Georgia - possibility of putting crypto gains and foreign capital gains on tax return

[JohnDebo]

Gains on crypto and foreign capital gains are not being taxed in Georgia.
However, is it possible to anyway declare them on Georgian annual tax return?

The goal is to use that tax return in the future as aml proof of funds with bank or brokerage account.

 

[Meta]

Do you have any connection to Georgia? Residence permit, income from there?

 

[JohnDebo]

More than 183 days of stay in calendar year + multiple personal and financial connections.
So tax residence is solid.

However I don't want to
- pay out dividends from foreign companies,
- sell crypto,
- sell stocks,
unless knowing that I can use this money later with banks and brokerage firms.

I'm afraid that
- dividend vouchers,
- statements from crypto exchanges
- statements from brokerage firms
won't be enough for banks and brokerage firms for purpose of aml proof of funds.

Thus I want to have these gains (from crypto, dividends, stocks) being on Georgian tax return. My bet is that it will be widely accepted as good enough proof of funds among banks and brokers.

 

[Meta]

Yes, there is space in the tax form to declare, it's mandatory actually.

Very beginning of the tax declaration is:
Total income: __________ GEL
including:
- Income subject to special tax regime: __________ GEL
- Income received from outside of Georgia: __________ GEL

Below are a few pages for different types of taxable in-Georgia income. You don't provide any details of foreign-sourced income. Just one number at the very beginning.

On the side note, I believe that in most cases banks would be much more interested to see "dividend vouchers, statements from crypto exchanges, statements from brokerage firms" and other docs explaining how you got the funds than seeing tax declaration. Except Europe, yes, there they love tax declarations.

Cheers.

 

[JSA]

Yes, there is space in the tax form to declare, it's mandatory actually.

Very beginning of the tax declaration is:
Total income: __________ GEL
including:
- Income subject to special tax regime: __________ GEL
- Income received from outside of Georgia: __________ GEL

Below are a few pages for different types of taxable in-Georgia income. You don't provide any details of foreign-sourced income. Just one number at the very beginning.

On the side note, I believe that in most cases banks would be much more interested to see "dividend vouchers, statements from crypto exchanges, statements from brokerage firms" and other docs explaining how you got the funds than seeing tax declaration. Except Europe, yes, there they love tax declarations.

Cheers.

I was wondering, is frequent crypto trading (day trading) also exempt from taxation?

 

[Meta]

I was wondering, is frequent crypto trading (day trading) also exempt from taxation?

I remember lawyer was asking if I was doing day trading and hinting that it may be gray area / can be fine with some structuring / within some limits etc. But it was not my case, so I don't know details. Overall it's not exempt I believe.

 

[JSA]

I remember lawyer was asking if I was doing day trading and hinting that it may be gray area / can be fine with some structuring / within some limits etc. But it was not my case, so I don't know details. Overall it's not exempt I believe.

Interesting. Would you mind elaborating on the ''structuring'' part? How much tax (i.e. 0%-10%?) would you be paying with a proper structuring?

 

[Meta]

I don't do day trading, so it was not applicable to me. So I didn't ask for the details. I just got the feeling that there was some solution.

 

[JSA]

I don't do day trading, so it was not applicable to me. So I didn't ask for the details. I just got the feeling that there was some solution.

Oh, I see. It's just that I've read several resources online on the subject and I was led to believe that crypto trading is exempt from both IT/CGT. I am thinking of moving to some place else, so that's why Georgia sounded like a good option.

 

[Revoltec]

A statement from the crypto exchange is much better than a tax return where no tax is to be paid. However, you need to know whether the bank you will be dealing with is crypto friendly or not

 

[khinkali]

More than 183 days of stay in calendar year + multiple personal and financial connections.

183 days is rarely relevant to taxation in Georgia. If you have untaxed Georgian source income (e.g. from work done on Georgian soil or some investments in Georgia) then you are required to submit a return. Otherwise you don't have to. As @Meta says, you just put your exempt income on the declaration.

I was led to believe that crypto trading is exempt from both IT/CGT.

