On Double Taxation Agreements and Georgia's 1% tax


A question for those who know a bit more about tax laws. If you’re a national and fiscal resident of a country that has an agreement to avoid double taxation with Georgia, does registering as an individual entrepreneur in Georgia and paying their 1% tax automatically mean you don’t have to pay tax in your country?

I don’t know about Georgia specifically. But in general the double taxation treaties would not enable this type of abuse of the tax system. Double taxation treaties are meant to provide that you would not be taxed in Georgia at 20% and also in France at 30% for a total of 50%. In the case of Georgia 1% tax, you would pay 1% to Georgia but still have to pay 29% to France, for a total of 30%.

That makes sense. So in order to legally pay the 1% tax only in that scenario, you’d have to stop being a tax resident of France and become a tax resident of Georgia (and meet all the requirements for that), right?

essentially that is correct but obviously a lot of nuances and caveats.

Be glad you aren’t American. Americans owe taxes to the USA no matter where they are tax residents. Some taxes like the NIIT aren’t covered by double tax treaties, so pay and pay again. Even if you avoid paying the IRS, you’ll still have to fill out extremely elaborate paperwork every year. If you make a mistake on your FATCA or FBAR filing, you’ll owe up to 300% of your assets (not just income) in penalties.

But the mystery remains: why are people lining up to renounce citizenship from the A#1 best country on Earth? They tell us every day on the teevee that all foreigners would die happy if they could even just glimpse our border wall for an instant, and I know that wedding party guests are filled with pride to die for democracy when they are vaporized by predator drones.