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Tax Planning in Georgia

Tax Planning in Georgia

Tax planning in Georgia is a service that is available for both individuals and companies, regardless if they represent resident entities or foreigners. Through this, any person arriving here is informed of the overall tax regime that has to be applied. 

At the same time, tax planning is a way through which one can find various legal options to reduce the overall tax burden, but this is generally not the case in Georgia, as the country applies a simple tax system, with reduced rates. 

Our team of lawyers in Georgia can provide tax planning, which is a component of the tax consultancy services available for foreigners, amongst numerous other types of legal services. 

How can our tax lawyers in Georgia help

Our tax lawyers in Georgia can offer comprehensive assistance with tax planning for businesses and individuals.

Our lawyers are well-versed in Georgia’s tax laws and regulations, as well as international tax treaties and agreements. We can provide valuable insights into complex tax issues and identify opportunities for tax optimization.

Our team will work closely with businesses and individuals to understand their financial situation, goals, and concerns. Based on this information, we can develop customized strategies for tax planning in Georgia.

We can also assist in structuring assets in a tax-efficient manner to maximize returns and minimize tax liabilities. This may involve setting up trusts and implementing strategies for income optimization.

In case of tax disputes and litigation proceedings, our lawyers can represent the client’s best interests before tax authorities, administrative tribunals, and courts.

For international assets or income, our Georgian lawyers can help you navigate the complexities of international tax planning. They can advise on issues such as foreign tax credits, repatriation of funds, and compliance with reporting requirements for offshore accounts.

In matters related to real estate, succession planning strategies can minimize estate taxes, protect assets, and ensure the orderly transfer of wealth to future generations. We can help establish trusts, draft wills, and estate planning documents.

Most importantly, our attorneys in Georgia will ensure that the tax planning strategies comply with applicable laws and regulations.

When is tax planning in Georgia recommended? 

Requesting the services of our team of Georgian lawyers, who advise on tax planning, is recommended especially for foreigners who have a connection of some sort with this country. 

The service is recommended for persons who will relocate here for a limited amount of time for employment purposes, or for those who want to become long-term residents. 

Of course, it is highly recommended to all foreign investors who want to open a company in Georgia, as the corporate tax system is much more complex compared to the one applied to natural persons. 

When we refer to tax planning in Georgia, one must know that the country charges 6 basic taxes1) the corporate income tax, 2) the personal income tax, 3) the property tax, 4) VAT, 5) excise tax and 6) import tax

In the case in which you want to buy a house in Georgia, you will be required to pay a property tax, which is one of the main taxes applicable here. 

The property tax for residential units varies between 0% and 1%, based on the income of the household, while for companies, the property tax is generally charged at a rate of 1%, although lower thresholds can apply (for leasing companies, it is charged at a rate of 0.6%). 

Our tax lawyers in Georgia specialize in tax planning services.

When will tax obligations appear for foreigners in Georgia?

If we refer to natural persons who are foreigners and who come to live in Georgia for a given purpose, tax liabilities can appear after living here for a period of 183 days in a row. 

In the case in which the duration of the stay is longer than this, we advise you to request information on tax planning in Georgia, as you will definitely have various tax obligations

For instance, in the case in which a foreigner will stay here for a minimum of 183 days, the person is required to file a tax declaration by March 31st of the following year. Our tax lawyers in Georgia will ensure compliance with local tax regulations.

It is also important to be aware that once you overstay this number of days in a period of 12 months (calculated from the 1st day of arrival in Georgia), you will have tax obligations

Our law firm in Georgia can present the documents you have to submit and the institutions where such papers have to be sent. 

What are the main Georgian tax rates? 

As said earlier, Georgia has a simple tax system. If you want to have an image on the tax obligations you can have throughout a financial year, we invite you to read the following list: 

  • the personal income tax is charged at the standard rate of 20%, regardless of the level of income (and it is applied only to the income obtained in Georgia);
  • the standard VAT is charged at a rate of 18%;
  • the corporate income tax is applied at a rate of 15%;
  • the tax on the property is charged at a rate of a maximum 1% of from the value of the property
  • the withholding tax charged on interest and dividends obtained from Georgian sources is applied at a rate of 5%. 

Tax planning for ​high net worth individuals in Georgia

Our tax lawyers in Georgia can help high net worth individuals with tax minimization services. A person qualifies as a high net worth individual if he/ she meets either of the following criteria:

  • Possesses a proven wealth of GEL 3,000,000;
  • Has an annual income exceeding GEL 200,000 over the past three years.

The High Net Worth Georgian Tax Residency program offers several benefits that contribute to efficient tax planning in Georgia:

  • Individuals can become tax residents within a short period, typically within a month.
  • They can apply for tax residency remotely with the help of our Georgian lawyers.
  • The tax residency status is available for the entire year.
  • The application must be completed before the end of the desired tax residency year.
  • The program bypasses the standard 183-day physical presence test typically required for tax residency.

Our tax lawyers in Georgia can find suitable and tailored strategies to optimize wealth or asset protection, and tax efficiency. By capitalizing on Georgia’s favorable tax residency regulations and double tax treaties with more than 50 countries, individuals can mitigate tax liabilities on both domestic and international incomes.

Tax planning in Georgia for companies 

Tax planning in Georgia is a crucial method that must be used when developing a business activity, as through this method the investors can observe the taxes due and the current financial situation of the company. 

The purpose of tax planning is to observe the mechanisms through which companies can reduce their level of taxation and this can be achieved with the help of our law firm in Georgia

Statistics about taxes in Georgia

The statistics behind tax revenues in Georgia show how the country manages its finances and services. Some individuals and businesses can navigate these figures for effective strategies regarding tax planning in Georgia. The statistics are presented by the OECD report for the year 2021:

  • 13,550 million Georgian lari accounted for the total tax revenue;
  • 4,791 million Georgian lari came from the taxes on income, profits, and capital gains, from which 3,776 million Georgian lari were the taxes on personal income, profits, and gains;
  • 8,128 million Georgian lari came from the taxes on goods and services.

Aside tax minimization and tax planning services, we can also assist in real estate matters, such as buying a house in Georgia.

The method can analyze the company’s sales, investments, cash-flow or discovering the most advantageous saving methods. For more details on tax planning services, you can rely on our lawyers in Georgia.  We can also put you in touch with our partners in other countries if you need company formation or legal services.