Georgian crypto taxation for CRS nationals

[Gamblord]

Anyone know what the tax deal is here for foreigners of CRS countries that want to sell crypto for USD on exchange then move it to Georgian bank account?

There's a lot of conflicting info. There's no capital gains tax in Georgia so crypto shouldn't be taxed. Also this income is made outside Georgia so it shouldn't be taxed. Since Georgia does not follow the CRS it will not report foreigner's gains to CRS country. Does the foreigner pay Georgian tax even though he barely lives in country and not a resident? Does the foreigner need to become a tax resident to get all these perks?


Some conflicting background:

Territorial taxation
Income earned in other countries is tax-free, even when introduced into the country. Only domestic income is taxed. Often involves a minimum tax-exempt allowance. No contributions to social security on income earned abroad.

Individual taxation in Georgia
Residents of Georgia are taxed on their worldwide income, whereas foreigners have to pay tax on their income derived from a Georgian source. The flat rate of Georgian personal income tax is 20%. An individual is considered to be a Georgian tax resident if she/he resides in the country for at least 183 days per year. For high net worth individuals, i.e., persons who either hold property valued at more than GEL 3 million (about EUR 1,2 million) or have annual income of more than GEL 200.000 (about EUR 80.000), more liberal tax residence rules apply.

According to reports made by Forbes Georgia, Inhabitants of Georgia trading coins to local or foreign fiat currency will not be necessitated to pay the value-added tax. Additionally, private citizens who carry out such transactions will also be spared from income tax. Bitcoin, however, will not become legal tender in the country, as the Georgian Lari will remain the legal tender in Georgia and using cryptocurrencies for payments will not be allowed. But that’s in force for just about any foreign currency as well.

https://www.visionary-finance.com/news/Value-Added-Tax-Has-Been-Talked-About-in-Cryptocurrency-Which

 

[Jonny Cage]

So where's a conflict?

If you are not Georgia tax resident, you don't pay taxes in Georgia.
If you are tax resident of Georgia you still don't pay taxes on your foreign income. And income from trading cryptos is considered as foreign income.

The Forbs info is about Georgian resident trading between each other. I guess they will be exempt from VAT.
In any other case all the info is for individuals holding Georgian residency. if you are not resident, nobody will tax you there.

 

[Gamblord]

So where's a conflict?

If you are not Georgia tax resident, you don't pay taxes in Georgia.
If you are tax resident of Georgia you still don't pay taxes on your foreign income. And income from trading cryptos is considered as foreign income.

The Forbs info is about Georgian resident trading between each other. I guess they will be exempt from VAT.
In any other case all the info is for individuals holding Georgian residency. if you are not resident, nobody will tax you there.

My understanding is that a foreigner that goes to Georgia and pull fiat into a bank is not technically a tax resident because he doesn't stay for 182 days but also isn't reported to his CRS country because Georgia is non-CRS, for the moment. It creates a situation where the foreigner is still a tax resident in CRS country but they never find out about it. Ideally it is best to become a tax resident of Georgia to be completely in the clear, although this is getting more expensive and difficult.

 

[OTR365]

Does the foreigner pay Georgian tax even though he barely lives in country and not a resident?

No taxes.

Your problem is not Georgian taxes on your foreign income, but whether Georgian banks let you bring in your sweet crypto money. My hunch is, things are becoming more difficult. Sooner or later people need to show some substance, i.e. a connection to Georgia. Thus, becoming a tax resident in Georgia might be a desireable option. I am thinking about this as well.

A place like Andorra could be a better long-term choice, though.

 

[Gamblord]

No taxes.

Your problem is not Georgian taxes on your foreign income, but whether Georgian banks let you bring in your sweet crypto money. My hunch is, things are becoming more difficult. Sooner or later people need to show some substance, i.e. a connection to Georgia. Thus, becoming a tax resident in Georgia might be a desireable option. I am thinking about this as well.

A place like Andorra could be a better long-term choice, though.

Thanks for reply. There's really nobody talking about this (openly at the moment).

I've been in crypto since 2017 and everybody's solution is just to move to country X where there is no crypto tax without taking into account of CRS/FACTA.

I'm sure one of two big banks are ok with USD being sent to them from money processors abroad and one can always test the waters before sending large amounts.

 

[Gamblord]

100k USD investment seems too expensive for me. For 50k more you get citizenship in St. kitts and Nevis and passport all within 90 days. I guess it all depends on what happens in the crypto market. A person that makes 3+ million won't care about dropping 150k for something that let's you have no tax for life. Not sure if I want to live in these places for 6months each year though

 

[OTR365]

I've been in crypto since 2017 and everybody's solution is just to move to country X where there is no crypto tax without taking into account of CRS/FACTA.

There are lots of crypto-sinners who forgot to pay the punitive taxes of their home countries. Their best alternative is to become a tax resident in a non-CRS country that does not tax crypto, let the years go by and hope for the best. U.S. citizens in this situation are damned whichever way they choose (Because of their tax laws and omnipotent IRS). Euros have some hope of a salvation, even a lot of hope.

Georgian tax residency can be gotten in many ways. Not all require a sizable investment. Living in Georgia is not for everyone, so I'm mainly looking for the HNWI option which allows people to eat khachapuri only now and then, not all the time.

 

[Gamblord]

5:27

I thought you were kidding but it seems like banks in Georgia tightening against crypto gains. I thought the difficult part was going to be getting secondary ID to pull fiat off exchanges.