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Tax residency in Georgia while living in 2 European countries?
- Thread starter ccmonger
- Start date
I appreciate your perspective, and I'm open to hearing your counterarguments or concerns about my statement. Could you please provide more details or reasons for your disagreement, such as references to the law?
This would help us have a more meaningful discussion and address any valid points you may have. From what I understand you claim that issuing a HNWI tax residence certificate is not based on law.
I have some nieces/family members (all female) hereinafter referred to as nieces.
They are all young and in their 20s.
They do remote work.
Their homes currently are in Germany, the UK, the Netherlands, Spain, Switzerland, and Portugal.
They earn easily over €100K a year/each. +50% goes to income tax.
NONE of them have €500K to deposit in a Monegasque bank.
As already mentioned, I have an apt. in Monaco for decades. I can easily have 8 people live there without an issue.
Can my nieces just move to my apt. and live in Monaco for 12 months and NOT have to pay income taxes anymore?
How?
Just move?
PS. I would cut a deal with them to only pay for the apt. expenses which will STILL be much cheaper than what they are paying now and to save their +€50K per year until they have their own €500K.
I cannot tell you anything about that country. My discussion with @Don is about Georgia.What if someone stays in Monaco for 12 months out of 12 months?
You mix two things that have nothing to do with each other.
No. Read again. And think.
This discussion has become meaningless since everything has been said: A Georgian HNWI certificate cannot be used for DTT purposes.
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To my understanding from this thread is that its possible but all depends on the 2 other countries I choose to stay in and their domestic laws
Also, Spain was just an example
Ireland and Scotland (connected with ferrys) are another option, and so on.
The reason for not being world traveler in many countries is because I'm doing it most of my life and I'm tried. I am trying to decrease the amount of traveling
and choosing countries that are close and can replac fights to driving or using ferrys to move between.
As backpacker stated, what the Georgian law states and how it's interpreted are 2 different things. Only experience on the ground nows what the final result will be. Everything else is speculation.
Sensible advice reads like this: You can read material online for years and still not fully understand all the tax traps. The pretty carefree good old days of floating around tax free or very low tax are gone. Now minimising tax is more like a science.
Also, in relation to comments / posts that mention countries other than the 3 in the original post, note some countries will claim you as tax resident if you do not spend more days in any other country (or in the country where you are supposed to have tax residency) - one example is France. So 60 days in Cyprus and then 61 days in France and whoops.
I have read the Isle of Man will provide tax residency from the start of a committed 5 year stay based on 90 days in IoM each year, so like the Cyprus 60 days regime there are options... but the catch is what are the rules in the other country you will spend time in? Cyprus rule states must not be tax resident anywhere else.. and countries like France will claim you if you spend more time there than in say IoM or Cyprus. Don't expect Cyprus to stand up and fight for you.
Its a very complex web and its important to not take risks in countries where tax evasion / treaty shopping etc is a crime - as these days a crime in your record restricts options for future residency, or for even just some travel like entering the UK for example.
Newbies... Don't act on advice found on the internet alone...and what one person might get away with (up till now) due to their own unique circumstances does not mean another person will enjoy the same success, or that the door might not close later on the first person recommending the route. Tax offices can take their time to entwine you before they bite.
On a related subject, since some posters are seeking online information they might actually act on - in the end it's like self assessment because in the end the responsibility rests with you. Sometimes self assessment based on insufficient info is like claiming tax deductions when filling out tax self assessment declarations - its easy to take a course of action originally especially if it looks like an easy enough option based on what you know - but for example in Italy the penalties for getting your self assessment wrong can be very serious. The days of floating around and not leaving a trail are pretty much gone... so just be ready for the seemingly easy plan might unravel and understand how far reaching the consequences and penalties will be.. and what will you do then? Some people have been keeping a very low profile for years and know how to stay that way - while others simply don't know if and when they are making a misstep.
The reality is, large tax offices know more about tax minimisation options (such as PT'ing) than most PT's do
. So, if you have an income high enough then you will become (sooner or later) a person of interest- as most governments are willing to try almost anything within their powers to increase revenues. Get it wrong and some will take away your passport. My friend is currently under threat from the AU gov for them to cancel his Aussie passport over unpaid taxes. He didn't know the fine details of the AU tax residency rules well enough and therefore his low tax PT'ing life style is biting him on the bum pretty hard right now. He is looking at a criminal record, a cancelled Au passport, and frankly who wants the bother? These days newbies are best to get legal tax residency advice from a lawyer with professional indemnity insurance... its not that all lawyers have anything great to propose, its just so when their advice goes wrong you can sue them. Remember in some countries asking your accountant for tax minimisation advice means the accountant will flag you to the tax office. We help each other as best we can... but newbies should proceed with great caution.
