Tax residency in Georgia while living in 2 European countries?

[ccmonger]

Hi,

I have an EU passport. I live in Thailand at the moment but looking to switch it up.

Is it possible to become a tax resident in Georgia (the country)

And then
Live 5.5 months a year in Portugal
Live 5.5 Months a year in Spain
And 1 month a year in Georgia

While all taxes will be paid and declared in Georgia as a tax resident there?

Without registring / triggering tax authorities in Portugal and Spain because I wont be staying more than 180 days in any of them?

Thx

 

[Sols]

Portugal probably won't care (things are changing there, though) and Georgia wouldn't exactly say no to your taxes.

Your problem is Spain. The 183-day test is just one thing that make you tax resident in Spain. They also look at where your primary economic interests/activities. If you pay no taxes in Portugal, spent one month in Georgia, and lived the rest of your time in Spain, the Spanish tax authority would very likely seek to tax you. That's if they find out about you, which is very hard to predict. They miss a lot. They catch some.

Spain is the wrong country to play around with. If you want similar climate, stick to Greece, Malta, Cyprus, Montenegro, and other more relaxed places. If you want to live in Spain, prepare to comply with Spanish law.

 

[ccmonger]

Out if curiosity
If I'm in Spain 5.5 months
And Portugal 5.5 months
Which is allowed with EU passport (unless I miss something) and not registering with any beurocratic / governmental institute + not triggering any tax residency law

why / how exactly they will even think about
contacting me at all?

I'm curious to know how that works

 

[Sols]

Out if curiosity
If I'm in Spain 5.5 months
And Portugal 5.5 months
Which is allowed with EU passport (unless I miss something) and not registering with any beurocratic / governmental institute + not triggering any tax residency law

Immigration and tax residence are not the same. Don't focus too much on the 180-days thing. That's just one of several things high-tax jurisdictions look at.

why / how exactly they will even think about
contacting me at all?

They usually don't. But people make mistakes all the time, drawing too much attention to them. If you keep a low profile and don't stick out, chances are no one will pay you any mind. Just don't do anything stupid like opening a local bank account.

 

[ccmonger]

Immigration and tax residence are not the same. Don't focus too much on the 180-days thing. That's just one of several things high-tax jurisdictions look at.


They usually don't. But people make mistakes all the time, drawing too much attention to them. If you keep a low profile and don't stick out, chances are no one will pay you any mind. Just don't do anything stupid like opening a local bank account.

OK thanks, no way about opening anything local

When driving between Spain and Portugal do you pass immigration?

 

[Sols]

When driving between Spain and Portugal do you pass immigration?

There can be spot checks, but it's not like flying.

 

[Marzio]

Is it possible to become a tax resident in Georgia (the country)

1 month a year in Georgia

Georgia - Individual - Residence

Detailed description of individual residence rules in Georgia

taxsummaries.pwc.com

 

[Don]

Hi,

I have an EU passport. I live in Thailand at the moment but looking to switch it up.

Is it possible to become a tax resident in Georgia (the country)

And then
Live 5.5 months a year in Portugal
Live 5.5 Months a year in Spain
And 1 month a year in Georgia

While all taxes will be paid and declared in Georgia as a tax resident there?

Without registring / triggering tax authorities in Portugal and Spain because I wont be staying more than 180 days in any of them?

Thx

It can work especially if you are not a Portuguese or Spanish citizen.

What I would do in your position is first obtain a residence permit in Georgia.
I would then take some time to establish economic substance and social ties in Georgia, open bank accounts, get a local sim, join a gym, open a company, buy an apartment, etc. At the same time, I make sure I don't have ties to Spain or Portugal.
Then, I would move on to obtain a residency permit in another EU state where I will almost not stay at all but just keep a second base, rent a cheap apartment, and open local bank accounts.
For example, something like Latvia or Estonia are great options because they also don't have management and control tests for the purpose of determining corporate residency.
Estonia is great as you can generate the tax residency certificate based on DTT any time you want online.
This way, it's easy to prove that your CVI (center of vital interests) is in Georgia, in the context of Georgia and the other country.
Simultaneously, when applying for a residence permit in EU, I would get a tax residence certificate based on the bilateral treaty of Georgia and another country's CVI test since I have homes in two countries.
Now, the tax residency is solidified, having eliminated the 183-day stay requirement in Georgia for tax residency, so I would visit Portugal and Spain without breaching Schengen visa rules, keeping rather low profile, limiting risk to habitual abode, at the same time structuring the companies with resident directors to mitigate potential tax residency risk for corporations.

Georgia - Individual - Residence

Detailed description of individual residence rules in Georgia

taxsummaries.pwc.com

Note that domestic law is often disregarded if tax residency is determined based on a bilateral treaty

 

[Marzio]

Note that domestic law is often disregarded if tax residency is determined based on a bilateral treaty

Not sure what are you talking about. If he wants to be a Georgian tax resident he needs to be present 183 days.

 

[Sols]

I don't know about Georgia in particular but the few times I'm aware of where someone has tried to become tax resident early, no one has said no. They won't issue a tax residence certificate, but they'll gladly give you a TIN and let you file taxes.

So if OP wants to donate money to the Georgian government, my spidey-senses say they'll probably accept it.

