Trading for a living & taxes in the Netherlands

This is a discussion on Trading for a living & taxes in the Netherlands within the Home Trader forums, part of the Trading Career category; Are there any Dutch traders here, who trade for a living, but for themselves, i.e., not as a trader for ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jan 15, 2010, 2:07pm   #1
DHB
 
DHB's Avatar
Joined Apr 2008
Trading for a living & taxes in the Netherlands

Are there any Dutch traders here, who trade for a living, but for themselves, i.e., not as a trader for a trading firm or bank? If so, how have you arranged your taxes? Have you created an onshore, or perhaps even an offshore business entity, through which you trade? Do you (still) pay ordinary income tax? What are the options that are available, and from what level(s) of equity does it pay to go for construction ABC or go for construction XYZ?

Additionally, does it matter what you trade, tax wise? For example, is there a fiscal difference between making a living trading cash forex, which is traded in the interbank market (so not in any specific country), and trading US stocks?

If there's anyone who could shed some light on this matter, I would be very grateful.

Cheers
DHB is offline   Reply With Quote
Old Jan 15, 2010, 4:50pm   #2
 
7 Posts
Joined Nov 2009
Re: Trading for a living & taxes in the Netherlands

As i understand it trading profits are not taxed in the Netherlands.
You do have to pay " vermogensbelasting" propertytax. So it's
a perfect country to tarde from.

Quote:
Originally Posted by DHB View Post
Are there any Dutch traders here, who trade for a living, but for themselves, i.e., not as a trader for a trading firm or bank? If so, how have you arranged your taxes? Have you created an onshore, or perhaps even an offshore business entity, through which you trade? Do you (still) pay ordinary income tax? What are the options that are available, and from what level(s) of equity does it pay to go for construction ABC or go for construction XYZ?

Additionally, does it matter what you trade, tax wise? For example, is there a fiscal difference between making a living trading cash forex, which is traded in the interbank market (so not in any specific country), and trading US stocks?

If there's anyone who could shed some light on this matter, I would be very grateful.

Cheers
ehlaban is offline   Reply With Quote
Old Jan 16, 2010, 12:12pm   #3
DHB
 
DHB's Avatar
Joined Apr 2008
Re: Trading for a living & taxes in the Netherlands

DHB started this thread Hi ehlaban,

Thanks for your response. I cannot help but think that what you're saying is too simplistic. I have very limited tax knowledge, but as far as I know, property tax (vermogensbelasting) only deals with the assets you have, not with the income you receive (or generate via your assets).

As an example, let's say you've got €200K in assets and are making 5% a month, which you use entirely to live off. My uneducated guess would be that not only would one have to pay property tax (vermogensbelasting) on the 200K of assets, but one would also have to pay income tax and contribute social security premia each month on the 10K income you receive. And I'm not even yet talking about the added complexity of having your trading account in another country, such as Britain or Switzerland, which might imply that your assets and/or income are liable for taxation in another country (although I'm not sure about this).

If any of the aforementioned is correct, I can image it being beneficial to create an onshore or offshore legal entity in which to put in your assets, and trade via this entity. This might also help to obtain financing for a mortgage for example, which I think will be difficult to get if you don't have any official sources of income, other than (what the average banker is likely to perceive as) financial speculation. Maybe it would be even more beneficial to migrate altogether to some tax haven, but let's not delve into that subject just yet.

Now don't get me wrong, I do intend to go and see a tax specialist about the possibilities in due course, but before doing so, I would like to be a bit more informed about what's possible than I am now.

Again, anyone who would like to share some of their experiences with taxation in Holland, you're welcome to do so!

Last edited by DHB; Jan 16, 2010 at 2:07pm. Reason: typo
DHB is offline   Reply With Quote
Old Jan 20, 2010, 11:01pm   #4
Joined Jun 2003
Re: Trading for a living & taxes in the Netherlands

I used to live and pay taxes in NL: Then dividends, interest and profits from writing options were normal taxable income at different levels. Trading income used to be taxed at 1.2 % of the value of the assets ( they assumed you make 4% on those assets which were to be taxed at 30%). But this friendly taxation is by law restricted to "gains from your assets which were managed in a careful way", so max 50 trades per person and year. Still this restriction is generally waved and no additional taxatiion was asked.

