Double Taxation Treaties: How You Can Avoid Paying Twice
5 minute read | Last Updated 28th January 2026
Written by: Lela Gochitashvili
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Introduction
For foreign investors, entrepreneurs, and expatriates, one of the most important tax concerns when operating internationally is the risk of double taxation, being taxed on the same income in more than one country. Georgia addresses this issue through an extensive network of Double Taxation Treaties (DTTs) designed to protect individuals and companies from paying tax twice on the same income.
This article explains how double taxation treaties work, how foreigners can benefit from them in Georgia, and what steps are required to apply treaty protection correctly.
What Is Double Taxation?
Double taxation occurs when the same income is taxed in two different jurisdictions:
- In the country where the income is generated (source country), and
- In the country where the individual or company is a tax resident (residence country)
Without treaty protection, foreign investors could face duplicate tax obligations.
What Are Double Taxation Treaties?
Double Taxation Treaties (DTTs) are bilateral agreements between two countries that determine:
- Which country has the right to tax specific types of income
- How tax credits or exemptions should be applied
- How tax disputes between countries are resolved
Georgia’s double taxation treaties are based on internationally recognized standards and aim to:
- Prevent double taxation
- Prevent tax evasion
- Encourage cross-border investment and economic cooperation
Georgia’s Double Taxation Treaty Network
Georgia has concluded double taxation treaties with more than 55 countries, including:
- EU member states
- United Kingdom
- United States
- Canada
- China
- India
- Turkey
- Ukraine and other CIS countries
For foreigners, this means income earned in Georgia or abroad may be taxed only once, depending on treaty rules.
How Double Taxation Treaties Work in Practice
Double taxation treaties typically use one of the following methods:
A. Exemption Method
Certain types of income are taxed only in one country and are exempt in the other.
B. Tax Credit Method
Income may be taxed in both countries, but the tax paid in one country is credited against the tax due in the other.
The applicable method depends on:
- The specific treaty
- The type of income
- The taxpayer’s residency status
Types of Income Covered by Double Taxation Treaties
Georgia’s double taxation treaties generally cover:
- Employment income
- Business profits
- Dividends
- Interest
- Royalties
- Capital gains
- Income from independent services
For foreign investors, treaty protection is especially relevant for dividend income, interest payments, and service fees, which are often subject to withholding tax.
Withholding Tax and Treaty Benefits
Under Georgian law, payments made to non-residents may be subject to withholding tax. However, a double taxation treaty can:
- Reduce the withholding tax rate
- Eliminate withholding tax entirely
- Shift taxing rights to the taxpayer’s country of residence
To apply treaty benefits, the foreign recipient must usually provide:
- A valid tax residency certificate issued by their home country
- Supporting documentation confirming treaty eligibility
Without these documents, the standard Georgian withholding tax rates apply.
Who Can Benefit from Double Taxation Treaties?
Foreigners may benefit from Georgia’s double taxation treaties if they are:
- Tax residents of a treaty country
- Individuals, companies, or shareholders receiving Georgian-source income
- Investors earning dividends, interest, or royalties from Georgian entities
Treaty benefits apply only if residency and income classification are properly documented.
Double Taxation Treaties and Tax Residency
Tax residency plays a crucial role in treaty application. A person must generally be considered a tax resident of one of the treaty countries to claim treaty protection.
According to the Tax Code, Georgia determines tax residency primarily through:
- The 183-day rule, or
- The High-Net-Worth Individual (HNWI) tax residency mechanism
Establishing tax residency correctly is essential to avoid disputes and ensure treaty benefits apply.
Common Mistakes Foreigners Make
Foreigners often lose treaty benefits due to:
- Failing to submit a tax residency certificate
- Misclassifying income (e.g., services vs royalties)
- Assuming treaty protection applies automatically
- Ignoring Georgian reporting and filing requirements
Proper planning and documentation are key to avoiding unnecessary taxation.
How Orson Law Can Help
Orson Law assists foreign investors and expatriates with:
- Determining treaty eligibility
- Applying reduced withholding tax rates
- Preparing and submitting tax residency certificates
- Structuring investments to maximize treaty protection
- Ensuring compliance with Georgian tax law
Our goal is to help clients avoid double taxation legally and efficiently while maintaining full regulatory compliance.
Conclusion
Georgia’s double taxation treaties play a critical role in making the country a safe and attractive destination for foreign investment. By clearly allocating taxing rights and offering exemption or credit mechanisms, these treaties ensure that foreigners do not pay tax twice on the same income.
Understanding how treaties apply and how to claim their benefits is essential for protecting income and optimizing international tax planning. With professional guidance, foreigners can confidently operate in Georgia’s transparent and treaty-backed tax environment.
For tailored advice, contact Orson Law at info@orsonco.com or via WhatsApp / +995 511 77 85 77.
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