Sensible advice reads like this: You can read material online for years and still not fully understand all the tax traps. The pretty carefree good old days of floating around tax free or very low tax are gone. Now minimising tax is more like a science.
Also, in relation to comments / posts that mention countries other than the 3 in the original post, note some countries will claim you as tax resident if you do not spend more days in any other country (or in the country where you are supposed to have tax residency) - one example is France. So 60 days in Cyprus and then 61 days in France and whoops.
I have read the Isle of Man will provide tax residency from the start of a committed 5 year stay based on 90 days in IoM each year, so like the Cyprus 60 days regime there are options... but the catch is what are the rules in the other country you will spend time in? Cyprus rule states must not be tax resident anywhere else.. and countries like France will claim you if you spend more time there than in say IoM or Cyprus. Don't expect Cyprus to stand up and fight for you.
Its a very complex web and its important to not take risks in countries where tax evasion / treaty shopping etc is a crime - as these days a crime in your record restricts options for future residency, or for even just some travel like entering the UK for example.
Newbies... Don't act on advice found on the internet alone...and what one person might get away with (up till now) due to their own unique circumstances does not mean another person will enjoy the same success, or that the door might not close later on the first person recommending the route. Tax offices can take their time to entwine you before they bite.
On a related subject, since some posters are seeking online information they might actually act on - in the end it's like self assessment because in the end the responsibility rests with you. Sometimes self assessment based on insufficient info is like claiming tax deductions when filling out tax self assessment declarations - its easy to take a course of action originally especially if it looks like an easy enough option based on what you know - but for example in Italy the penalties for getting your self assessment wrong can be very serious. The days of floating around and not leaving a trail are pretty much gone... so just be ready for the seemingly easy plan might unravel and understand how far reaching the consequences and penalties will be.. and what will you do then? Some people have been keeping a very low profile for years and know how to stay that way - while others simply don't know if and when they are making a misstep.
The reality is, large tax offices know more about tax minimisation options (such as PT'ing) than most PT's do
. So, if you have an income high enough then you will become (sooner or later) a person of interest- as most governments are willing to try almost anything within their powers to increase revenues. Get it wrong and some will take away your passport. My friend is currently under threat from the AU gov for them to cancel his Aussie passport over unpaid taxes. He didn't know the fine details of the AU tax residency rules well enough and therefore his low tax PT'ing life style is biting him on the bum pretty hard right now. He is looking at a criminal record, a cancelled Au passport, and frankly who wants the bother? These days newbies are best to get legal tax residency advice from a lawyer with professional indemnity insurance... its not that all lawyers have anything great to propose, its just so when their advice goes wrong you can sue them. Remember in some countries asking your accountant for tax minimisation advice means the accountant will flag you to the tax office. We help each other as best we can... but newbies should proceed with great caution.And what do you achieve when you sue the lawyer?As backpacker stated, what the Georgian law states and how it's interpreted are 2 different things. Only experience on the ground nows what the final result will be. Everything else is speculation.
Sensible advice reads like this: You can read material online for years and still not fully understand all the tax traps. The pretty carefree good old days of floating around tax free or very low tax are gone. Now minimising tax is more like a science.
Also, in relation to comments / posts that mention countries other than the 3 in the original post, note some countries will claim you as tax resident if you do not spend more days in any other country (or in the country where you are supposed to have tax residency) - one example is France. So 60 days in Cyprus and then 61 days in France and whoops.
I have read the Isle of Man will provide tax residency from the start of a committed 5 year stay based on 90 days in IoM each year, so like the Cyprus 60 days regime there are options... but the catch is what are the rules in the other country you will spend time in? Cyprus rule states must not be tax resident anywhere else.. and countries like France will claim you if you spend more time there than in say IoM or Cyprus. Don't expect Cyprus to stand up and fight for you.
Its a very complex web and its important to not take risks in countries where tax evasion / treaty shopping etc is a crime - as these days a crime in your record restricts options for future residency, or for even just some travel like entering the UK for example.
Newbies... Don't act on advice found on the internet alone...and what one person might get away with (up till now) due to their own unique circumstances does not mean another person will enjoy the same success, or that the door might not close later on the first person recommending the route. Tax offices can take their time to entwine you before they bite.
