Is Crypto Legal Tender In Georgia? The only legal currency for transactions in Georgia is the Georgian Lari (GEL).
However, you can still relatively easily get a personal bank account at a local Georgian bank with USD, GBP, and EUR balances. You can also easily withdraw USD from regular ATMs in Georgia – even though it is not legal tender.
Although crypto is not legal tender, there is currently no regulation by The National Bank of Georgia preventing it from being used in the form of a barter exchange. Using crypto for real estate purchases is a good example. (More on that below.) The main takeaway is, right now you can use it, but regulation could be enacted at any time.
Tax & Capital Gains On Crypto In Georgia
The good news headline here is… 0% tax on crypto trading as an individual, because based on the public decision issued by the Georgian Ministry of Finance in 2019, crypto, by its very nature, is not “sourced” in any specific geographical location, meaning that it is not considered “Georgian sourced”. This type of income would come under the 0% tax on capital gains derived from crypto trading laws.
Crypto inside a legal entity: If your trading activity is performed by a legal entity that owns the crypto, any profit in relation to activity within a Georgian registered legal entity (LLC, for example) would be taxed with 15% Corporate Income Tax and 5% personal Dividend Tax, at the time of distribution. There is no annual profit tax in Georgia. Tax is only applied when profits are distributed. (Georgian Tax Code Articles 97(1)(a) and 130(1).)
Crypto for those with Small Business Status (SBS): Trading activities, especially involving crypto, while holding Small Business Status (1% tax rate) is a complex matter. In general, it would be taxed at 0% as defined above. However, the National Bank of Georgia has yet to decide if crypto trading will be considered a “currency operation”, which would be prohibited for those with SBS (GTC Article 90(3)). So, if in the future, crypto trading becomes regulated as a currency operation, that could lead to a revocation of your SBS if performing crypto trading. In the worst case, there is a small possibility that crypto trading could become regulated as a currency operation and that back taxes may even be applied. This is another reason why trading as a natural person, not with SBS, is recommended.
Of course, the only reason to have SBS in the first place is if you carry on business activities other than crypto trading, which qualify to be taxed at the 1% rate. If crypto is your only income, then you should probably remain as a natural person instead of registering for SBS.
But the most important thing to note is that if you do intend to register for SBS, that income from your crypto trading activity (i.e., supply of crypto assets in exchange for money), while being tax-free, will still count towards the 500,000 GEL (~$160,000 USD) annual turnover threshold. Once exceeded, you could lose your 1% tax status entirely.
The summary is: if your crypto trading is not performed through a business, then you most likely will have 0% Personal Income Tax to pay on profit and when liquidating your crypto-provided you are a tax resident of Georgia, and no other country has a claim to tax you on that income.
To get tax residency in Georgia, you have two options:
183 days present on the territory of Georgia in any 12-month period.
High Net Worth Individual tax residency program.
It should be noted that simply gaining tax residency in Georgia does not always instantly cancel tax residency in your previous country. There is often a formal process to go through, and with countries like the USA, renouncing citizenship is the only way to exit the tax system.
In some countries, capital gains taxes may still be applied even after exiting your previous tax system, as they are aware that people could otherwise move abroad for a year in order to avoid a large tax bill, then return home with a pile of untamed gains. So, it’s essential to check the laws on this in your current country of tax residency.
Contact our legal advisors in Georgia. and we will help you register a business in Georgia online.
