Will You need To File An Annual Tax Return In Georgia?

Will you need to file an annual tax return in Georgia (country) for the most recent reporting year? If the following is true, then the answer is probably “yes”. Did you:

Spend any time in Georgia (Tbilisi/Batumi etc.) in the last reporting year and receive any personal income from any source that has not already had tax paid in full to the Georgian Revenue Service? Including any income not already taxed in Georgia throughout the course of normal monthly tax declarations?
Or have employment income (foreign or Georgian) which was not taxed at source in Georgia?

You are responsible for ensuring that any income is declared, and there are penalties for failing to do so. In this article, we outline the essential considerations to help you decide if you need to file an annual tax return in Georgia, on what income you should file, and when the declaration must be submitted, as well as some other essential considerations.

Attention: As of January 1st, 2024, a new reporting period for individuals who receive capital gains from the sale of assets has gone into effect.

Previously, individuals declared capital gains from the sale of assets as part of their annual tax return in Georgia. However, due to recent legislative changes, this is now subject to monthly reporting.

If you receive capital gains from the sale of assets that are classified as Georgian sourced (such as gains from the sale of Georgian located movable or immovable property – including real estate – or shares of a Georgian enterprise), please note the following:

You are now required to submit the income declaration for capital gains by the 15th of the month following the month in which you received such capital gains.
Additionally, you must pay the corresponding income tax by the same deadline.

By When Must I File My Annual Tax Return in Georgia?

Between January 1st and March 31st of the tax year following the reporting year.

Already know you need to file? Get Your appointment time below – Click here.

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What is taxed:

Employment income on which your employer hasn’t already paid tax in Georgia. (This can include income from a foreign employer, even if you are working remotely for less than 183 days in Georgia, within a 12 month period.)
Rental income of properties you own in Georgia.
Foreign business income that is not exempt (which is more types of income than many expats think) and has not already been declared within a Georgian business.
Interest gains from private sources within Georgia (not including interest within Georgian banks or interest derived abroad).
Gambling/casino winnings, unless already taxed at source.
In some cases, income on gains from investments and trading.
Any other non-exempt personal or business income on which Georgian tax has not already been paid.

What is not taxed:

Salary which has already had Georgian tax withheld at source.
Business income that was already taxed in Georgia.
Personal remittance between personal bank accounts of friends and family that were not payments relating to an economic activity.
Most foreign royalty payments, interest, and passive dividends where no active work (including remote work via laptop etc.) took place from within Georgia to generate them.
In some cases, foreign income earned from working while not physically present in Georgia. Your case for this is also stronger if it was already taxed elsewhere.
Income of those with a special status (such as diplomats, in some cases).
Foreign pensions and social security payments.
Any other income which is not tax liable in Georgia.
NOTE: Property Income on real estate and vehicles is taxed annually, but is due on a different declaration than the annual income tax return.

If you do not think you were a tax resident in the last reporting year, please see the additional info below for those who spent less than 183 days in Georgia in any given year.

Who doesn’t need to file?

Essentially, anyone who has zero tax liability in Georgia, or whose tax has been withheld at source in its entirety. For example:

Those who had no income during the tax year. Including those who lived off savings or pensions only, or were supported entirely by a spouse, parent, or a 3rd party.
Those who have already declared every part of their income to Georgia via their monthly business declarations and have nothing else to declare.
Those who have assessed that all of their undeclared income is not tax liable. For example, an author who lives off book royalties derived from a foreign source and has no other taxable income.
People whose only income is employment income from a Georgian employer, who has already withheld tax on the employee’s behalf.

If you are unsure if the income you have would need to be declared, contact us with as much detail as possible about the income in question and we’ll give you a quick verdict, if possible.

I spent less than 183 days in Georgia this year. Do I still need to file an annual return?

If you did not meet the 183 day requirement to become a Georgian tax resident this year, then it depends.

Firstly, tax residency is triggered on the day you hit the 183rd day in Georgia in ANY 12 month period, not just in a particular calendar/tax year. This means that you could potentially trigger tax residency even if you spend less than 183 days in Georgia in a single tax year.

Example:

Bob is present in Georgia from Oct 1st, 2022 to March 10th, 2023 (161 Days).
He is absent from Georgia until Sept 1st, 2023.
He is present again from Sept 1st to Sept 30th, 2023 (30 days).
Total days present in 2023 = 99.
Total days present in the 12 month period of Oct 1st, 2022 to Oct 1st, 2023 = 191.
Bob is considered a tax resident for all of 2023, but not 2012.

