Managing Offshore Corporation from Georgia?

[Jea]

My plan is to get temporary/permanent residence in Georgia so I could cash out some crypto profits tax free. I'm currently in the planing stage and I have some questions.

1. Resident and nonresident individuals are taxable only on Georgia-source income (source - page 4, source 2). So I can transfer fiat from a crypto exchange to my personal bank account without having to pay any tax, correct?

2. Companies are considered to be subject to Georgian taxation if their place of management is located in Georgia. Georgian corporate income tax is levied on the worldwide income of resident companies. (source 1, source 2)
This means that if I transfer fiat to the corporate bank account of my offshore company (of which I'm the director) and if I have either temporary or permanent residence in Georgia, I'll have to pay Georgian corporate tax (15% tax only on distributed profits), right?
What if I have residence permit in multiple countries? Would my offshore corporation be then considered a resident in multiple/all of these countries?

What would be the best way to get around this issue? Should I do my crypto withdrawals to my personal account only?
Or should I rather get residence in a country which won't tax my offshore corporation's income sourced from outside of that country? Gan you recommend such countries (easy to get residence permit, territorial taxation of personal income and territorial taxation of my offshore company's income)? Does Panama meet these criteria?

Thanks.

 

[Martin Everson]

Sorry you have lost me here. All you want to do is cash out crypto tax free right by moving to Georgia? So why are you talking about companies and Panama etc etc...lol.

Look once you move to Georgia and any fiat money you earned or exchanged from Crypto to Fiat and hold before your residency started is considered capital and you just bring it in tax free.

If you open a Wealth Management account with i.e Bank of Georgia (minimum 250k GEL) and not to basic account. Then source of wealth can be specified as Crypto Currency. I quote their questionnaire for Crypto Currency due diligence:

"A receipt from the service you bought the bitcoins from (for example, an exchange) and a screenshot from your wallet that shows the transaction from the service to you"

Stick the money on a 6-12 month deposit to be good to the bank or open a brokerage account with them and trade a bit and then after spend the money. btw you only pay personal tax of 5% on dividend and interest income so its not even worth thinking about avoiding that low level of tax.

Your other questions are pointless in me answering if the below is your objective as stated.

My plan is to get temporary/permanent residence in Georgia so I could cash out some crypto profits tax free.

 

[JohnSeed]

As @Martin Everson nicely summed up for you, there is only need for you to move to Georgia and pay your 5% personal income tax there once you start earning fresh money while you are a resident there.

 

[GrumpyMess]

btw you only pay personal tax of 5% on dividend and interest income

Is the crypto cash out definitely classified as a dividends or interest income by the tax office? If yes, 5% seems a fair tax.

All you want to do is cash out crypto tax free right by moving to Georgia? So why are you talking about companies and Panama etc etc...lol.

Because he has an offshore company and as I understand some activity will be conducted during his residence in Georgia.

btw you only pay personal tax of 5% on dividend and interest income so its not even worth thinking about avoiding that low level of tax.

It depends on how he will make the cash out, if like an individual in theory he doesn't have to pay any tax since the profits are not from georgian source, if like a company he afraids his offshore company not to be considered a tax resident company during this year, which I highly doubt.

My plan is to get temporary/permanent residence in Georgia

Do you plan to reside there for a 183 days or to get a residence based on some other ?

 

[JohnSeed]

How would you guys think about the following.

We establish a fully operative company in Georgia, I would setup a real office & find someone that can sit there and do some SEO work or similar for a low monthly pay. The guy will have a landline phone if that is still possible and required, a small kitchen with water and electricity supply and that's it. Now I go to my local tax office and tell them I operate a real Georgia company with office and all that like.

Do you think there is any EU tax office that would- or even has to accept that and won't tax me personal?

 

[Jea]

Sorry you have lost me here. All you want to do is cash out crypto tax free right by moving to Georgia? So why are you talking about companies and Panama etc etc...lol.

