Tax residency in Georgia while living in 2 European countries?

[backpacker]

I love tax lawyers, they are the best

Indeed, specifically in Georgia.

I did, and it says: "I certify that the person is resident in Georgia for tax purposes."

Advice: Read it all .
Bored to repeat -> post #23

 

[Revoltec]

It should be derived either from Presence, or with the amount of assets that person has.

You are in denial. Using the HNW certificate, Georgia will claim you are a tax resident, but your home country wont accept it in accordance with the DTT. You will need to convince your home country in another way.

 

[Don]

You are in denial. Using the HNW certificate, Georgia will claim you are a tax resident, but your home country wont accept it in accordance with the DTT. You will need to convince your home country in another way.

My main point was that you can apply for treaty benefits with HNWI certificate since its a proof of tax residency.
It doesn't automatically mean though that you are tax resident of Georgia within the meaning of the DTA in all cases, but imagine a simple case with some other jurisdiction where you have never been, but happen to receive some income and need to apply for tax refund. Why wouldn't they accept your tax residency?
Even then you would never show them your HNWI tax residence certificate. Rather you would acquire a relevant form from the other jurisdiction and get it stamped by Georgian tax office.

 

[Revoltec]

My main point was that you can apply for treaty benefits with HNWI certificate since its a proof of tax residency.
It doesn't automatically mean though that you are tax resident of Georgia within the meaning of the DTA in all cases

So you changed your mind?

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

 

[Don]

So you changed your mind?

No. You need to evaluate the specific cases and relevant circumstances.
The cases where you are clearly a non-resident in the other jurisdiction is straightforward to obtain a certificate of tax residence based on a double tax treaty.

In fact, both scenarios are possible.

 

[backpacker]

It doesn't automatically mean though that you are tax resident of Georgia within the meaning of the DTA in all cases, but imagine a simple case with some other jurisdiction where you have never been, but happen to receive some income and need to apply for tax refund. Why wouldn't they accept your tax residency?

You wrote a lot in this thread, you received plenty of replies. Still, you do not get it (or don't want to):
The HNWI certificate does not make you a tax resident within the meaning of a DTT .

get it stamped by Georgian tax office.

It will not be stamped by a Georgian tax office .

 

[Don]

You wrote a lot in this thread, you received plenty of replies. Still, you do not get it (or don't want to):
The HNWI certificate does not make you a tax resident within the meaning of a DTT .

Thank you for your comment, Sir.

Regarding tax treaties, it's important to note that, generally, tax treaties do not impose tax.

Tax is imposed by domestic law, so let's first have a look at what Georgian law says. If, based on Georgian law, an individual is considered a Georgian tax resident, then he is a Georgian tax resident, unless his/her tax residency is instead determined based on a double tax treaty, which is only possible if first, two treaty countries' domestic laws consider the individual a tax resident. In such cases, if you are considered a tax resident in both countries under their respective laws, the tax treaty's tie-breaker rules come into play.

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.

HNWI certificate is a document issued based on Georgian domestic law certifying tax residence in Georgia.

If someone has a Georgian HNWI tax residence certificate and it happens that another treaty jurisdiction claims his/her tax residency, he/she may need to inform the tax authorities of his/her residency status, especially if there is a dispute or if he/she is changing his/her residency status.

Based on the treaty, in rare cases, two jurisdictions can also consider an individual tax resident in their respective jurisdiction.

In this case, you have a Mutual Agreement Procedure. The MAP is the mechanism that Contracting States use to resolve any disputes or difficulties that arise in the course of implementing and applying the treaty.

 

[backpacker]

Thank you for your comment, Sir.

 

[Revoltec]

Thank you for your comment, Sir.

Regarding tax treaties, it's important to note that, generally, tax treaties do not impose tax.

Tax is imposed by domestic law, so let's first have a look at what Georgian law says. If, based on Georgian law, an individual is considered a Georgian tax resident, then he is a Georgian tax resident, unless his/her tax residency is instead determined based on a double tax treaty, which is only possible if first, two treaty countries' domestic laws consider the individual a tax resident. In such cases, if you are considered a tax resident in both countries under their respective laws, the tax treaty's tie-breaker rules come into play.

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.

HNWI certificate is a document issued based on Georgian domestic law certifying tax residence in Georgia.

If someone has a Georgian HNWI tax residence certificate and it happens that another treaty jurisdiction claims his/her tax residency, he/she may need to inform the tax authorities of his/her residency status, especially if there is a dispute or if he/she is changing his/her residency status.

