)	58
Taxation principle applicable to dividends	If the dividends are paid by a Georgian company to a foreign company, they may be taxed in the recipient’s country of residence, but Georgia may also withhold tax at the reduced treaty rate (0%-15%).
What are dividends?	They define the income obtained by investors, deriving from the shares they own in a company.
Taxation principle applicable to interest, royalties and capital gains	The same rules as the ones established for dividends.
Place of taxation for pensions	Private pensions: generally in the recipient’s country of residence; government-service pensions: generally in the paying state
Place of taxation for business profits	The country of tax residence

What is a double tax treaty in Georgia?

A double tax treaty (DTT) is an agreement between Georgia and another country that establishes how certain income and taxes are treated when a taxpayer has connections with both states. The main purpose of DTT is to prevent the same income from being taxed twice and to allocate taxing rights between Georgia and the other contracting country.

Georgia’s double tax treaties are based on the OECD Model Tax Convention and may include:

rules concerning tax residency;
business profits;
permanent establishments;
dividends;
interest;
royalties;
other types of cross-border income.

Given the particularity of each agreement, if you need information on a specific treaty, our lawyers in Georgia can provide updated information and its appliance.

What are the taxes covered by Georgia’s double taxation conventions?

Each double taxation treaty signed by Georgia has its own terms and covers the most important taxes paid in Georgia and in the other state.

The following taxes are paid in Georgia and can fall under the provisions of a double tax agreement:

profit tax;
income tax;
property tax.

Depending on the other state signing the agreement, the same taxes, as well as other levies can fall under the provisions of such a treaty.

It should be noted that all Georgian double taxation treaties contain specific provisions related to the fiscal residency of the taxpayer. Foreign citizens and companies are taxed differently if they are residents of Georgia or not.

How many double tax treaties does Georgia have?

There are 58 double tax treaties in force. Georgia has concluded double taxation agreements with countries including: Romania, Germany, France, the United Kingdom, the Netherlands, China, Japan, Singapore and Switzerland.

Our lawyers in Georgia can provide updated information on the list of double tax treaties signed by government until this moment.

Who can benefit from a double tax treaty in Georgia?

Anyone who’s a tax resident of Georgia or of a country that has a DTT with Georgia can benefit from the agreement. That includes both individuals and companies.

Depending on which treaty applies and the type of income, you might get reduced withholding rates, tax credits, exemptions or refunds.

How is a permanent establishment defined under Georgia’s double tax treaties?

The following entities are considered for special tax regulations according to the treaties on double taxation in Georgia:

fixed businesses that can include branches, offices, and/or management places,
factories, workshops, construction sites, and other similar facilities,
gas and oil wells, mines and quarries.

When it comes to Georgia, in order to be deemed as permanent establishments, these must operate on the territory of the country for at least 6 months to fall under the incidence of these agreements.

How are associated enterprises taxed under Georgia’s double tax treaties?

When it comes to associated enterprises, there are two types of entities that enter this category under Georgia’s DTTs.

The first one is an enterprise of a contracting country that has a direct or indirect participation in the management, capital or control of a company registered in the other state.

The second one implies companies that have direct or indirect participation in other entities in both parties in the double tax treaty.

Business profits obtained by companies that do not fall under the scope of permanent establishments will be taxed in the country in which the enterprises operate under the laws of the respective state. However, there are also cases in which an entity can be taxed in both states.

If you need information on the taxation of companies under the double tax treaties signed by Georgia, you can rely on our law firm for detailed information on the legislation in this sense.

What tax reliefs are available under Georgia’s double tax treaties?

Georgia’s double taxation treaties contain special regulations related to the taxation of certain incomes deriving from dividend payments, interests and royalties.

The following reduced tax rates can apply:

in the case of dividend payments, the rates range between 0% and 15%;
interest payments are also imposed with reduced rates which range between 0% and 10%;
royalties are subject to reduced rates ranging between 0% and 10%.

The applicable rate depends of the double tax treaty concluded between Georgia and the respective contracting state.

How does tax residency affect the application of Georgia’s DTTs?

Tax residency is one of the main factors determining whether a person or company can benefit from a double tax treaty signed by Georgia. DTTs generally apply when a tax resident of one contracting state earns income in the other contracting state.

The taxpayer’s residence helps determine which country has the right to tax the income and whether treaty relief may be available.

Non-residents claiming benefits under a Georgian DTT may also need to provide proof of tax residence in the other contracting country, depending on the applicable procedure.

Our lawyers in Georgia can assess the applicable double tax treaty and provide guidance on the documents and conditions that may be required to claim the benefits.

Is a certificate of tax residence required to benefit from a Georgian DTT?

Yes. The certificate must be issues by the competent authority of the country where the income recipient is tax resident.

Under Georgia’s DTT procedure, it must accompany the relevant forms when claiming a reduction or exemption from withholding tax or requesting repayment of tax paid in excess.

If you need information about the existence of a double tax treaty in Georgia, contact our law firm!