To be more specific this is what I was planning to do first (quickly cash out small portion of crypto).
Questions under #2 relate to my future plans. I might want to open an offshore company later for asset protection purposes, for passive investment holding, active online business or for other reason. It looks like Georgia would consider that offshore company a corporate tax resident if I'll be the director with a residence permit in Georgia. And it looks like Panama won't, so I'm trying to find out, if Panama would be a better place for me to get residence.

2. Companies are considered to be subject to Georgian taxation if their place of management is located in Georgia. Georgian corporate income tax is levied on the worldwide income of resident companies. (source 1, source 2)
This means that if I transfer fiat to the corporate bank account of my offshore company (of which I'm the director) and if I have either temporary or permanent residence in Georgia, I'll have to pay Georgian corporate tax (15% tax only on distributed profits), right?
What if I have residence permit in multiple countries? Would my offshore corporation be then considered a resident in multiple/all of these countries?

What would be the best way to get around this issue? Should I do my crypto withdrawals to my personal account only?
Or should I rather get residence in a country which won't tax my offshore corporation's income sourced from outside of that country? Gan you recommend such countries (easy to get residence permit, territorial taxation of personal income and territorial taxation of my offshore company's income)? Does Panama meet these criteria?

btw you only pay personal tax of 5% on dividend and interest income so its not even worth thinking about avoiding that low level of tax.

Isn't there a 15% tax when distributing profits from a Georgian company (or a foreign company managed from Georgia)? Thanks...

 

[Jea]

Do you plan to reside there for a 183 days or to get a residence based on some other ?

So far my plan is:

1. Go to Georgia for 1-2 months, rent some flat in Tbilisi, (possibly get an utility bill in my name for easier bank account opening), open personal Georgian bank account(s), cash out $100-200k from crypto.
2. Then I was planning to get the Short-Term Residence Permit (which comes with a temporary residence ID card) by investing $100k into local real estate. But now I'm not sure about this step, as this might make my (future) offshore company tax resident in Georgia (see my post above) and unlike individuals, resident companies are not exempt from tax on profits coming from outside of Georgia.
3. Go to Panama for 2-3 months, rent some flat, get utility bill, open a few local bank accounts, cash out some crypto to test them. Possibly buy some property there. Apply for permanent residence under the Friendly nations visa.
4. Possibly incorporate an offshore company (see my post above). Don't wanna file any accounting or pay any taxes.
5. Travel and open (either personal or corporate) bank accounts with my Georgian or Panamanian residence and my EU passport in countries like Liechtenstein, Singapore and other reputable offshore jurisdictions. Cash out larger portion of my crypto.
6. Live in different places around the world tax free (not triggering the 183 days rule).

 

[GrumpyMess]

But now I'm not sure about this step, as this might make my (future) offshore company tax resident in Georgia (see my post above) and unlike individuals, resident companies are not exempt from tax on profits coming from outside of Georgia.

It depends on how much time you will be residing in Georgia, if less than 183 days you will be having just a residence permit but not a tax residence and thus your offshore company will not be considered resident also. The same goes with UAE.

Go to Panama

Panama route is quite exotic and hard nowadays.

 

[Martin Everson]

Is the crypto cash out definitely classified as a dividends or interest income by the tax office? If yes, 5% seems a fair tax.

He will have cashed out before residency. So it would not be income but capital.

Isn't there a 15% tax when distributing profits from a Georgian company (or a foreign company managed from Georgia)? Thanks...

Georgia companies are only tax on distributed profits so are tax free until distribution of profits where you will be taxed 15%. You don't want to pay 15% tax at a time of your choosing? You must be some sort of no-tax maximalist .