On a related subject, since some posters are seeking online information they might actually act on - in the end it's like self assessment because in the end the responsibility rests with you. Sometimes self assessment based on insufficient info is like claiming tax deductions when filling out tax self assessment declarations - its easy to take a course of action originally especially if it looks like an easy enough option based on what you know - but for example in Italy the penalties for getting your self assessment wrong can be very serious. The days of floating around and not leaving a trail are pretty much gone... so just be ready for the seemingly easy plan might unravel and understand how far reaching the consequences and penalties will be.. and what will you do then? Some people have been keeping a very low profile for years and know how to stay that way - while others simply don't know if and when they are making a misstep.
The reality is, large tax offices know more about tax minimisation options (such as PT'ing) than most PT's do
Well said.As backpacker stated, what the Georgian law states and how it's interpreted are 2 different things. Only experience on the ground nows what the final result will be. Everything else is speculation.
Sensible advice reads like this: You can read material online for years and still not fully understand all the tax traps. The pretty carefree good old days of floating around tax free or very low tax are gone. Now minimising tax is more like a science.
Also, in relation to comments / posts that mention countries other than the 3 in the original post, note some countries will claim you as tax resident if you do not spend more days in any other country (or in the country where you are supposed to have tax residency) - one example is France. So 60 days in Cyprus and then 61 days in France and whoops.
I have read the Isle of Man will provide tax residency from the start of a committed 5 year stay based on 90 days in IoM each year, so like the Cyprus 60 days regime there are options... but the catch is what are the rules in the other country you will spend time in? Cyprus rule states must not be tax resident anywhere else.. and countries like France will claim you if you spend more time there than in say IoM or Cyprus. Don't expect Cyprus to stand up and fight for you.
Its a very complex web and its important to not take risks in countries where tax evasion / treaty shopping etc is a crime - as these days a crime in your record restricts options for future residency, or for even just some travel like entering the UK for example.
Newbies... Don't act on advice found on the internet alone...and what one person might get away with (up till now) due to their own unique circumstances does not mean another person will enjoy the same success, or that the door might not close later on the first person recommending the route. Tax offices can take their time to entwine you before they bite.
On a related subject, since some posters are seeking online information they might actually act on - in the end it's like self assessment because in the end the responsibility rests with you. Sometimes self assessment based on insufficient info is like claiming tax deductions when filling out tax self assessment declarations - its easy to take a course of action originally especially if it looks like an easy enough option based on what you know - but for example in Italy the penalties for getting your self assessment wrong can be very serious. The days of floating around and not leaving a trail are pretty much gone... so just be ready for the seemingly easy plan might unravel and understand how far reaching the consequences and penalties will be.. and what will you do then? Some people have been keeping a very low profile for years and know how to stay that way - while others simply don't know if and when they are making a misstep.
The reality is, large tax offices know more about tax minimisation options (such as PT'ing) than most PT's do
Unfortunately, despite all of our warnings, the crowd will continue to listen to the Snake Oil Salesman.
I agree that the HNWI certificate alone can not be used for DTT since it lacks the necessary information. Other documents would indeed be needed.
However, it certifies the person as a taxpayer (tax resident) in Georgia, so anyone having such a certificate should be able to request the initiation of the Mutual Agreement Procedure, in case of a potential dual residence (on top of other cases to be able to access treaty benefits).
The taxpayer may at the basis of the International Agreement on the Avoidance of Double Taxation (DTA) ratified by the Parliament of Georgia and in accordance with the “Rule for the Mutual Agreement Procedure defined by the international agreement on the avoidance of double taxation" (rule), to request the initiation of the Mutual Agreement Procedure (MAP).
The authorities can indeed refuse to initiate the MAP, and in this case, they shall provide feedback within one month.
Let's assume you are right in claiming that it can not be used.
In such a case, I'm curious to know what they would provide as an answer.
Would it be something along the lines of the following?
"Dear Sir,
Please note that the HNWI certificate is just a paper with no legal meaning. It is just there to attract investments to Georgia.
Since you have stayed in Georgia for less than 183 days/year, we kindly hope you'll consider that you've been wasting oxygen, which a mosquito could have used better. As such, we'd encourage you to locate the nearest fire hydrant and attempt to fit it inside your colon.
We remain at your disposal and look forward to hearing from you."
The sentence has to be interpreted in the light of its object and purpose, which is to exclude persons who are not subjected to comprehensive taxation (full liability to tax) in a State, because it might otherwise exclude from the scope of the DTA all residents of countries adopting a territorial principle in their taxation, a result which is clearly not intended.
