CFC rules in Georgia

[backpacker]

@khinkali
Would it not be better to decide for a jurisdiction where you pay a little bit of taxes? In return for a mature and reliable legal system + the benefit of being able to use every EMI you want, every crypto exchange you want, every broker you want .... .

Anyway, if you still decide to apply for the ATR and you need a reliable law firm/tax advisor, let me know and I forward the address.
However, for me as private individual (retiree) it does not make any more sense to take this route.

 

[khinkali]

jurisdiction where you pay a little bit of taxes

EU, UK, US, CA, CH, NZ would open up exchanges and maybe banking, but they bring uncertainty and risk. HK, let's wait and see. So maybe you mean SG or BVI?

I'd rather pay 20% on distribution than do tax accounting for every trade in local currency. That favours GE (maybe EE too if they take the same approach).

 

[Almouk]

Think about your previous post (dated 16-May-2021) and ask yourself. The answer is quite obvious.
Look at it this way: He does not have an office. No physical contact, no law firm attached. You can check his website and try to find anything more then email or phone ... . Honestly, that is not the type of advisor I do want to work with. Moreover, there is no law firm attached. He will not be able to defend you whenever something goes wrong.
Look for something with more substance if you want to do serious business. A law firm is a must-have!

I did not read until now. As you say, apparently no physical localtion, although between the services offered is the representation during tax inspections. Thanks for your opinion. I appreciate it and I will take in account. Wondering what law firm you really recommend.

Considering the most recent downward move of the crypto market I would strongly suggest to not only concentrate on this segment. If somebody applies for such an ATR then it would be wise to include traditional financial instruments (FOREX, securities traded/listed outside of GE ... ) as well.

Anyway, as I have the rest of year for taking a decision and it seems difficult to get the Golden Ticket as @khinkali refers to it, I will focus in researching other choices or thinking about other countries that you don't have any doubt about taxation as happens with Bulgaria (10% on crypto and about traditional financial instruments, tax free applies to capital gains from disposal of shares traded on the Bulgarian and EU stock exchanges).

 

[backpacker]

Wondering what law firm you really recommend.

I will probably not be allowed to name any law firm in this forum. However, I already gave a hint in one of my earlier posts referring to the local list of law firms in the Legal500 . Go to that webpage, look up "Georgia -> Law Firm Directory" and you do get a list of firms that have taken out commercial profiles in The Legal 500. You will now find a list of eight law firms. Ask the moderator of this forum, and if he agrees I will reveal my personal preference

Bulgaria (10% on crypto and about traditional financial instruments, tax free applies to capital gains from disposal of shares traded on the Bulgarian and EU stock exchanges).

Spot on! Bank interest is taxed at 8% and dividends at 5%. Probably the most straight forward place in the EU when it comes to a tax efficient location combined with low living costs (talking about a private individual). And you can benefit from the public health system from the first day of your membership.

So maybe you mean SG or BVI?

No. I was thinking of:

• Bulgaria (-> there is a potential risk that one day EU bureaucrats come up with a European wealth levy)
• Philippines (-> only when you set up in one of their Special Economic Zones, in your case preferably Cagayan Valley)

 

[khinkali]

My reservations about Cyprus are trading only through a company (else a heavy tax penalty), the accounting method (trade by trade bookkeeping is awful if you're arbitraging price errors) and the EU risk . Georgia or UAE could address those concerns. Maybe Singapore or Caribbean. But I'm not sure that Bulgaria or Philippines would help.

One member suggested Malta in a favourable light, but I don't think it's that simple. Gibraltar perhaps, but the lifestyle could be a little claustrophobic.

Nobody ever seems to talk about Gibraltar here. if you set up a fund there with genuine substance (which is required anyway), then it could be an option for someone resident in Portugal, Cyprus or (relevant to the thread topic), Georgia?

 

[backpacker]

But I'm not sure that Bulgaria or Philippines would help.

They do because I mentioned them in this context:

mature and reliable legal system + the benefit of being able to use every EMI you want, every crypto exchange you want, every broker you want .... .

We most talk about BG - everything is said and the cased clear cut: Very easy taxation system. The rest of Pro & Cons have been widely discussed.
The Philippines is very often presented in a negative light. However, compared to Thailand it shines in many aspects: No trouble with immigration (the people who get in trouble with PH immigration are idiots or criminals), mature legal system (even though it can be slow), a very reliable and consistent taxation system (the current tax reform is an ongoing process in three steps over a period of four years which was announced two years before they started to change it), no obscure public decisions or strange rulings with regards to taxes. I am not talking about zero tax, this is about low taxation and easy access to exchanges + EMI.

High-frequency crypto trading by avoiding proper bookkeeping is at odds with most jurisdictions. The problem is "high-frequency". That means you either get used to proper bookkeeping, dismiss the entire project or move to a jurisdiction without any taxation at all. The latter comes with the known limitations to lifestyle, doing business, freedom of expression etc. . You simply have to decide what you value more - you can not have it all!

 

[khinkali]

I've nothing against BG as such but if you're going to accept the EU risk, why not just live in Cyprus if you accept trading through a company?

The problem is "high-frequency". That means you either get used to proper bookkeeping, dismiss the entire project or move to a jurisdiction without any taxation at all.

One avenue I am exploring is that in a jurisdiction with tax on distribution, trade by trade bookkeeping in local currency might not be necessary for tax purposes. When tax is on distribution (in local currency), the trades don't necessarily matter.