So far my plan is:

1. Go to Georgia for 1-2 months, rent some flat in Tbilisi, (possibly get an utility bill in my name for easier bank account opening), open personal Georgian bank account(s), cash out $100-200k from crypto.
2. Then I was planning to get the Short-Term Residence Permit (which comes with a temporary residence ID card) by investing $100k into local real estate. But now I'm not sure about this step, as this might make my (future) offshore company tax resident in Georgia (see my post above) and unlike individuals, resident companies are not exempt from tax on profits coming from outside of Georgia.
3. Go to Panama for 2-3 months, rent some flat, get utility bill, open a few local bank accounts, cash out some crypto to test them. Possibly buy some property there. Apply for permanent residence under the Friendly nations visa.
4. Possibly incorporate an offshore company (see my post above). Don't wanna file any accounting or pay any taxes.
5. Travel and open (either personal or corporate) bank accounts with my Georgian or Panamanian residence and my EU passport in countries like Liechtenstein, Singapore and other reputable offshore jurisdictions. Cash out larger portion of my crypto.
6. Live in different places around the world tax free (not triggering the 183 days rule).

This sounds like fantasy mate. You literally going around world with the plan your explaining with no real objective. Georgian and Panamanian residency are BS residencies for banking purposes and you will get nothing but problems in developed world when you add crypto source of funds. Before you do anything speak to banks to find out firsthand and be realistic about your plans.

Btw I have Georgian residency but only reside there part time.

 

[GrumpyMess]

Georgian and Panamanian residency are BS residencies for banking purposes and you will get nothing but problems in developed world

Is the same with UAE? It seems there are not too much residency options left

Btw I have Georgian residency but only reside there part time.

why do you need it if your home country has 0 tax?

 

[JohnSeed]

Is the same with UAE? It seems there are not too much residency options left


why do you need it if your home country has 0 tax?

That's a valid question I was wondering why someone is looking for anything outside of his country if he has to pay 0% Tax ?

 

[Martin Everson]

Is the same with UAE?

No

why do you need it if your home country has 0 tax?

I got the residency before I returned to Caribbean and kept it. Why should I give it up?

 

[Jea]

He will have cashed out before residency. So it would not be income but capital.

Actually I wanna cash out after getting offshore residency. If I cashed out now (while having EU residency) I'd have to pay tax in my country, which I want to avoid.

Georgia companies are only tax on distributed profits so are tax free until distribution of profits where you will be taxed 15%. You don't want to pay 15% tax at a time of your choosing? You must be some sort of no-tax maximalist .

Correct.. I also don't want to file or even do any accounting...

This sounds like fantasy mate. You literally going around world with the plan your explaining with no real objective. Georgian and Panamanian residency are BS residencies for banking purposes and you will get nothing but problems in developed world when you add crypto source of funds. Before you do anything speak to banks to find out firsthand and be realistic about your plans.

The objective is to establish residency (or multiple residencies) in a country which won't tax me, open bank accounts and cash out some crypto profits. Going around the world is not an issue, as I'd like to visit these places anyway.

What if I buy a property in Georgia/Panama, get utility bills, local bank account with that address - you think no bank in Singapore/Liechtenstein will accept me? Worst case I can go to Mauritius or other lower tier tax havens to open bank accounts... I'd definitely call the banks first.

I understand that crypto is a high risk business for banks. But I've opened multiple offshore accounts in the past (even made large transfers to crypto exchanges) and I know that it's about having proper documentation to make the bank feel comfortable that I'm not doing anything shady. BTW, I'm gonna look for some Swiss (or from a similar jurisdiction) lawyers or other reputable profesionals who work with crypto, who could certify that my crypto holdings come from Ethereum pre-sale.

Btw I have Georgian residency but only reside there part time.

So your offshore company (if you have one) is not considered a tax resident in Georgia?

BTW, what's the difference between UAE and Georgian/Panamanian residency?

 

[Martin Everson]

Actually I wanna cash out after getting offshore residency. If I cashed out now (while having EU residency) I'd have to pay tax in my country, which I want to avoid.