CMC ( when they were still named Deal4Free) used to deliver an official paper to their dutch clients, explaining the tax exemtion of cfd and forex trading.

But all this was 4 or 5 years ago. So check the web!

Regards

Hittfeld
Hittfeld is offline   Reply With Quote
Old Jan 20, 2010, 11:39pm   #5
DHB
 
DHB's Avatar
Joined Apr 2008
Re: Trading for a living & taxes in the Netherlands

DHB started this thread Hi Hittfeld,

Thanks for sharing this info. The 30% tax on the fictitious 4% gains (i.e., the 1.2% you were talking about) still applies nowadays, with the first 20k for singles and 40k for couples being exempt from that tax to boot, see this link (which is in Dutch btw).

However, that 1.2% should only be paid over the average asset value over the year. If you trade for a living, your capital gain will be substantial over the course of a year, but you withdraw part or perhaps even all of that gain every month to live from. Would these withdrawals from your trading account not be seen as regular income, and would these then not be subject to ordinary income tax and social securities blah blah? Again, if that's the case, I suspect that it might be advantageous to set up a onshore/offshore legal entity if your assets and/or monthly income from trading exceed a certain threshold value.

Knowing how tax happy our government is, I find it hard to believe I'm living in a trading tax haven, but who knows if this is a loophole
DHB is offline   Reply With Quote
Old Jan 21, 2010, 10:27am   #6
 
blancspa's Avatar
Joined May 2008
Re: Trading for a living & taxes in the Netherlands

yeah, would be good to know, I am thinking of giving Holland a try
__________________
...driven on by the greed of the trader, is led over all lands and all seas by the hope of gain...
blancspa is offline   Reply With Quote
Old Jan 21, 2010, 10:58am   #7
Joined Jun 2003
Re: Trading for a living & taxes in the Netherlands

Quote:
Originally Posted by DHB View Post
Hi Hittfeld,

If you trade for a living, your capital gain will be substantial over the course of a year, but you withdraw part or perhaps even all of that gain every month to live from. Would these withdrawals from your trading account not be seen as regular income, and would these then not be subject to ordinary income tax and social securities blah blah?
.....

Knowing how tax happy our government is, I find it hard to believe I'm living in a trading tax haven, but who knows if this is a loophole

You ARE living in a tax haven!!!!! The trick is NOT to look for a tax heaven in general, but to look for a country where YOUR KIND OF ICOME GENERATION is taxfree. For example gains from sale of real estate property are (with certain restrictions) free from any tax in NL and GErmany, but taxed heavily in many countries (incl SWITZERLAND). Gains from betting are taxed (and due to social security) in Switzerland, but not in Germany or UK - in NL depending on the subject you are betting on! So is Switzerland a tax heaven? GErmany a tax hell? It depends.

To my knowledge NL is a traders tax heaven. I used to play the following game: A self created Day-Job ( 15 hrs per week ) for the taxation and social security. Savings accounts ( taxed als interest), broker accounts for monthly traded investment strategies ( 1.2% - additionally 15% on received dividends) broker accounts for trading (1.2%). The cash stream from the accounts are not subject to any taxation or ss. Everything to be declared in iots proper "box".

As long as you can proof to have another job, there was no risk involved to be considered as a professinonal trading firm (which would be a different kind of taxation).

Regards
Hittfeld

p.s. I `m going to leave CH within 2 years. Guess where!
Hittfeld is offline   Reply With Quote
Old Jan 21, 2010, 11:02am   #8
 
blancspa's Avatar
Joined May 2008
Re: Trading for a living & taxes in the Netherlands

uk ? lol
blancspa is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Trading Arcade in Amsterdam, The Netherlands BetterOptions Trading Firms 0 Feb 12, 2009 1:57pm
Trading Facts | Taxes (UK) Magos General Trading Chat 3 Dec 10, 2008 8:41am
Trading Futures & living in Australia? _JWG_ Futures & Options 15 Nov 21, 2008 12:41pm
Taxes on trading EUREX products pal Home Trader 0 Jun 10, 2008 7:31am
Traders in the Netherlands bodemloze_put The Foyer 0 Aug 3, 2005 1:55pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)