I am right!
Answer: Read what's written on the HNWI certificate.
No!
Basic knowledge: ".... income from sources in that State ...."
Umm, is this a serious question? You will not find any modern business with any kind of serious income making decisions about tax minimisation strategies without first obtaining and recording their legal and accounting advice from a professional registered in the country where you are likely to run in to tax assessment. It's a 'cost' of doing business for a long time. Professional indemnity insurance covers the lawyer for incorrect advice that leads to the client getting in a bad situation. So there is an avenue to recoup financial losses such as tax fines and penalties etc.. assuming you follow the written advice properly. More importantly, getting advice in writing from a tax lawyer / accountant who is qualified in the jurisdiction/s you are wanting to 'use' means you can show to the relevant tax office that you did seek professional advice before embarking on the tax minimisation strategy in good faith. Meaning you have an avenue to argue with the tax authority about whether or not they should be fining you etc. and if the strategy proves to be 'wrong' then its a good faith mistake and not deliberate tax avoidance. Its of little use obtaining or rather relying legally on professional advice from a tax lawyer only registered and with insurance for / in the Cayman Islands about tax obligations in Spain... you want a Spanish resident lawyer who faces the music with you if the doodah hits the fan in spain. Or check your lawyers professional indemnity cover extends to the jurisdictions you seek advice about. Generally, people asking for advice on the internet will take all "advice" with a grain of salt.... for possible educational purposes only but few these days would take any consequential action based on such advice. The point is these days tax obligations are so complex you need to think carefully about any tax minimisation strategy to implement, plus be ready with the defensive strategy and documentation to show the tax office if it goes wrong. The problem is, its easy to implement a tax minimisation strategy without proper advice... and hope for the best based on what others have got away with up till now - but usually the people who end up in front of the tax auditors are too busy defending themselves (or trying to run away) to post about the mistakes they made. That means, it's hard to learn from other peoples mistakes. Keeping a low profile is common sense... but that's not a common commodity and it's surprising how easy it is to monitor peoples activities and movements these days. So keeping a low profile and hoping you go unnoticed is not going to help if a tax office comes calling later on. They will go back through your past records and activities and try and see if there is a chink / hole in your strategy anywhere. But as soon as they start to throw jargon at you, you will be looking for an expert to help you sort it... avoiding a problem is always better than trying to remedy it later. When the tax office auditors (professional qualified people) don't agree with your novice interpretation of how to read a DTT, do you think you will win that argument? Given the complexity of tax law these days only a very few people would be suitably experienced and / or qualified to go it alone. Also, as mentioned before, it's not just about a tax bill that might arise later... is it criminal activity / avoidance? What are the possible implications beyond just financial fines etc? Most people are not aware of the full scope of troubles they might be exposing themselves to these days and therefore that they can not properly plan to be ready to defend against what they don't know... when their strategy gets tax office audit. You. can read online about some people getting 5 years bans from EU simply due to overstaying (no criminal activity like tax avoidance involved - just overstaying) - best to hold fast to the belief that the tax office is not your friend and prepare accordingly.
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I did, and it says: "I certify that the person is resident in Georgia for tax purposes."
I agree with oldtimer2. You can speak with an international tax adviser who can give you high-level advice on structuring. Still, in many cases, it is recommended that you seek further advice/confirmation from local lawyers, and this is precisely how international tax advisers usually work since there are no lawyers qualified to advise regarding multiple jurisdictions. I recommend anyone to follow this, and, most importantly, get the confirmation in writing since lawyers can also lie to you, which they are more prone to do verbally.
Taken from the DTA between Sweden and Georgia:
"For the purposes of this Agreement, the expression "resident of a Contracting State" means a person who, under the laws of that State, is liable to tax there by reason of his domicile, residence, place of business or other similar circumstance and also includes that State, its public law bodies or institutions, political subdivisions or local authorities. However, this expression does not include a person who is liable to tax in that State only in respect of income from sources in that State or in respect of capital situated therein."
I do not know how other DTA's are written, but to me, it is quite clear that this mean the HNWI certificate wont help you solve anything under the DTA. However, there might be other ways to solve this like cutting all ties to your home country etc. But most tax agencies will ask fot the DTA so you do not wanna go that route.
I have verified my statements with a Georgian tax adviser.
Happy to share contacts if anyone has doubts.
