Taxes in Georgia

Among foreigners who buy real estate in Georgia, Russians have long become the undisputed leaders. According to the data of the Government Commission on Migration of Georgia, over the past four years, Russian citizens have most often bought real estate from foreigners in Georgia - in 2018, our compatriots acquired about 40% of the total number of objects on the local market. Also, great interest in Georgian square meters is noted among representatives of Iran, Ukraine, Armenia, Turkey, Azerbaijan and the United States. Statistics also show that in 2018, compared to 2017, the cases of registration of apartments, the owners of which became citizens of other countries, doubled.

Buying a home

In the process of buying real estate, only the state fee is paid - this happens at the time of registration of the purchase and sale agreement at the House of Justice. The payment is 150 GEL (52 dollars) with quick registration on the same day or 51 GEL (18 dollars) with registration within four working days.

Ownership costs

During the period of housing operation, the owner usually pays the cost of maintaining the building of the apart-hotel or residential building and the adjacent territories. This tariff varies from 0.5 lari (17 cents) to 1 dollar (2.8 lari) per square meter, depending on the project and its status. Everything else is paid according to the meters - gas, electricity, water supply and Internet / TV - these are all expense items, their number is minimal. In addition, income from the rental of real estate is taxed - if it takes place, then the expenses will be 5% of the income.

Property tax

As in many countries, there is a property tax in Georgia - it is differentiated depending on the total family income and applies to tax residents of Georgia, that is, to individuals registered as taxpayers with the tax authorities of Georgia. If we are talking about the property of legal entities, then there are variations here, but usually in both cases the tax does not exceed 1%.

It should be noted that the tax on property of individuals also includes construction in progress, a building or part of it. Property tax of an individual is calculated on the basis of a declaration filed with the tax authority. The deadline for filing a declaration in Georgia is no later than November 1, payment is made no later than November 15 of a calendar year.

The annual tax rate on taxable property of an individual is differentiated according to the income of the taxpayer's family during the tax year and is determined as follows:

- for families with an income of up to 100,000 lari (34,700 dollars) - not less than 0.05% of the market value of taxable property at the end of the tax period and not more than 0.2%;

- for families with an income of GEL 100,000 (($ 34,700) or more - at least 0.8% of the market value of taxable property at the end of the tax period and not more than 1%.

An individual files a property tax return if that person's family income exceeds GEL 40,000 ($ 13,880) in the previous calendar year.

The Tax Code of Georgia also provides for special benefits for persons who have rented land assigned to them for more than two years. Surplus real estate is usually tax exempt if it has been owned by an individual for more than two years.

Selling costs

In the event of a sale, the owner of the property also pays income tax in the amount of not more than 5%, however, this tax applies only to tax residents of Georgia. There are no other taxes on real estate today.

Gift and inheritance taxes

Provided that the object passes into the ownership of the next of kin (I and II degrees of relationship), it will not be taxed at any value. Also, the similar process of donation and inheritance of property to relatives of III and IV degrees of kinship will not be taxed if its market value does not exceed 150,000 lari (50,000 dollars).

Business expenses

Taxation of local businesses is also transparent and today there are the following taxes for legal entities in Georgia:

• income tax - 15%
• VAT - 18%
• import tax - 0% / 5% / 12% depending on the product
• excise - set depending on the type of goods and services (tax rates are specified in article 188 of the Tax Code of Georgia)
• property tax - up to 1%

All taxes except the last are recognized as national, and property tax - regional or local. The amount of tax on dividends is also very important for the founders of companies. Here his rate is set at 5%.

In addition to taxes, Georgian companies, starting from 2019, are also required to pay 2% of the salary of their employees to the country's Pension Fund.

Today Georgia is following the European path of development, therefore, among other things, it has introduced a taxation system in its country that has made the mechanism for calculating and recording taxes absolutely transparent, thus simplifying the life of citizens as individuals and entrepreneurs. Georgia is distinguished by low tax rates, including for increasing the inflow of foreign investment into the country - this creates an attractive economic environment and investment potential for investors interested in our country.

Thank you for your help in preparing the material:

Galina Dmitrieva, Nazarov & Partners Representative in Georgia

Tatiana and Marina Svyazhina Dehtiarevi, experts of the company Hgroup