Delaware company with a shareholder fiscally resident in Georgia (the country)

#21
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@blizz yes people have FZ and VZ companies in Georgia and enjoy tax advantages.

People complain that FZ companies are very difficult to get banking for in Georgia.

VZ is a tax status for an otherwise normal IT company that sells mostly outside of Georgia. If it's genuinely a Georgian business (managed in Georgia, doing the work in Georgia) and exporting services then Georgian banking should be OK. If it's really a company for moving offshore money around then I would expect local bank accounts to be closed.
 
#22
khinkali said:
The angle I'm unsure about is whether you can be taxed on the work but also generate profit. i.e. if your company charges $1000 per hour and pays you $100 per hour, I wonder if the $900 dividend is taxable or not.
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Old thread, but this never got anyone's input so I figured I'd offer my 2 cents.

The issue that your proposed structure triggers is Georgia's "substance over form" legislation. So in case of a "thin" setup, the tax authorities can easily (and successfully) argue that the foreign entity serves no actual purpose other than that of avoiding taxation, at which point the foreign entity would be considered transparent, and all of its profit would be taxed as if it was flowing directly into Georgia. So at the very minimum, the foreign entity would need to have sufficient substance and not just be an empty shell.
 
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#23
You need to consider the following aspects:
Delaware company shall have a business substance, local director etc, otherwise it might be considered to be managed in Georgia. A company which is managed from Georgia is considered as a Georgian company (thus taxable in Georgia).
Also, if the shareholder Georgian tax resident actually does consulting services, the income might be requamified from passive income (dividend) into active income (consulting fee) thus taxable (at least partly) in Georgia.

https://tpsolution.ge/territorial-taxation-for-individuals-in-georgia/In the above blog you can see that not every income received by a Georgian tax resident individual is exempted from tax (but some type of incomes really are exempted).
 
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