Georgia territorial taxation makes foreign-source dividends, interest, and royalties tax-free for individuals who are Georgian tax residents. The legal basis is Art. 82.2.u of the Georgian Tax Code (GTC): income without a Georgian source is exempt for resident natural persons — covering not only dividends but also foreign interest, royalties, and capital gains. Here is what exactly is exempt as of July 2026 — and where the limits are.
What is tax-free for residents
Territorial taxation applies to individuals with Georgian tax residency (183 days in any 12-month period, or HNWI status — see Georgia tax residency). Exempt under Art. 82.2.u GTC are, among others:
- foreign dividends (e.g. from brokerage accounts and ETFs held abroad)
- foreign interest
- foreign royalties/license fees
- capital gains from foreign assets
- rental income from real estate abroad
- pensions from abroad
For comparison, the domestic side: dividends paid by Georgian companies to individuals carry a 5% withholding tax, which is final. Two further location factors: Georgia levies no wealth tax and no inheritance or gift tax within the close family.
What is NOT tax-free: the source question
Territorial taxation is not a blanket exemption for “income from abroad”. What matters is the source — and for active work, the source is determined by where the work is performed:
- Active work in Georgia = Georgian source. Any work you perform while physically present in Georgia is Georgian-source income (Art. 104.1 GTC) — even if the client sits in Germany or the US. This income is taxable: 1% with Small Business Status, 20% without — see Georgia 1% tax.
- Where the payment lands is irrelevant (Art. 104.2 GTC). A foreign bank account does not turn Georgian-source income into exempt income — this widespread misconception regularly leads to back taxes.
| Income type | Source | Georgian tax (resident) |
|---|---|---|
| Dividends from foreign companies | Foreign | 0% (Art. 82.2.u) |
| Foreign interest, royalties, capital gains | Foreign | 0% (Art. 82.2.u) |
| Rent from property abroad | Foreign | 0% (Art. 82.2.u) |
| Dividends from Georgian companies | Georgian | 5% withholding, final |
| Freelancing performed physically in Georgia | Georgian (Art. 104.1) | 1% with SBS / 20% without |
| Salary for work in Georgia | Georgian | 20% |
The director solution for foreign companies
The solution our client base lives by anyway: the owner does not manage the company from Georgia. An employed manager or director outside Georgia runs the operational business; the owner confines himself to shareholder rights and new projects. In short: work on the business, not in the business. That makes sense commercially — delegation is the precondition for scaling — and satisfies the tax requirement: no permanent establishment, no Georgian-source income under Art. 104.1.
BGGE delivers the structural setup: a management or director agreement, documented decision-making (board minutes, substance evidence), and, on request, a binding advance ruling (Art. 47 GTC) confirming the tax treatment in advance. For the specific combination including the distribution logic, see US LLC + Georgia.
Worked example: EUR 60,000 of capital income per year
A Georgian tax resident receives EUR 50,000 in dividends from a foreign brokerage portfolio and EUR 10,000 in interest from foreign bonds:
| Georgia | Germany | Austria | |
|---|---|---|---|
| Tax on EUR 60,000 capital income DE: 25% flat tax plus solidarity surcharge, before allowances; AT: 27.5% capital gains tax | EUR 0 | ~EUR 15,000 | ~EUR 16,500 |
| Wealth tax | none | none | none |
| Inheritance tax (close family) | none | yes | none |
The five-figure annual difference does not come from hiding anything, but from a legal change of residency into a territorial system. The precondition is a clean exit: as long as residency continues in Germany or Austria, worldwide taxation applies there, and in dual-residency cases the treaty tie-breaker decides. Those leaving Germany must additionally clarify exit taxation (§6 AStG) and extended limited tax liability (§2 AStG) with their tax advisor.
Declaration and transparency
Tax-free does not mean reporting-free:
- Home country: Anyone who is or remains taxable in their home country must fully declare foreign accounts and income there.
- CRS: Georgia has participated in the automatic exchange of information since 2024; banks report accounts of persons who are tax resident abroad. Our clients’ goal is relocation: once you are genuinely tax resident in Georgia, your Georgian accounts are not reported abroad — not through a trick, but because the center of your life has moved. Details: CRS and Georgia.
- Georgia: Even exempt structures should be documented (residency certificate, source-of-funds evidence, advance ruling where relevant), especially for account opening — see Bank account in Georgia.
FAQ
FAQ
Are foreign dividends really tax-free in Georgia?
Yes. For individuals who are Georgian tax residents, income without a Georgian source is exempt (Art. 82.2.u GTC) — including foreign dividends, interest, royalties, capital gains, foreign rental income, and foreign pensions.
Is my freelance income tax-free if my clients are abroad?
No. Work you physically perform in Georgia is Georgian-source income (Art. 104.1), regardless of where the client sits or which account is paid (Art. 104.2). With Small Business Status it is taxed at 1% of turnover; otherwise at 20%.
How do I avoid a permanent establishment with my foreign company?
By not managing the company operationally from Georgia yourself: a manager or director outside Georgia runs the day-to-day business, while the owner confines himself to shareholder rights and new projects. A binding advance ruling (Art. 47) adds planning certainty.
Does Georgia have a wealth tax or inheritance tax?
No. Georgia levies no wealth tax and no inheritance or gift tax within the close family. Dividends from Georgian companies to individuals carry a final 5% withholding tax.
Do I still have to report tax-free foreign income somewhere?
Yes, if you are taxable in your home country: foreign accounts and income must be declared there. Georgia has reported account data under CRS to the country of tax residence since 2024 — the model only works legally and transparently.
This article is for general information only and does not constitute legal or tax advice. If you are or remain taxable in your home country, you must declare foreign income and accounts there — always involve a tax advisor in your home jurisdiction before relocating or restructuring. Last updated July 2026; rules may change.