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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Guidance by country: Georgia: dividends

The following applies for periods from the treaty having effect until the amending protocol has effect (see DT7750).

There are three possible rates of withholding tax in Georgia under the treaty:

  1. The dividend will be exempt from withholding tax if the United Kingdom parent company controls, directly or indirectly, at least 50 per cent of the voting power in its Georgian subsidiary and has invested at least £2 million - or the equivalent amount in the currency of Georgia - in the share capital of the Georgian company (Article 10(2)(a)).
  2. The withholding tax rate will be 5 per cent if the United Kingdom parent controls at least 10 per cent of the voting power of the Georgian subsidiary (Article 10(2)(b)(i)).
  3. In all other cases, the withholding tax rate will be 10 per cent (Article 10(2)(b)(ii)).

The withholding tax payable in Georgia as above (if any) qualifies for credit as a direct tax (see INTM164010(c)).

The reductions to the above rates are not given if the dividends are effectively connected (see INTM153120 fifth sub-paragraph) with a business carried on by the United Kingdom resident recipient through a permanent establishment in Georgia.

Where a Georgian company pays a dividend to a United Kingdom company which controls directly or indirectly not less than 10 per cent of the voting power in the Georgian company, credit may also be given for the underlying tax (see Article 23(2)(b) and INTM164010(d)).

Under the amending protocol, dividends are taxable only in the state of residence of the beneficial owner of the dividends unless they are paid out of property investment vehicles, such as United Kingdom Real Estate Investment Trusts. Dividends from such vehicles can be taxed at a rate of 15 per cent, unless they are paid to pension schemes, in which case they are free from source state tax.