I spend most of my time making investments in frontier markets, yet I’ve taken steps to diversify the rest of my life internationally too.
One way I’ve done this is by getting residency in the Republic of Georgia (not to be confused with the US state) earlier this year. I hope to invest in Georgia soon and spend some time there.
Why would I want residency in another country? First of all, tax reasons. I’m a US citizen and unlike almost every other country in the world, I’m taxed based on citizenship and not residency.
A German living in Singapore, for example, no longer pays tax to Germany and instead pays it to Singapore. He’s no longer living in Germany, after all. Why should he pay taxes to a country when he’s not living there to use the services his taxes go toward?
Being an American, I’m not so fortunate. The IRS wants a cut no matter where I am in the world. The “Foreign Earned Income Exclusion” is the only respite I have.
This exclusion lets me deduct around $100,000 of my taxable income if I live abroad. Having official residency to prove my status helps a lot.
Second, having residency or citizenship in another country opens up investment opportunities, making it easier to deploy capital.
For example, I’m also working toward citizenship in Cambodia and citizens of the country are allowed to own land. Cambodian farmland and other types of property investments are otherwise closed to foreigners.
The Best Government in Eastern Europe?
Most governments aren’t looking out for their citizen’s best interest, but some are no doubt better than others.
Getting residency is a bureaucratic process practically everywhere in the world. Georgia makes it easier than most though. Needless to say, this lures entrepreneurs to invest in Georgia.
Filing for residency itself took less than a week. It happened at the “Public Service Hall” in Georgia’s capital of Tbilisi.
The hall is a massive, newly built, dome-like structure. The building has banks, cafes, and dozens of sections with queues taking care of everything from residency to pension applications.
Mere thoughts of so much government in one place might give some people a headache. However, the Public Service Hall is clean, well-organized, and my queue came up quickly.
Despite all of that, I would not recommend going through Georgia’s residency process by yourself. A good lawyer is a must.
Why? Well, most government workers don’t speak English. Not only that, but they unexpectedly called me in for an “interview” a week before my residency’s approval.
I wasn’t in Georgia at the time… my lawyer was able to complete the interview on my behalf though. This saved me the time and cost of an extra flight back.
Something else went wrong too. For the first time in my life, I lost my passport.
This story could be an entire article in and of itself. But the short version is that I was able to track down my passport three days later through the help of my attorney.
Why Invest in Georgia? Efficiency & Prosperity
Georgia’s simple residency process is a good representation of the country as a whole. Banks in Tbilisi are open until 8PM on weekdays while online wire transfers are a breeze.
Companies can be opened in about a day and Georgia jumped to 15th place on the World Bank’s Ease of Doing Business Index in just a few years.
As a result, entrepreneurs want to invest in Georgia and set up shop.
Georgia’s inward foreign direct investment increased by 8.9% last year – over three times the world average of 2.7%. New businesses are opening all over the city.
Property values are also on the uptrend as people flock to invest in Georgia and its booming economy.
In some ways, Georgia’s economic growth and government policies are similar to the early days of Singapore. Most of us are familiar with the story of how a malaria infested swamp became one of the most important financial centers in Asia.
Nowadays, Singapore is still very efficient. But good luck getting permanent residency unless you put in many years’ worth of on the ground effort. Either that, or have a net worth into the tens of millions of dollars.
Singapore is rich and desirable enough to where they can be very selective about immigrants.
Overall, I’m very happy to have received residency in Georgia. I look forward to seeing the country’s future and involving myself more in it.
Will Georgia go the same way as Singapore? Only time will tell, but I’m personally betting my money on it. One thing is almost certain: if it does, things won’t be as easy as they are now.
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