Tax residency in Georgia while living in 2 European countries?

[backpacker]

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

It's written on the HNWI certificate.
Moreover, the changes have been discussed at length in this forum about a year ago.
Actually, the HNWI certificate could never be used for international tax purposes since it doesn't qualify for ordinary tax residency.

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.


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).

Well, I don't have the time to go through all of this.
I suggest you check again, then try that yourself in practice and only after that publish your idea. Once you succeeded with your idea, let us all know by submitting/uploading proof of evidence.

 

[Don]

It's written on the HNWI certificate.

Moreover, the changes have been discussed at length in this forum about a year ago.

Actually, the HNWI certificate could never be used for international tax purposes since it doesn't qualify for ordinary tax residency.


Well, I don't have the time to go through all of this.
I suggest you check again, then try that yourself in practice and only after that publish your idea. Once you succeeded with your idea, let us all know by submitting/uploading proof of evidence.

Perhaps you are right regarding the HNWI, but the general logic is that if you qualify for domestic law purposes as a tax resident, you should also be able to access the tax treaty. Based on Georgian law, they have their way of counting days.

Can you provide an example of the HNWI certificate?

Article 34 – Resident natural persons and non-resident natural persons in Georgia

1. Natural persons shall be:
a) citizens of Georgia;
b) foreign citizens;
c) stateless persons.

2. 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.

3. 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.

4. 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 organisation 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.

5. 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.

6. Georgian residency, except as provided for in paragraph 2 of this article, may be accorded to a high net worth individual under the procedure and conditions determined by the Minister of Finance of Georgia. A high net worth individual shall be a person as defined by the Law of Georgia on Securities Market.

6-1. 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.

6-2. The residency of Georgia, except for cases provided for in paragraphs 2, 6 and 6-1 of this article, may be granted to a foreign natural person in the case and under the procedure defined by the Minister of Finance of Georgia.

7. A non-resident in Georgia shall be a person who is not a resident under this article.

8. The status of a resident or of a non-resident is established for each tax period. At the same time, the days, according to which the natural person was deemed as a resident in the previous tax period, shall not be taken into account in establishing the status of residency in the following tax periods.

 

[backpacker]

Can you provide an example of the HNWI certificate?

Every tax authority on Planet Earth will laugh about this piece of paper.

 

[JackAlabama]

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

Without being too specific, a clue is here :
Unless you plan to live with your friend Juan José Guerrera Sanchez, will you rent or buy in Spain?

 

[backpacker]

but the general logic is that if you qualify for domestic law purposes as a tax resident, you should also be able to access the tax treaty.

No, not at all.
Another prominent example is Switzerland with its (unfortunately not yet abolished) lump sum taxation for ultra-wealthy foreigners (a Swiss cannot take advantage of this system at all).

So, please check your understanding of the system. Do not construct some fancy model just by reading shaky translations of local laws. It confuses others.

Based on Georgian law, they have their way of counting days.

By counting 183 days in any 12-months rolling period, arrival and departure day included. Nothing mystique, no hocus pocus. Just plain and simple day count.

 

[Don]

View attachment 5623
Every tax authority on Planet Earth will laugh about this piece of paper.

Right, because it is not based on the DTT.

A tax residence certificate should be applied based on a specific tax treaty.
A person requesting such a certificate should specify the treaty. There are situations where one could otherwise qualify as a dual tax resident, and the only way to avoid that is to apply for a DTT based on a treaty.

According to Georgian law: If a natural person has several residences (homes or other residences), his/her place of residence or place of actual stay shall be determined by a tax authority in agreement with the natural person.

Article 35 - Place of residence and place of actual stay of a natural person
1. A place of residence of a natural person shall be the person’s usual place of residence or the place of his/her actual stay unless otherwise provided for
by this article.
2. A place of residence of a minor shall be the place of residence of the person having parental rights with respect to the minor, and a place of residence
of the person who has a guardian or custodian shall be the place of residence of the guardian or custodian.
3. A place of actual stay of a natural person shall be the place of his/her temporary residence, unless otherwise provided for in this article.
4. A place of actual stay of military personnel, also of persons permanently relocating due to the nature or conditions of their job shall be the place
where they actually live or are registered in the prescribed manner (including, the place of deployment of military units or the location of the respective
enterprise).
5. If a natural person has several residences (homes or other residence), his/her place of residence or place of actual stay shall be determined by a tax
authority in agreement with the natural person.

By counting 183 days in any 12-months rolling period, arrival and departure day included. Nothing mystique, no hocus pocus. Just plain and simple day count.

Then why does the law say that leisure and business trips abroad will be counted as staying in Georgia?

 

[backpacker]

Right, because it is not based on the DTT.

Of course, "RIGHT".
The question is why you started all this bla-bla and repeated it even in your post #22.

A tax residence certificate should be applied based on a specific tax treaty.

A tax residence certificate is -first of all- just a piece of paper. It confirms that the issuing country claims you as being its tax resident.
In this forum many people write about a tax residence certificate based on a DTT as some sort of magic document.
For a cosmopolitan such a "paper" has the same value as any other tax residence certificate because such a person would not be so naive to bring himself/herself in the situation to require such a certificate (where it's value is still in doubt since different rules apply for citizens and non-citizen).