As per Revenue Service Public Decision 201 (using Google Translate):

"taking into account the content of the operation, it should be considered that the mentioned activity is not carried out in the territory of Georgia and such an operation The income received does not belong to the income received from the source in Georgia"

Having met with multiple tax auditors on this subject, the main rationale for believing that trading (whether high or low frequency) is exempt from Georgian tax is that crypto transactions are not happening in Georgia. This has parallels with Fx or share trading; if you trade on NASDAQ it's not Georgian source income.

There are caveats.

* Receiving crypto as payment can be Georgian source income, which makes sense as you would pay Georgian tax on work done in Georgia whether paid in GEL, USD or bananas that remain housed in a safe on the moon.

* There are concerns that people who have small or micro business registration might find that their trading is covered by their business activity. 1% turnover tax would be catastrophic for a high frequency trader who makes 0.2% per trade. This also make sense; the exemption is for natural persons while businesses pay tax on worldwide income.

* I've never asked about trading on a Georgian exchange because no exchange here had an API when decision n201 was released. As a non-lawyer, non-tax auditor my unprofessional reading of the tax code and n201 makes me think it's probably taxable.

The most important thing is that each person should seek professional advice for their circumstances. Once nice thing about Georgia is that you can get a legally binding determination from the revenue service, which is quite cheap compared to other places.

 

[JSA]

183 days is rarely relevant to taxation in Georgia. If you have untaxed Georgian source income (e.g. from work done on Georgian soil or some investments in Georgia) then you are required to submit a return. Otherwise you don't have to. As @Meta says, you just put your exempt income on the declaration.


As per Revenue Service Public Decision 201 (using Google Translate):

"taking into account the content of the operation, it should be considered that the mentioned activity is not carried out in the territory of Georgia and such an operation The income received does not belong to the income received from the source in Georgia"

Having met with multiple tax auditors on this subject, the main rationale for believing that trading (whether high or low frequency) is exempt from Georgian tax is that crypto transactions are not happening in Georgia. This has parallels with Fx or share trading; if you trade on NASDAQ it's not Georgian source income.

There are caveats.

* Receiving crypto as payment can be Georgian source income, which makes sense as you would pay Georgian tax on work done in Georgia whether paid in GEL, USD or bananas that remain housed in a safe on the moon.

* There are concerns that people who have small or micro business registration might find that their trading is covered by their business activity. 1% turnover tax would be catastrophic for a high frequency trader who makes 0.2% per trade. This also make sense; the exemption is for natural persons while businesses pay tax on worldwide income.

* I've never asked about trading on a Georgian exchange because no exchange here had an API when decision n201 was released. As a non-lawyer, non-tax auditor my unprofessional reading of the tax code and n201 makes me think it's probably taxable.

The most important thing is that each person should seek professional advice for their circumstances. Once nice thing about Georgia is that you can get a legally binding determination from the revenue service, which is quite cheap compared to other places.

Thanks for the clarification, Khinkali. From what I understand, Georgia is likely the only country on the European continent that doesn’t tax crypto trading profits.

When it comes to "foreign-sourced income," most countries only consider passive foreign income, like pensions and dividends, to be tax-free. This exemption doesn’t usually apply to active traders like me.

I had assumed that individuals trading their personal funds on foreign exchanges (e.g., Binance, Kraken, Coinbase) daily or frequently might be exempt from taxation. This assumption is why I’m now considering Georgia as my next base. It seems like a potentially better option than the UAE, which was initially my first choice.

Yeah, definitely. I’ve been thinking about consulting with ExpatHub.GE on this. Are they reputable? It would be great if someone could confirm.

 

[Meta]

Thanks for the clarification, Khinkali. From what I understand, Georgia is likely the only country on the European continent that doesn’t tax crypto trading profits.

When it comes to "foreign-sourced income," most countries only consider passive foreign income, like pensions and dividends, to be tax-free. This exemption doesn’t usually apply to active traders like me.

I had assumed that individuals trading their personal funds on foreign exchanges (e.g., Binance, Kraken, Coinbase) daily or frequently might be exempt from taxation. This assumption is why I’m now considering Georgia as my next base. It seems like a potentially better option than the UAE, which was initially my first choice.

Yeah, definitely. I’ve been thinking about consulting with ExpatHub.GE on this. Are they reputable? It would be great if someone could confirm.

I use ExpatHub, they do a lot for me. Very satisfied.