In order to receive Tax residency in Georgia its important, that person had any kind of Ties with Country. It should be derived either from Presence, or with the amount of assets that person has. Therefore, in order to obtain Georgian tax residency, a natural person must submit the following Documentation to the Revenue Service along with the application:
a) documents confirming that his assets exceeds 3 million GEL globally, including that he owns property in Georgia equivalent to at least 500,000 US dollars in GEL and a residence permit/residence certificate/identity card of a citizen of Georgia; or
b) documents confirming that his annual income during the last 3 tax years prior to the submission of the application exceeds 200,000 GEL, as well as that he owns property worth at least 500,000 US dollars in GEL in Georgia and a residence permit/residence certificate/ID card of a citizen of Georgia; or
c) documents that confirm that his property exceeds 3 million GEL, including that he owns property in Georgia worth at least 500,000 US dollars in GEL and documents that confirm that he received at least 25,000 GEL of income from a source in Georgia in the last tax year before submitting the application; or
d) Documents confirming that his annual income in the last 3 years prior to the submission of the application exceeds 200,000 GEL, as well as that he owns property worth at least 500,000 US dollars in GEL in Georgia, and documents confirming that he received at least 200,000 GEL from a source in Georgia in the last tax year prior to the submission of the application 25,000 GEL income.
It is not hard to find out the current requirements to apply for the certificate.
What then? Be warned. Sadly, Georgian legal advisors are notoriously unreliable. I am speaking from my own and friends hard experience, having used and relied on Georgian lawyers before. They will leave you in it. The Georgian government will leave foreigners "in it".
Did the lawyer refer to public or private cases where the HNW certificate has withstood challenges by foreign tax offices?
Remember also, what the law states, and what the Revenue Service practice is, are sometimes, and in very important cases, 2 different things.
What is needed first are the case records and / or contact details for any person who has used this type of certificate in real negotiations with any foreign tax office/s. Without this you are at risk of becoming the first guinea pig / test case.
Then, after we know from an actual live example that the Georgian certificate stands up in reality when put to the test, then that's one important step. But the reality check doesn't stop there.
The second essential step is learning if the Georgian tax office (Revenue Service) will actually get involved and actively argue the case against the foreign tax office, if / when it gets down to the point where the two countries need to negotiate and then reach an agreement over who will tax that person / company and for what and for how much.
You cannot assume the RS will do it. This is Georgia, not a large western country that will push their case.
Any suggestion that the foreign tax payer (who is presumably not a Georgian citizen) is involved in tax avoidance and possibly associated potentially criminal activity, then my belief is there is a real risk that the RS will simply not turn up and will leave the certificate holder to fight their case alone. If you think the Georgian government deals cleanly with foreign 'investors' then you have not read widely enough.
Finally, in each individuals case, could it be counter productive to show such a HNW certificate to foreign tax office/s that think they have a claim over the taxpayer?
Under the latest eligibility rules, using such a certificate also now tells the foreign tax office quite a bit about the taxpayers net worth that they had to declare to be eligible to get the certificate.
Presumably a foreign tax office is / was / will be chasing this example person because they are a high value target and because that other country believes it has grounds and tax revenues worth pursuing.
This certificate quantifies at least some of the taxpayers value as a target.
By using a HNW Georgian certificate the tax payer is also actually flagging they are a special case and not a regular georgia resident tax payer.
Such things can be two edged swords. Be careful what you ask for.
Great points!
I don't know about the specific cases regarding Georgia.
Similar to UAE, the biggest problem I see with Georgia is that they have nothing to gain in treating you as a tax resident.
I would say even better would be to have the case records and/or contact details for any person who has used this type of certificate in real negotiations with your competing tax office/s. I don't think it's worth extrapolating the practice of other tax authorities. Otherwise, generally speaking, there have been cases where the court has decided that the non-availability of TRC cannot be an excuse to deny tax treaty benefits to a genuine non-resident if alternate documentation is provided.
Really?The reality is, large tax offices know more about tax minimisation options (such as PT'ing) than most PT's do
(1) Do you mean those unproductive parasites who can't make an honest living and instead join criminal gangs under the ruse of "government" to coerce money from hardworking productive members of society actually have brains and resources, but just decided to make peanuts and use violence to rob others?
or (= inclusive disjunction "or")
(2) do you mean they'll interpret the text of their "unilateral ex-parte laws" in a way most beneficial to them because, after all, they have the state-sponsored monopoly on violence backed up and rubber-stamped by their other gang members, i.e. prosecutors, judges, etc. who ALSO get paid from the money they extort from their productive victims?