To make it short: A tax residence certificate can be useful if you want to demonstrate that a certain country claims you as a tax resident. However, all other things apply on your personal circumstances.
Example: If a Swiss comes with a tax residence certificate based on the DTT between Egypt (or another country for that purpose) and Switzerland, claiming to be a tax resident of Egypt, but still maintains his membership in the local Jodlerclub in Hergiswil (NW), he/she will be taxed in Hergiswil (NW). Egyptian taxes will be offset, so double taxation is not applicable.

Then why does the law say that leisure and business trips abroad will be counted as staying in Georgia?

I explained that above. Common sense prevails. Georgia does not accept you claiming to be on leisure while you stay more than 183 days.
You will be considered tax resident of Georgia + the other jurisdiction. In case of the latter, a DTT (if applicable) may or may not help (read above).
Btw., "the law" is one thing. There are guidances and -more important- EO's of the Ministry of Finance (in Georgian) how these laws are applied.

 

[Konstanz]

View attachment 5623
Every tax authority on Planet Earth will laugh about this piece of paper.

Actually it's not totally useless. At least you have something. For example, Andorra almost don't have DTT's and issue only domestic tax residence certificate. But this documents is still useful and people still able to be tax resident in Andorra

 

[backpacker]

Actually it's not totally useless. At least you have something. For example, Andorra almost don't have DTT's and issue only domestic tax residence certificate. But this documents is still useful and people still able to be tax resident in Andorra

This cannot be compared.

There is a difference between the Georgian HNWI certificate and the Georgian ordinary tax residence certificate. No matter if the Georgian ordinary tax residence certificate is issued in connection with a DTT or not, it is very useful for many situations. The very same is valid for any other ordinary tax residence certificate.

However, the GE HNWI certificate is not issued on the basis of tax obligations. It is issued because you have invested in the country. It clearly states this.

 

[Konstanz]

This cannot be compared.

There is a difference between the Georgian HNWI certificate and the Georgian ordinary tax residence certificate. No matter if the Georgian ordinary tax residence certificate is issued in connection with a DTT or not, it is very useful for many situations. The very same is valid for any other ordinary tax residence certificate.

However, the GE HNWI certificate is not issued on the basis of tax obligations. It is issued because you have invested in the country. It clearly states this.

Agree. Still better than nothing but it's not good they state it's issued because of investment, not because person is genuine resident

 

[Don]

Actually it's not totally useless. At least you have something. For example, Andorra almost don't have DTT's and issue only domestic tax residence certificate. But this documents is still useful and people still able to be tax resident in Andorra

Yes.

Someone with the Georgian HNWI tax certificate could still obtain a certificate of tax residence based on a double tax treaty, even if he/she is not a resident based on domestic law in the other country.

I can imagine a common case where it could work:
1) as a Georgian tax resident you receive some income as a non-resident from whatever country, and initially, a higher tax than the treaty rate of tax is withheld.
2) to apply for the refund and benefit from a lower treaty rate, you need to fill out certain paperwork
3) in this case there should normally be a specific form (Certificate of Residence, where you should declare the type of income and the amounts to be refunded). You shall obtain such form from the country where you are non-resident but receive income. You would need to fill it out and then get it stamped by the Georgian tax office (actually getting two countries involved in the process).
The certificate would include the following line: "The competent tax authority of the Republic of Georgia hereby certifies that the above-mentioned person is a resident of Georgia for treaty purposes (if necessary, adding the duration of residence: from x to y)."

In fact, submitting a TRC, in general, should not be perceived as a necessary condition to get access to treaty benefits, if no explicit provision regarding the certificate is included in the DTT. Once the treaty conditions are met, the tax exemption must be granted.
If the taxpayer can demonstrate – by any other means available – that the beneficiary is a resident in the other country, the tax authorities cannot consider submitting the TRC as a necessary condition in order to exempt the payment from being subject to a withholding tax or taxed with lower withholding tax, unless the requirement for TRC is explicitly stated in the DTT (which is rare). This could open opportunities to obtain TRC by staying fewer days in Georgia.

Georgia can be a bit complicated to work with since they don't really care so much about making you a tax resident. They have a territorial tax system, and locally sourced income is one way or another taxed in Georgia.

 

[backpacker]

Someone with the Georgian HNWI tax certificate could still obtain a certificate of tax residence based on a double tax treaty

No !

 

[kekmaw]

No !

Shouldn't this depend on what's written in the specific tax treaty, though?


1. For the purposes of this Agreement, the term "resident of a Contracting State" means:
a) in the case of Georgia:
any person who, under the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature, and also includes that
State and any political subdivision or local authority thereof. This term, however, does not
include any person who is liable to tax in that State in respect only of income from sources in
that State or capital situated therein.

 

[backpacker]

Shouldn't this depend on what's written in the specific tax treaty, though?