Based on the treaty, in rare cases, two jurisdictions can also consider an individual tax resident in their respective jurisdiction.

In this case, you have a Mutual Agreement Procedure. The MAP is the mechanism that Contracting States use to resolve any disputes or difficulties that arise in the course of implementing and applying the treaty.

For most tax treaties (all that I have read) the paragraph on the definition on residency excludes the possibility of you being considered to be a tax resident of any country based on capital situated there. Therefore, the HNWI certificate is irrelevant.

 

[AlicaFunk]

It means you need to have a house there or rent some property and actually live there I believe ?

 

[Don]

For most tax treaties (all that I have read) the paragraph on the definition on residency excludes the possibility of you being considered to be a tax resident of any country based on capital situated there. Therefore, the HNWI certificate is irrelevant.

You are referring to the term "resident" in the DTT, which usually includes the following line:"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."

However, HNWI residence is not issued only on basis of capital, but requires also a residence permit.

Quoting:
In addition to meeting the significant property requirements, they must either:

• Have a legal residence permit OR Georgian resident ID card.
• Certify that he/she received income of 25,000 GEL or more in the tax year prior to the year of application, from a source in Georgia.

 

[Revoltec]

You are referring to the term "resident" in the DTT, which usually includes the following line:"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."

However, HNWI residence is not issued only on basis of capital, but requires also a residence permit.

Quoting:
In addition to meeting the significant property requirements, they must either:

• Have a legal residence permit OR Georgian resident ID card.
• Certify that he/she received income of 25,000 GEL or more in the tax year prior to the year of application, from a source in Georgia.

I see. But what is then the point of talking about the HNWI certificate at all if you already have a residence?

It means you need to have a house there or rent some property and actually live there I believe ?

Yes, for most cases only renting and not actually spending time in the country is enough. However, do not rent or own a house in any other country in that case. You could still spend time in another country how long you want as it is lower down in the list of the tie-breaker rules.

 

[Don]

I see. But what is then the point of talking about the HNWI certificate at all if you already have a residence?

HNWI certificate is for tax residence, but to get it you need to have legal residence.
Legal residence doesn't equal tax residence.
Just having a residence permit in Georgia doesn't automatically make you a tax resident in Georgia.

 

[backpacker]

This thread is a masterpiece of confusing people who are interested in this topic.
@Don Please stop it.

but to get it you need to have legal residence.

Wrong!

Now go back to the page from where you source your "knowledge" and read it carefully from top to bottom!

 

[uplana]

This thread is a masterpiece of confusing people who are interested in this topic.

That's some of a statement, if you think so, you should quickly describe how you see it and correct it, so we will be able to do our own conclusion from both! Your sentence has nothing to do in this thread as it stands alone without any backup.

 

[backpacker]

If you think so, you should quickly describe how you see it

Simply read this thread, from top to bottom.

 

[Revoltec]

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.

Is there any risk of not being accepted for tax residency in case you spend more than 183 days and them claiming you were only here for leisure in case you have no job or something like that? I'm wondering why they have added the exclusion on leisure in the tax law at all? Something written about this in the EO's?

 

[clemens]

I feel like it's gonna be super tough in 2024 to spend half the year in a low- or no-tax spot and the other half in a high-tax place.

The thing is, the tax folks aren't as clueless as they used to be, all thanks to AI (it’s not like the staff suddenly got a brain boost or something). So, the country with the steep taxes is gonna want its cut, even if you've gone and bought a place and said you're paying taxes in that low-tax country.

 

[Revoltec]

I feel like it's gonna be super tough in 2024 to spend half the year in a low- or no-tax spot and the other half in a high-tax place.

The thing is, the tax folks aren't as clueless as they used to be, all thanks to AI (it’s not like the staff suddenly got a brain boost or something). So, the country with the steep taxes is gonna want its cut, even if you've gone and bought a place and said you're paying taxes in that low-tax country.

I do not understand what this means. If a tax treaty exists and everything comes down to physical presence, then just spend a majority of the year in one country

 

[clemens]

I do not understand what this means. If a tax treaty exists and everything comes down to physical presence, then just spend a majority of the year in one country

But still, the country with the highest tax burden will try to charge you tax when you own a property or something else in that country that could make it look like you lived there. You will have to fight for your case, that's for sure. The tax authorities have become extremely aggressive, especially in the countries where the tax is highest and those with large fortunes are moving out. These countries include Denmark, Norway, Germany, France, among others.