I've spun this out from Offshore Company Managed by a Perpetual Traveller as there are some Georgia residence elements to the discussion.
With Georgia slowly integrating with the EU, I'd be worried about "profit shifting". People hire expensive tax auditors to help with this.
See discussions about Estonia company with Cyprus PE. You manage the business from Cyprus, pay 12.5% Cyprus tax and Estonia doesn't tax the Cyprus PE. But Georgia isn't in the EU and doesn't tax the non-Georgia source income managed from Georgia, so it looks like Estonia would tax it. Only at 20% on distributed profits, which is not a bad deal if you plan on compounding profits for a few years.
Pay no corp tax and 5% dividend tax for foreign persons to use your software trading services, trade with no company and pay 0% tax (with some limitation as to which exchanges will allow a Georgian resident) or trade via an offshore company as a Georgian PE. I assume the latter has no Georgian taxes but you would need to find a jurisdiction that has good access to exchanges for trading (so not UAE or Belize) with no or low taxes (not US or EU) or that doesn't tax activity managed by the Georgian managed PE.
Given that Estonia taxes PE's outside the EU that don't pay tax in the PE country, I'm wondering how it works if you have a Georgian Branch of a Hong Kong or Singapore company? You don't have customers in Georgia. You don't provide services from Georgia. You manage a crypto business from inside Georgia. Why bother with the offshore company, given that if you trade in Georgia without a company it seems to be tax free? Because you have the flexibility to move physically around friendly jurisdictions. But where do you bank (country country, PE country, third country?) and what proof of address do you use for KYC/AML?
Another idea that is mentioned from time to time is a transparent partnership (e.g. England LLP, Scotland SLP or Ireland LLP). If I read the Georgian tax code correctly, a Georgian natural person managing an offshore LLP doesn't create a tax burden for the natural person or the partnership because the partnership is tax transparent and there's no Georgian source income. What address do you use for KYC/AML on exchanges (the Georgian branch, the offshore parent company, the managing partner)?
- Residence of offshore company
- "Place of business"; e.g. country of registration or legal address listed in the charter
- Place of management
- Where managerial functions are conducted
- If the "manager does not directly manage the enterprise" then use place of business
- ( it looks like they use "place of business" for a partnership, which could be interesting for a transparent LP or LLP or SLP etc )
- Source of income
- Geogian customer of a service. Georgian service provider. Goods provided to someone in Georgia. etc.
BEPS!
With Georgia slowly integrating with the EU, I'd be worried about "profit shifting". People hire expensive tax auditors to help with this.In the tax code, Georgia sees the PE based on its management even if there is no local source income. If there's no local source income then the PE isn't taxed in Georgia, which could be an advantage. I would think that if you're worried about a Georgian PE then your aim might be to have the PE in Georgia, rather than avoid having it.
See discussions about Estonia company with Cyprus PE. You manage the business from Cyprus, pay 12.5% Cyprus tax and Estonia doesn't tax the Cyprus PE. But Georgia isn't in the EU and doesn't tax the non-Georgia source income managed from Georgia, so it looks like Estonia would tax it. Only at 20% on distributed profits, which is not a bad deal if you plan on compounding profits for a few years.
That's for providing services (e.g. you license your trading software to people who trade coins), not for the actual trading (which looks to be tax free for natural persons based on ruling 201). This is the distinction that I'm considering personally.
Pay no corp tax and 5% dividend tax for foreign persons to use your software trading services, trade with no company and pay 0% tax (with some limitation as to which exchanges will allow a Georgian resident) or trade via an offshore company as a Georgian PE. I assume the latter has no Georgian taxes but you would need to find a jurisdiction that has good access to exchanges for trading (so not UAE or Belize) with no or low taxes (not US or EU) or that doesn't tax activity managed by the Georgian managed PE.
Given that Estonia taxes PE's outside the EU that don't pay tax in the PE country, I'm wondering how it works if you have a Georgian Branch of a Hong Kong or Singapore company? You don't have customers in Georgia. You don't provide services from Georgia. You manage a crypto business from inside Georgia. Why bother with the offshore company, given that if you trade in Georgia without a company it seems to be tax free? Because you have the flexibility to move physically around friendly jurisdictions. But where do you bank (country country, PE country, third country?) and what proof of address do you use for KYC/AML?
Another idea that is mentioned from time to time is a transparent partnership (e.g. England LLP, Scotland SLP or Ireland LLP). If I read the Georgian tax code correctly, a Georgian natural person managing an offshore LLP doesn't create a tax burden for the natural person or the partnership because the partnership is tax transparent and there's no Georgian source income. What address do you use for KYC/AML on exchanges (the Georgian branch, the offshore parent company, the managing partner)?
My understanding is that it's cheaper and easier to get an advance tax ruling in Georgia than in most places. So pick an answer you like, then see if the tax authorities agree to it. If they do, then you have a 3 year guarantee that can't be overruled by future retrospective legislation. I'd keep a copy by the bed to ensure restful sleep each night.
they are using a weak SSL certificate, not the best for a insurance company.