What is your EU country? If it is a country like i.e Spain then you will have exit tax and will still owe capital gains tax to Spain if you cash out within 10 years of leaving Spain. However this is for high amounts over 4m. You need to check rules in your own country however as BS tax rules like this exist all over EU including Poland as another example.

you think no bank in Singapore/Liechtenstein will accept me?

You would be a leper in banking terms for retail banking.

Worst case I can go to Mauritius or other lower tier tax havens to open bank accounts... I'd definitely call the banks first.

You added Mauritius now to list of countries. I can't keep up, is this a new country you are really thinking about now?

BTW, I'm gonna look for some Swiss (or from a similar jurisdiction) lawyers or other reputable profesionals who work with crypto, who could certify that my crypto holdings come from Ethereum pre-sale.

Cool .

So your offshore company (if you have one) is not considered a tax resident in Georgia?

Yes

BTW, what's the difference between UAE and Georgian/Panamanian residency?

Georgia/Panama residency are not welcome at a lot of banks. UAE somehow is. Panama does not have a good repuation and same with Georgia as it used to be a war zone ten years ago.

 

[John Andrews]

You don't have to go to Georgia. In fact, you can even stay in the EU - in Croatia there is no tax on crypto gains if you can prove you've been holding it for 2 years or more. There are also no CFC rules for individuals, you can operate a Seychelles company for example.

The only possible issue would be finding a bank which is okay with crypto but I don't think that would be a problem to be honest, there is already a local company which does crypto exchange here and they bank locally (google Electrocoin). They also do consulting and might be able to assist you in regards to this.

So you can cash out to your personal IBAN and then do what you want.

 

[Jea]

What is your EU country? If it is a country like i.e Spain then you will have exit tax and will still owe capital gains tax to Spain if you cash out within 10 years of leaving Spain. However this is for high amounts over 4m. You need to check rules in your own country however as BS tax rules like this exist all over EU including Poland as another example.

We don't have such rules. But I'll double check with local lawyer/accountant to be 100% sure, as I wouldn't expect countries like Poland to have such exit tax rules...

You would be a leper in banking terms for retail banking.

Lol, what about private banking?

You added Mauritius now to list of countries. I can't keep up, is this a new country you are really thinking about now?

I wanna bank in reputable offshore jurisdictions like Singapore, Liechtenstein, Switzerland, Hong Kong (not sure about this one due to the current unrest), UAE, ...
If their banks won't accept me, I'd have to go to less reputable jurisdictions like Mauritius, Panama, etc.
These plans are not set in stone, so feel free to recommend other banking or residence jurisdictions which might be suitable for me...

Yes

Is that because you have hired a director who's located elsewhere?
You wrote in the other thread: "Secondly offshore companies i.e traditional IBC's are by default not tax resident in the place of incorporation. Place of operation has to be outside the country and by default will be place of active control and management i.e directors residency - if no other place of operation is specified."

 

[Jea]

You don't have to go to Georgia. In fact, you can even stay in the EU - in Croatia there is no tax on crypto gains if you can prove you've been holding it for 2 years or more.

I don't want to submit any tax returns or anything else to any government. Besides that I do some active trading and have other online business which wouldn't be excluded.
I can stay in the EU without (almost) any restrictions anyway, as long as I'm not staying over 183 days in one country or don't trigger other residency rule...

There are also no CFC rules for individuals, you can operate a Seychelles company for example.

So if you are managing a Seychelles IBC from Croatia, it won't be considered tax resident there? I doubt that..

Thanks for the suggestions..

 

[Jea]

What is your EU country? If it is a country like i.e Spain then you will have exit tax and will still owe capital gains tax to Spain if you cash out within 10 years of leaving Spain. However this is for high amounts over 4m. You need to check rules in your own country however as BS tax rules like this exist all over EU including Poland as another example.

Just checked this and my country has exit tax only for corporations, so I'll be fine Poland has 19% exit tax for individuals, damn...

Anyway, of somebody has advice how to avoid my offshore company become tax resident in Georgia if I have a temporary or permanent residence there, please let me know...