Living in Georgia but want to operate through non Georgian company - possible?

[georgianboy]

Hello,

I live in the country of Georgia.
They have here great tax benefits for sole trader / individual entrepreneur, but not so much for companies. Also, privacy sucks, and there is no legal protection like an LLC have.

Is there some way for me to do all my work through some company ill form outside Georgia for legal and privacy protection.
This way
Everything will be under the company name and I'll just get dividends or salary (whatever that is more tax beneficial) as an individual or individual entrepreneur and pay tax only on that?

1. Is such company will be considered Georgian company because the management of it and the work is done through Georgia?

2. Is it even legal to do this?

3. If it's doable, what are comfortable jurisdictions to do it without increasing my tax burden due to corporate tax of such company?

P.S
I'm not interested in U.S LLC because I'm not interested to get ITIN or provide and info to u.g goverment.

And, also not Emirates, because it's just too expensive to open and maintain.

Thanks for the help in advance.

 

[Don]

Hello,

I live in the country of Georgia.
They have here great tax benefits for sole trader / individual entrepreneur, but not so much for companies. Also, privacy sucks, and there is no legal protection like an LLC have.

Is there some way for me to do all my work through some company ill form outside Georgia for legal and privacy protection.
This way
Everything will be under the company name and I'll just get dividends or salary (whatever that is more tax beneficial) as an individual or individual entrepreneur and pay tax only on that?

1. Is such company will be considered Georgian company because the management of it and the work is done through Georgia?

2. Is it even legal to do this?

3. If it's doable, what are comfortable jurisdictions to do it without increasing my tax burden due to corporate tax of such company?

P.S
I'm not interested in U.S LLC because I'm not interested to get ITIN or provide and info to u.g goverment.

And, also not Emirates, because it's just too expensive to open and maintain.

Thanks for the help in advance.

Whats your budget, turnover, activities?

 

[georgianboy]

budget for what exactly?
I'm looking for simple to maintain solution is such exist.
Turnover 200-250k /y
Marketing online

 

[Don]

budget for what exactly?
I'm looking for simple to maintain solution is such exist.
Turnover 200-250k /y
Marketing online

Budget for maintaining the structure with minimum substance is what I meant. If uae is too expensive, tell us what will be the workable budget then?

 

[georgianboy]

ן

Budget for maintaining the structure with minimum substance is what I meant. If uae is too expensive, tell us what will be the workable budget then?

I don't know what solutions there might be, that's what I'm asking. I was hoping that just forming a company in some jurisdiction will be sufficient. By knowing what options are there, their complexity and their costs I'll know if it's worth the hassle.

 

[Don]

ן

I don't know what solutions there might be, that's what I'm asking. I was hoping that just forming a company in some jurisdiction will be sufficient. By knowing what options are there, their complexity and their costs I'll know if it's worth the hassle.

If you earn your income as a result of performing any sort of activities while you’re located within the territory of Georgia, it is almost always considered Georgian-sourced, not foreign-sourced, and unless a separate business structure is in place, and subject to a 20% Personal Income Tax rate.

Passive income originating from abroad (royalties, dividends, etc.) is generally tax-free, but note that in the case of dividends originating from a foreign company that is owned or managed by you while you are physically in Georgia, Permanent Establishment rules may kick in, making the income subject to Corporate Income Tax & Dividend Tax in Georgia.

That being said if you establish enough substance abroad you could achieve some tax savings.

 

[georgianboy]

If you earn your income as a result of performing any sort of activities while you’re located within the territory of Georgia, it is almost always considered Georgian-sourced, not foreign-sourced, and unless a separate business structure is in place, and subject to a 20% Personal Income Tax rate.

Passive income originating from abroad (royalties, dividends, etc.) is generally tax-free, but note that in the case of dividends originating from a foreign company that is owned or managed by you while you are physically in Georgia, Permanent Establishment rules may kick in, making the income subject to Corporate Income Tax & Dividend Tax in Georgia.

That being said if you establish enough substance abroad you could achieve some tax savings.

But what are the permanent establishment rules in Georgia?

If I'm a Georgian resident individual entrepreneur that manage or a director in the foreign company and I get dividends, how much tax will I need to pay? Will it be As a Georgian company (20% corporate tax) or as the individual entrepreneur : 1-3% ?

I'm not trying to avoid paying taxes, I'm trying to minimize them while protecting my privacy and liability.

 

[Marzio]

Before looking offshore did you know that you coukd achieve 5% tax with an IC or with a VZP?

 

[georgianboy]

Before looking offshore did you know that you coukd achieve 5% tax with an IC or with a VZP?

My business is not accepted for that.

 

[Marzio]

My business is not accepted for that.

Then you have zero options to pay less than 20% tax unless you move or create substance in a country with a DTT with Georgia. For example by forming a Romanian company you could pay 3% up tp 500K EUR but you need to hire somebody there.

 

[georgianboy]

Then you have zero options to pay less than 20% tax unless you move or create substance in a country with a DTT with Georgia. For example by forming a Romanian company you could pay 3% up tp 500K EUR but you need to hire somebody there.

any idea where I read about PM laws for resident holding foreign company?

 

[Marzio]

I don't know what PM laws for resident holding foreign company are

 

[backpacker]

If I'm a Georgian resident individual entrepreneur that manage or a director in the foreign company and I get dividends, how much tax will I need to pay?

20%

Then you have zero options to pay less than 20% tax

Why?
Nobody hinders him to incorporate a normal (onshore) corp under standard rules. CIT is only 15%.
He can then take advantage of the so-called "Estonian tax model" offered by GE, if it suits him.

 

[Marzio]

Why?

Because either if he takes out salary or dividends he will end up paying 20% tax

 

[backpacker]

For example by forming a Romanian company you could pay 3% up tp 500K EUR but you need to hire somebody there.

This will not give him any advantage if he still manages/controls/coordinates the company from Georgia or this company is owned by him (>25% stake) and he wants to cash in dividends.

Because either if he takes out salary or dividends he will end up paying 20% tax

Salary or dividends = Yes.

Capital gains = No
Accumulate the value, then sell. You end up with a much lower tax bill. That's the idea of the Estonian Tax model.
Of course, it only works if someone does not rely on this company as the only source of income (which would anyway destroy most alternative tax options).

 

[Marzio]

This will not give him any advantage if he still manages/controls/coordinates the company from Georgia or this company is owned by him (>25% stake) and he wants to cash in dividends.

I said "you need to hire somebody there" so by paying a minimal wage to a director he will not be seen as the one managing the company from Georgia. 3% CIT in RO + 5% dividends income in Georgia = 8% total tax

Of course, it only works if someone does not rely on this company as the only source of income

Which is exctly his case.

 

[backpacker]

I said "you need to hire somebody there" so by paying a minimal wage to a director he will not be seen as the one managing the company from Georgia. 3% CIT in RO + 5% dividends income in Georgia = 8% total tax

You said that.
And the last part of my sentence (you cited it) says ->

or this company is owned by him (>25% stake) and he wants to cash in dividends.

The taxman learned a lot during the last couple of years: A simple director is useless - ownership is key.

 

[Marzio]

A simple director is useless - ownership is key

A nominee director is useless, a fairly priced director + rent office space could be enough.

 

[Jerry1911]

Guys do you really think a country such as Georgia has the means to enforce place of effective management on some Western expat living there?

 

[TheCryptoAnt]

Guys do you really think a country such as Georgia has the means to enforce place of effective management on some Western expat living there?

Clearly not but people in this forum like to masturbate to the idea of hypothetical tax chaos situations.