Property rental tax in Georgia for foreigners: how to declare your income

Buying a flat in Georgia is only half the story. If you let it out, you’ll need to declare the income you receive: determine your tax status, register on the Revenue Service’s portal, draw up a tenancy agreement and keep the supporting documents. Foreigners often lack clarity on this matter: how much to pay, where and how to report it, and what to do with any money you wish to transfer abroad. This article sets out, step by step, what you need to do to ensure that your rental income in Georgia is above board and clear to both the tax authorities and the bank.

What is required before submission: proof of ownership and taxpayer status

You can only let out property for which ownership has already been registered with the National Agency for the Public Register (NAPR): proof of this is an extract from the register, which you will also need when proving your income and when dealing with the tax authorities. We have set out a step-by-step guide on how a foreign national can complete a property purchase in a separate guide: How a foreigner can buy property in Georgia. The deadlines, fees and pitfalls of the registration process itself are summarised in this article on the registration of property in Georgia.

What we’re interested in here is the next step: once you’ve registered, you become not only the owner but also the recipient of income, which needs to be declared. Two issues are important in this regard: the basis on which the flat is let (the tenancy agreement) and your tax status (resident or non-resident). We will look at both of these in turn below.

Tax status: resident and non-resident

Your tax status determines which types of income are subject to tax in Georgia. Under the Georgian Tax Code, an individual is considered a resident if they have actually been present in the country for 183 days or more during any continuous 12-month period ending in the relevant tax year. If you have not met this threshold, you are a non-resident.

For an owner of a flat in Georgia, this distinction does not exempt them from the obligation to pay tax on rental income: income from letting Georgian property is received in Georgia, so tax is payable on it regardless of where you live. There is another difference: how your income outside Georgia is taxed. Non-residents are taxed here only on income from Georgian sources, whilst residents are generally taxed on all their income. If you plan to stay in the country for more than six months, assess in advance whether you will become a resident and check this with a tax adviser.

The tax rate for a typical scenario is straightforward: an individual’s income from letting out residential property, from which no deductions are made, is taxed at the rate 5% of the amount received (Article 81 of the Tax Code). Repair costs and utility bills are not deductible in this case. The letting of non-residential premises and other scenarios may be taxed differently; therefore, it is advisable to check the type of contract and the intended use of the premises on the Revenue Service portal (rs.ge) before letting for the first time.

Registration on rs.ge and the procedure for paying rental tax

All tax procedures in Georgia are carried out online via the Revenue Service portal rs.ge. The procedure for a foreign national is as follows: log in to the taxpayer’s personal account (you will need your passport and the property owner’s details), declare the rental income on your tax return and pay the tax. Tax is calculated on the amount actually received from the tenant.

• Set up a taxpayer account on rs.ge before you receive your first rent payment — this makes it easier to declare your income right from the start.
• Keep a record of payments by month: amount, date, payer and method of payment.
• Please check the latest instructions on rs.ge for the deadlines for submitting your tax return and making payments, as well as the relevant forms and sections of the portal: these are subject to change, and you should not rely on second-hand information.
• If you are unsure of your tax status, or if you are letting out a flat through an agency, please consult a Georgian accountant or tax adviser.

Tenancy agreement and proof of income

A tenancy agreement is the basis for legal compliance: without it, it is difficult to account for the income, and in the event of a dispute with the tenant, there is nothing to base your case on. Draw up the agreement in writing, preferably in two languages (Georgian and the tenant’s language), and include the parties, the property’s address and cadastral code from the NAPR extract, the term, the amount and method of payment, and the conditions for termination.

Keep all supporting documents together: the tenancy agreement, an extract from the register, handover certificates, and bank statements showing incoming payments. It is best for the tenant to pay by bank transfer into your account: this way, every payment is visible on your statement, and the source of income is clear both when filing your tax return and when transferring money abroad.

Errors in the legalisation of a tenancy

The main mistake property owners make is to assume that all their obligations end once the title has been registered. The owner’s tax and other obligations arise as soon as you start receiving rent. Keep the originals of the tenancy agreement, extracts from the NAPR and proof of payment: these are required for tax records and, if necessary, for a residence permit.

The rates and thresholds in the Tax Code are subject to change, so please check the current version at matsne.gov.ge and explanations on rs.ge. Do not rely on verbal advice from the tenant, an estate agent or acquaintances.

Examples: long-term and short-term rentals via online platforms

Below are two simplified examples of how to work this out. The figures are for illustrative purposes only and are intended merely to demonstrate the logic; please check your own amounts and payment schedule on rs.ge.

Example 1. Long-term lease

A flat in Tbilisi is let for one year at $600 per month to an individual for residential purposes. The annual income is $7 200. At a tax rate of 5% before deductions, the tax will amount to approximately $360 per year (payments in lari are calculated at the exchange rate in force on the date the income is received). Repair costs and utility bills are not deducted from the taxable base.

Example 2. Daily rentals via platforms

Flats in Batumi are let via online booking platforms. The total amount received over the course of a year, after deducting the platform’s commission, constitutes your income; keep separate records of this for each booking. Taxation of short-term rentals depends on who the tenant is and how the business is registered, so please check rs.ge or consult a local adviser to clarify how tax is calculated in your specific case. If you plan to let the property as a business, work out how much you’ll be left with after tax and expenses.

To understand just how profitable this arrangement is, compare the income with the costs, as set out in our analysis: How to work out whether your property is generating enough income.

Transferring income abroad and double taxation

Rent can be received into a Georgian bank account and then transferred abroad. For large transfers, the bank may request documents confirming the source of the funds: a tenancy agreement, an extract from the NAPR and proof of tax payment. Therefore, legalising your income in Georgia is necessary not only for tax purposes, but also for your own benefit.

The other side of the issue is taxation in your country of residence. Many countries tax their residents’ worldwide income, which means that the same income may be subject to two taxes. Georgia has concluded double taxation agreements with a number of countries, which usually allow for a credit against tax paid in Georgia. To find out whether such an agreement exists with your country and how to claim a tax credit, you should check the text of the agreement and consult a tax adviser in your country, rather than relying on general advice.

Conclusion

In short: income from letting a flat in Georgia must be declared from the very first payment. Determine your tax status, set up an account on rs.ge, draw up a written tenancy agreement and keep records of your payments. Rates and deadlines under tax legislation are subject to change, so before submitting your tax return, check the current version on official websites or consult a Georgian tax adviser.

We have covered the process of buying a flat as a foreigner and registering it separately: step-by-step guide to buying и Timelines and pitfalls of registration. If you need help finding a property and managing the transaction, please submit an enquiry and we will get in touch with you shortly.