Clarifications from the Georgian Tax Service on the procedure for obtaining a tax resident certificate based on wealth

Starting from March 1, 2023, the Georgia Tax Residency by Wealth program is in operation. The Order of the Minister of Finance of Georgia No. 60 of March 1, 2023 establishes the criteria and rules of procedure for acquiring tax residency status. The main advantage of this program is that it does not require mandatory presence on the territory of Georgia for more than 183 days. The requirements for a person to be recognized as wealthy when obtaining the tax resident status include: having property in excess of GEL 3,000,000 or annual income in excess of GEL 200,000 for the last 3 calendar years. 

You can read the first article on this topic here. 

In practice, questions arise as to what types of property and what types of income will be sufficient to meet these criteria, as well as in what form they should be formalized. REVERA lawyers have drafted the inquiry and sent it to the IRS.

We share with you the answers, which will be useful in planning your tax residency.

Question #1. What documents are used to confirm property in/outside Georgia in the amount exceeding 3,000,000 GEL, if the property is:

1. Real estate:
   • Is the value stated in the sale and purchase agreement sufficient?
   • Does the market value of the property need to be appraised? If yes, at what point is the appraisal made?
2. Cash in a bank account
3. Dividends
4. Securities.

IRS Response:

• For immovable property and securities, both their nominal value (e.g., purchase agreement) and market valuation as of the nearest date prior to the application for tax residency must be confirmed. In respect of funds in a bank account, it will be sufficient to provide a bank statement as of the nearest date prior to filing an application for recognition as a tax resident.

Question #2: Is it possible to apply for tax residency for 2024 in 2026, provided that the criteria were met in 2024? Proof of property must be provided for 2024 or the property must be owned in 2026 (at the time the application is filed).)?

IRS Response:

• Tax resident status can be obtained only in the year in which such an application is submitted. If the conditions are met in 2024, it is not possible to apply in 2026.

Question #3. The existence of property in the amount of 3,000,000 GEL or annual income of 200,000 GEL for the last three years should be confirmed in the year of receipt of income of 25,000 GEL from the source in Georgia or in the year when the application for recognition as a tax resident is submitted?

IRS Response: 

• The conditions of having property in the amount of 3,000,000 GEL and proof of income in the amount of 200,000 GEL must be current at the time of application for recognition as a tax resident of Georgia. Income in the amount of 25,000 GEL from a source in Georgia must be received in the calendar year preceding the submission of the application for recognition as a Georgian tax resident. 

Question #4. What period of time must the condition of having USD 500,000 in Georgia be met for the purposes of recognition as a tax resident?

IRS Response:

• The condition that an individual must own real estate on the territory of Georgia in the amount equivalent to 500,000 USD in GEL. The criterion will be considered met if the individual owned the specified real estate during the last period of time. The Tax Service did not clarify the specific timeframe by period.

You can contact the REVERA Private Clients team for advice and support of the described procedure.

Authors: Yaroslavna Zadesenskaya, Levan Pogosov

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