Colomn for Overseas real estate investment

The Myth of “High Interest and No Tax” Georgian bank time deposits are often promoted with phrases like “high interest” and “tax-free.” While it is true that interest rates in Georgia can be relatively attractive, and local tax treatment appears simple, this perception can be misleading when viewed from a global tax perspective. Local Tax Treatment vs. Global Tax Reality Within Georgia, the taxation of bank interest is straightforward, which leads many to assume that interest income is effectively tax-free. However, this assessment only applies within Georgia itself and does not account for international reporting standards or foreign tax obligations. Why Tax Residency Matters Under CRS Under the Common Reporting Standard (CRS), the decisive factor is not where the bank account is held, but where the account holder is tax resident. Banks report account information to tax authorities based on declared tax residency, and this information is exchanged internationally. As a result, interest income may still be taxable in the account holder’s country of tax residence, regardless of local Georgian treatment. Why “Tax-Free” Is Often Misunderstood The misunderstanding surrounding Georgian deposits stems from several factors: Light or simple local taxation Outdated, pre-CRS information A focus on where tax is not collected rather than where it is owed In the CRS era, transparency has replaced secrecy, and proper reporting has become essential. Practical Considerations for Deposit Holders Anyone considering Georgian time deposits should ensure: Their tax residency status is clearly defined Interest income is assessed under applicable tax laws Account usage can be fully explained under CRS reporting With proper planning, Georgia’s attractive interest rates can be utilized without creating compliance issues. Conclusion: Beyond the “Tax-Free” Label Georgian bank deposits can be a useful tool for asset management, but only when approached with a correct understanding of tax obligations. In today’s global reporting environment, the key question is not whether income is taxed locally, but how it should be handled under the rules of one’s tax residency. Clarity and compliance, rather than assumptions, are what ultimately protect investors in the CRS era.