The Revenue Service will tax non-resident individuals at the maximum rate in case of failure to submit a property tax declaration!

The Internal Revenue Service has issued another situational guidance document dealing with the taxation of non-resident individuals' estates (N1434). 

According to the new approach, the Revenue Service of non-resident natural persons without Georgian citizenship, who own property subject to property tax in the territory of Georgia, in case of failure to submit a property tax declaration, He will charge the property tax at the highest rate and demand payment of said tax.

 As it is known, according to subsection "c" of Article 201, Part 1 of the Tax Code, a natural person is taxed with property tax (except for land):

•       real estate (including unfinished construction);
•       yacht, boat;
•       helicopter, airplane;
•       light vehicles;
•       other property;

 Both resident and non-resident natural persons (regardless of citizenship) who own the above-mentioned property in Georgia are subject to property tax, if the income of such natural persons (their family) exceeds 40 GEL during the calendar year. In case of recording income over 000 GEL, taxation is done from the market value of the property:

•       For families with income from 40 to 000 GEL, at the rate of 100% to 000% of the market value of the property.
•       For families with an income of 100 GEL or more, at the rate of 000% to 0.8% of the market value of the property.

 It is known that in general, all types of income are included in the above-mentioned incomes of a natural person, including Both received from a source in Georgia and received from a source not in Georgia, etc. Without taking into account the tax benefit (except for non-resident citizens of Georgia, in which case only local income is taken into account).

 Therefore, when calculating the income of a non-resident natural person for estate tax purposes, generally all types of income should be taken into account. However, it should be noted that, in contrast to resident individuals, information on the income of non-resident individuals is less available to the Revenue Service, therefore, the non-resident individual's property tax Failure to submit the declaration in case the Revenue Service considers that the income of such a non-resident natural person exceeds 100 GEL, As a result, the Revenue Service provides those non-resident individuals who, for example - If they do not submit a declaration, they own an apartment or a house in Georgia will be taxed according to the rate (from 0.8% to 1%) and requires payment of property tax on properties assessed at the highest rate.

In the case of later submission of the annual property tax return, the estimated property tax will be subject to reduction, however, in this case, the person may be subject to appropriate sanctions. despite. that it is not mentioned in the situation manual about the sanction.  

 As a result, non-resident natural persons who own the above-mentioned property in Georgia should take into account all of the above-mentioned and themselves should timely declare and pay the above-mentioned tax or properly substantiate that their income during the calendar year did not exceed 40 GEL. 

For details on the situation guide, see The following link: 

https://infohub.rs.ge/ka/workspace/document/740f2138-085a-40d9-bbbc-87133c9dd5dd