If you definitely have not triggered tax residency, that does not necessarily mean you won’t have any tax liability either. If you have been earning money (foreign or domestic) while living in Georgia, then that income may be liable for taxation, no matter how long you have been in the country.

If you intend to leave Georgia or are a remote worker who only intends to be here temporarily, read our article on remote worker tax in Georgia to help you decide your next steps.

What if I already paid tax in another country?

If a double taxation avoidance agreement (DTA) exists between Georgia and the country in question, AND you are definitely not considered a tax resident of Georgia, then paying tax in the country where the agreement considers you a tax resident might be sufficient in some cases. But determining that requires further analysis of the specific DTA treaty.

If there is no DTA, or you are deemed a Georgian tax resident by the agreement, then you would be liable to pay tax on that income in Georgia, assuming that the work was performed from within the territory of Georgia. In some cases you may be able to claim tax relief or tax credits against the tax that you already paid abroad, equivalent to the value of the tax you pay in Georgia. It depends on the tax law of the country where you paid the tax.

Late Filing Charges

If you do not file your Georgian annual tax return by March 31st, and you are exposed by the RS for not having filed when you should have, you will pay a penalty of 50% of the tax owed, as well an additional 0.05% per day on the amount of tax owed (not including the 50% penalty fine) up until the day you pay.

The statute of limitations allows for back taxes and penalties to apply retroactively for 3 years (up to 4 in certain cases) after the date when the tax became due. Interest would accrue on any tax not paid by 31st March, if a later audit discovers that it was owed.

If you are not ready to file by March 31st, you can file a blank deferment before that date, and then file your final declaration by June 30th. So long as you file by June 30th, you will only pay the 0.05% per day interest on your final tax bill, and pay no additional penalty.

If you missed the tax filing deadline and choose to file late, and do so before the RS has identified you as owing tax, then the fines are 5% of the tax owed (+interest) for late filing up to 2 months, and 10% (+interest) for late filing more than 2 months after the deadline.

Get Your Tax Return Filed Professionally: Our Annual Filing Service

The process of annual tax return filing can be divided into two parts.

The first part is determining the tax liability – what parts of your income need to be taxed, at what rate, and when.

This part is handled by tax specialists. They give advice on what to file and what not to file. It is with their expertise that your tax liability is determined correctly.

The second part is the actual process of filing – the technical work involving submitting financial information to the RS.

Our Accounting Division assists with this part. Basically, when it is decided what income will need to be taxed, at what rate, and when, our accountants file the taxes.

If you are unsure about your exact tax liabilities in the relevant period and you need help assessing what parts of your income would be liable to Georgian tax (and declared on your annual tax return), our tax advisers can help you decide. Appointment booking is now open! See below.

But if you feel like you don’t need this type of advice at all, you can give us a detailed breakdown of the numbers that need to be filed, and we’ll get our Accounting team to do it for you.

Tax Return Services: Our Prices

The final price depends on the number of total hours your filing will take. This makes it tricky to estimate an exact package price in advance as tax filing in Georgia can be a lot more complicated than in the UK/EU/etc., so it’s best to submit the form below with your details so we can assess what type of filing you may need.

Prices Are Based on our Standard Hourly Rates:

Accounting/Filing:
For non-monthly accounting package clients: 250 GEL + VAT per hour.
For current monthly clients: 125 GEL + VAT per hour.

Senior Tax Consultancy (when required):
600 GEL + VAT per hour.

Services You May Need:

A 60 minute consultation with a senior tax attorney to assess your liability.
Filing service, charged hourly.

NOTES:
– Initial consultations must be booked and paid for in advance.
– A tax filing price estimate will be issued after the initial consultation.
– The final price will be determined by the actual work done and may vary from the estimate.
– The estimated amount will be transferred as a retainer. If less work than estimated is performed, we will refund the difference. If more work is required, we will inform you about this and invoice you prior to the work commencing.

NOTE: Payment of the final tax bill (we provide the total calculation) to the treasury, would be the responsibility of the client. The tax bill must be paid by March 31st, 2021, to avoid any interest being added to the final sum.

Book An Appointment – Fill The Form Below

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Please fill out the form and we’ll get back to you with appointment times and prices.

Meetings are online, via Zoom.