1. For the purposes of this Agreement, the term "resident of a Contracting State" means:
a) in the case of Georgia:
any person who, under the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature, and also includes that
State and any political subdivision or local authority thereof. This term, however, does not
include any person who is liable to tax in that State in respect only of income from sources in
that State or capital situated therein.

No!
Read the last sentence of your citation.

 

[Don]

Shouldn't this depend on what's written in the specific tax treaty, though?


1. For the purposes of this Agreement, the term "resident of a Contracting State" means:
a) in the case of Georgia:
any person who, under the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature, and also includes that
State and any political subdivision or local authority thereof. This term, however, does not
include any person who is liable to tax in that State in respect only of income from sources in
that State or capital situated therein.

In general, tax treaties do not impose tax. Tax is imposed by domestic law; therefore, tax treaties limit the taxes otherwise imposed by a State. In effect, tax treaties are primarily relieving in nature. Similarly, tax treaties do not allocate taxing rights, although it is often claimed that they do. In light of this fundamental principle, it is usually appropriate before applying the provisions of a tax treaty to determine whether the amount in question is subject to domestic tax.

If the amount is not subject to tax under domestic law, it is unnecessary to consider the treaty.

For example, assume that under the provisions of a treaty between Belgium and Georgia, interest paid by a resident of one State to a resident of the other State is subject to a maximum rate of withholding tax of 10 per cent.

If, under the law of Belgium, interest paid by a resident in that country to an arm’s-length lender resident in Georgia is taxed at 30% WHT, the treaty does not give Belgium the right to impose a 30% per cent withholding tax on the interest.

A common example is Wise cashback, where they withhold 30% interest.

If you’re eligible for a lower withholding tax rate under the Belgium double tax treaty with your country of residence, you can apply to the Belgian tax authority using the official form for refund of Belgian WHT (Form 276 INT).

Now, you need to get this form stamped by the Georgian tax office.

As a result, you would have your residence confirmed within the meaning of a DTT.

 

[backpacker]

In general, tax treaties do not impose tax. Tax is imposed by domestic law; therefore, tax treaties limit the taxes otherwise imposed by a State. In effect, tax treaties are primarily relieving in nature. Similarly, tax treaties do not allocate taxing rights, although it is often claimed that they do. In light of this fundamental principle, it is usually appropriate before applying the provisions of a tax treaty to determine whether the amount in question is subject to domestic tax.

If the amount is not subject to tax under domestic law, it is unnecessary to consider the treaty.

For example, assume that under the provisions of a treaty between Belgium and Georgia, interest paid by a resident of one State to a resident of the other State is subject to a maximum rate of withholding tax of 10 per cent.

If, under the law of Belgium, interest paid by a resident in that country to an arm’s-length lender resident in Georgia is taxed at 30% WHT, the treaty does not give Belgium the right to impose a 30% per cent withholding tax on the interest.

A common example is Wise cashback, where they withhold 30% interest.

If you’re eligible for a lower withholding tax rate under the Belgium double tax treaty with your country of residence, you can apply to the Belgian tax authority using the official form for refund of Belgian WHT (Form 276 INT).

Now, you need to get this form stamped by the Georgian tax office.

As a result, you would have your residence confirmed within the meaning of a DTT.

Just hot air. Nothing special here.

@kekmaw replied to post #32 which refers to the Georgian HNWI certificate. A person with GE HNWI status cannot use a DTT.

 

[Don]

Just hot air. Nothing special here.

@kekmaw replied to post #32 which refers to the Georgian HNWI certificate. A person with GE HNWI status cannot use a DTT.

So you are saying that if a person has HNWI status and stays in Georgia 365 days a year, the Georgian tax office will show him the middle finger when he tries to apply for a tax refund from Belgium based on the tax treaty?

 

[crassus54]

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?

I am in a similar situation, could you keep me posted if that works?

 

[curiousmarv]

I am in a similar situation, could you keep me posted if that works?

Practically it may work if you stay well enough under the radar and especially don't aquire things in Spain or in Portugal (means no possessions there like a house or bank account, your children should not go there to school etc).
Theoretically it's not secure enough. Tie-Breaker Rule for taxes (search for it) would apply if anybody will really question your tax residency (and you should always expect the worst to be legally 100% on the safe side).

I think to get Georgia in to the equation 100% legal you need to stay half a year there always.

Why don't you just get an US LLC and live as a permanent traveler, leave Georgia out of the equation. Stay nowhere more than maximum 5.5 months.

 

[crassus54]

Practically it may work if you stay well enough under the radar and especially don't aquire things in Spain or in Portugal (means no possessions there like a house or bank account, your children should not go there to school etc).
Theoretically it's not secure enough. Tie-Breaker Rule for taxes (search for it) would apply if anybody will really question your tax residency (and you should always expect the worst to be legally 100% on the safe side).

I think to get Georgia in to the equation 100% legal you need to stay half a year there always.

Why don't you just get an US LLC and live as a permanent traveler, leave Georgia out of the equation. Stay nowhere more than maximum 5.5 months.

My situation is not as casual, as if I mess up I have to deal with French tax authorities.

I am trying to figure out a way to do the 5.5/5.5/1 month plan with PR.

Do you know anyone that could help?