Of course if you're licensed as a broker or a financial advisor then you need an audit for the regulator and/or national bank. But they're not looking at tax and might not require trading reports to be in local currency.

So you could have one set of books for tax in local currency that are based on the investment going in and profit going out, and another set of trade logs in the many relevant currencies to show the regulator that you're not cheating the investors. Both of these things are easy (else you should not be trading at all), the advantage would be avoiding the trade by trade arbitrage accounting in local currency that makes no sense to me.

 

[ska]

You don't need an LLP if your LTD is not UK tax resident. Just saying.

Tax domicile UK LTD. in Georgia and get Virtual Zone status (must check but should be possible)? Nomad worry-free (5% profit distribution tax) thereafter.

What do you mean? I'm interested as I'm in Georgia too but I would like to have a company in UE for branding and more banking services.
Can I open a LTD in UK and not pay taxes there?
Or you was just talking about transferring company from UK to Georgia?

 

[backpacker]

why not just live in Cyprus

It's an island and that in itself comes with many caveats. From my point of view the only PLUS of Cyprus compared to BG are taxes. Which again is limited due to GeSY/GHS.
If you want to move and settle in a new jurisdiction do not only look at taxes.

 

[soomon]

I've looked into it and contacted a few. After a while of correspondence I figured that it is pointless because these people are unable to defend there own point-of-view.
I am now in contact with one of the "big 8" law firms in this country. That is what I would advise you to do, too. Check the list in Legal500 and pick one. You will experience a totally different atmosphere with knowledgeable people who can defend their point-of-view. These "big 8" law firms work with international companies and sometimes open their doors for private individuals. Then build up a relationship with them and things will work smoothly.
Do not go for one of these "internet tax advisors" without any brick & mortar office. Whatever they claim, in the end they can not defend you!

Would you happen to have experience with expathub.ge? Are they reliable?

 

[backpacker]

@soomon
As a general rule, I do not comment on individual (i.e. private) organisations who are operating in the fields of law!

 

[soomon]

@soomon
As a general rule, I do not comment on individual (i.e. private) organisations who are operating in the fields of law!

I understand Thanks for getting back to me

 

[soomon]

I had a 30 minute free session with them. It was very informative and helpful. I realized that a lot of things are quite different from what they are reported to be on the internet. Although they told me I'd not qualify for the virtual zone or the international company status which means I would not get any of those fancy tax breaks, I found it very valuable.

I of course cannot recommend them as a tax lawyer, since I have no experience other than a 30 minute call. What I would recommend though is taking their offer for that call if you want some free information on your specific case.

I am not affiliated with them in any way. This is not supposed to be advertisement. I hope me sharing my experience helps somebody.
If this kind of post is not allowed, please let me know / report it so I gets deleted asap.

 

[orangekangaroo]

Would you happen to have experience with expathub.ge? Are they reliable?

I have used their 30-minute free consultation. I was impressed with their knowledge and I decided not to move to Georgia.

 

[backpacker]

I have used their 30-minute free consultation. I was impressed with their knowledge and I decided not to move to Georgia.

What other country did you choose instead of Georgia?

 

[orangekangaroo]

What other country did you choose instead of Georgia?

I enquired about the 1% TAX on turnover (up to 160K USD) private entrepreneur scheme in Georgia, however, I really needed a legal entity and wanted to do a construction with UK LLC. This one does not fly with the Georgian tax authorities. Currently in Romania getting setup on the Micro Entrepreneur Scheme, 1-3% Tax on turnover (up to 1 million euros).

Romania has other benefits:

1. EU country so much easier on payment gateways, PayPal etc.
2. EHIC (European Health Indetity Card)
3. Better banking than Georgia
4. Better quality of life than Georgia

 

[backpacker]

I enquired about the 1% TAX on turnover (up to 160K USD) private entrepreneur scheme in Georgia, however, I really needed a legal entity and wanted to do a construction with UK LLC. This one does not fly with the Georgian tax authorities. Currently in Romania getting setup on the Micro Entrepreneur Scheme, 1-3% Tax on turnover (up to 1 million euros).

Romania has other benefits:

1. EU country so much easier on payment gateways, PayPal etc.
2. EHIC (European Health Indetity Card)
3. Better banking than Georgia
4. Better quality of life than Georgia

Thank you for replying to my curiosity.
Romania looks like an excellent choice. Specifically when seeing the path Georgia has chosen with regards to its future development.

 

[khinkali]

I met one of their guys for a drink. They seem serious and dedicated. I was particularly impressed not to get some generic sales pitch (my needs are less typical than I assumed when I first came to this forum). They also tend to give sensible and non self promoting advice in other places.

I haven't done business with them thus far, but I have a good feeling that they do what they say they do and don't promise what they can't deliver.

 

[mastaplan]

I was thinking of moving to Georgia and trading through a company so I am glad to have seen this thread.

I had understood that trading a personal account was untaxable though. What is the concern around trading personal accounts? Is the concern mainly for people doing HFT or shows 'badges of trade' as per HMRC guidance?

 

[khinkali]

@mastaplan I could be wrong but I think the posts were mostly about trading goods or providing services.

The situation is different for financial trading. I don't have the level of clarity I want yet, but I am quite optimistic that some kinds of trading as a natural person are outside the scope of Georgian taxation.