 

[Don]

Not sure what are you talking about. If he wants to be a Georgian tax resident he needs to be present 183 days.

Yes, but this is local law.
If your tax residence is determined based on a treaty, it will not apply.
There is also a possibility for HNWI to obtain tax residence based on local law without 183 days.

It's not like if a Georgian citizen suddenly does not stay 183 days a year in Georgia, the tax office will reject issuing a tax residence certificate if they apply for it.

A resident of Georgia shall fill in: Form N1 “Tax agent information on exemption or reduction of tax withheld at source on income paid to non-resident” and Form N4“Application for Certificate of Residence”

 

[Marzio]

If your tax residence is determined based on a treaty, it will not apply.

Are you referring to the article 4 of the treaty where the first test is if the tax payer has a permanent home available?

 

[Don]

Are you referring to the article 4 of the treaty where the first test is if the tax payer has a permanent home available?

Yes, but note that it applies only if you have residencies in multiple jurisdictions

 

[Marzio]

The double tax treaty indeed superseedes the domestic law BUT you will not access the DTT if Georgia doesn't considers you tax resident first and by not being present 183 days in Georgia you will fail the presence test.

 

[Don]

The double tax treaty indeed superseedes the domestic law BUT you will not access the DTT if Georgia doesn't considers you tax resident first and by not being present 183 days in Georgia you will fail the presence test.

Correct, but its important to understand the definition of the "day". Also, as I mentioned HNWI regime is an exception.

According to Article 34 of Georgian tax code:
1. A Georgian resident for the entire current tax year shall be a natural person who has actually stayed in the territory of Georgia for 183 or more days in any continuous 12-calendar-month period ending in that tax year, or a natural person who was in a foreign country in the public service of Georgia during that tax year.
2. The time of actual stay in the territory of Georgia shall be the time, during which a natural person stayed in Georgia, as well as the time he/she spent outside Georgia specifically for treatment, leisure, business trip or education.
3. The time of actual stay in the territory of Georgia shall not include the time, during which a natural person stayed in Georgia:
a) as a person having a diplomatic or consular status or as a family member of such person;
b) as an employee of an international organization acting under an international agreement of Georgia or as a person in the public service of a foreign country in Georgia or as a family member of such person, other than Georgian citizens;
c) when moving from one foreign country to another via the territory of Georgia;
d) for treatment or leisure.
4. The day of actual stay in the territory of Georgia shall be the day, during which a natural person stayed in Georgia irrespective of the length of the stay.
5. If the residency of a natural person cannot be established in relation to any country, such natural person shall be deemed to be a Georgian resident if he/she applies to a tax authority, provided he/she is a Georgian citizen.
6. non-resident in Georgia shall be a person who is not a resident under this article.

 

[Marzio]

Are you saying that also time spent outside Georgia is counted for Georgian tax residency if that time was specifically for leisure? LOL that's amusing.

 

[Don]

Are you saying that also time spent outside Georgia is counted for Georgian tax residency if that time was specifically for leisure? LOL that's amusing.

Exactly

And vice versa.. as a non legal resident I can stay in Georgia for 1 whole year for leisure and it's not counted as days in Georgia for tax residency purposes (which I have a legal right to do due to certain citizenship - visa-free stay)

a DAY in Georgia does not equal a DAY in the UK

 

[backpacker]

Also, as I mentioned HNWI regime is an exception.

Nope, the HNWI certificate cannot be used for DTT purposes. Moreover, conditions have been amended recently.

as a non legal resident I can stay in Georgia for 1 whole year for leisure and it's not counted as days in Georgia for tax residency purposes (which I have a legal right to do due to certain citizenship - visa-free stay)

Please collect information on the ground and read the Georgian version of the Tax Code.
One year leisure without being able to demonstrate taxation elsewhere won't be accepted by RS. You are considered "established" and day count kicks in (RS checks automatically with border control).

 

[kekmaw]

Nope, the HNWI certificate cannot be used for DTT purposes. Moreover, conditions have been amended recently.

Do you have a source about the HNWI not being sufficient for DTT purposes?

 

[Don]

Nope, the HNWI certificate cannot be used for DTT purposes. Moreover, conditions have been amended recently.

HNWI certificate means you are a tax resident in Georgia based on local law.
Now, you can at the same time, get a tax residence certificate from another country. No need to visit the Georgian tax office for this purpose.
For example, if you consider Estonia, solely the existence of a permanent home or, in most practical cases residence permit makes you a tax resident based on local law, so you can also access DTT.
As a result, for avoiding dual residence you can and must get a TRC to certify your non-tax residence in Estonia.
So assuming you have no other ties and sufficient substance in Georgia, Estonia can issue you a tax residence certificate based on the DTT of Georgia-Estonia that according to the treaty, you are a tax resident in Georgia.

Please collect information on the ground and read the Georgian version of the Tax Code.
One year leisure without being able to demonstrate taxation elsewhere won't be accepted by RS. You are considered "established" and day count kicks in (RS checks automatically with border control).

Yes, but I assumed being a tax resident elsewhere (in another treaty country), and my CVI outside Georgia (occasional leasure doesn't count for Georgian purposes).