Forex tax haven question

[stochastic]

Before you go running to go offshore, make sure you pick a jurisdiction with no tax treaties in case you need to use their banking. Most Caribbean jurisdictions like Cayman islands now are under EU directives. Dubai, has tax treaties among others, with Germany, Switzerland, US.
For privacy and serious banking secrecy only Panama and Singapore have laws against disclosing information. See panama corporations in this section.
You can open your trading account under the corporate name and do your banking in a third country. Under Panama law, all income is tax free.

 

[soldintime]

Why not move to Malta to trade. Foreign earnings are tax free as long as they are not remitted within the same tax year. So wait till the tax year is over and earnings from the previous year can be remitted tax free.

Malta does not have the Tax heaven badge as other countries, cheap living, plenty of sun shine. Also there are no council taxes.

 

[zupcon]

Why not move to Malta to trade. Foreign earnings are tax free as long as they are not remitted within the same tax year. So wait till the tax year is over and earnings from the previous year can be remitted tax free.

Malta does not have the Tax heaven badge as other countries, cheap living, plenty of sun shine. Also there are no council taxes.

Can you clarify this, in which country are your earnings actually being made ?, and in which country are you actually domiciled ?

I trade from Malta using a Maltese ITC which pays approx 4.5% tax, the only restriction is that I'm not allowed to spend more than 180 days per year there, but thats fine cos there are better places to be than stuck on a barren rock.

 

[soldintime]

Can you clarify this, in which country are your earnings actually being made ?, and in which country are you actually domiciled ?

I trade from Malta using a Maltese ITC which pays approx 4.5% tax, the only restriction is that I'm not allowed to spend more than 180 days per year there, but thats fine cos there are better places to be than stuck on a barren rock.

I am domiciled in Netherlands. Malta has a non dom agreement similar to the UK. However earnings made overseas become capital at the start of the new tax year. This allows you to freely remit those earnings. All my trades are earned outside of Malta.

You love it or hate in Malta. After 3 years we are looking at moving somewhere else. We have enjoyed it but Island live is a bit small for us.

 

[SanMiguel]

Don't know what it's like for a Brit offshoring a company while remaining a resident of Britain and working out of Britain, but I definitely know that in Germany for example that would not work.

Live and work in Germany, you pay taxes in Germany, and having or not having an offshore company is totally irrelevant.

The only way having a firm in Monaco etc allows you to not pay taxes in Germany is if you are a resident of Monaco.

I think there are a lot of very dodgy "advisors" out there that may well try and make a quick buck off of gullible prey, but for Germany at least the reality is extremely straightforward and simple, for a German resident an offshore company offers no benefits, not on the right side of the law.

One thing I do know about Britain which most Brits probably don't realize is that the good news is that you are a veritable tax haven.

Yup.

Bad news is that that applies only to foreigners I'm afraid.

Switzerland has a very similar arrangement.

Foreigners can have an offshore trading company in Monaco or the Virgin Islands etc while living in and trading out of the UK or Switzerland.

And you only pay taxes on that money that you "import" to spend.

The rest of your profits that you generated but do not spend in the UK / Switzerland remains tax free, even if you spend them outside of the UK / Switzerland.

"The UK is a tax haven for people of foreign domicile, even if they are UK resident (residence and domicile being separate legal concepts in the UK), in that they pay no tax on foreign income so long as it is not remitted to the UK."
Tax haven - Wikipedia, the free encyclopedia

Pretty clever, as that attracts some seriously rich people who spend lots of money in your country.

Could a UK resident register a company in Switzerland and trade from Spain?
What happens if you then become resident in Spain?
How would you get your offshored money without being taxed? Surely as soon as you import it into any country, it becomes taxable?

 

[SanMiguel]

Can you clarify this, in which country are your earnings actually being made ?, and in which country are you actually domiciled ?

I trade from Malta using a Maltese ITC which pays approx 4.5% tax, the only restriction is that I'm not allowed to spend more than 180 days per year there, but thats fine cos there are better places to be than stuck on a barren rock.

What is a Maltese ITC? Is it possible just to register a Maltese trading company but trade SBs or CFDs from the UK and not pay tax on them?

 

[zupcon]

What is a Maltese ITC? Is it possible just to register a Maltese trading company but trade SBs or CFDs from the UK and not pay tax on them?

Its an international trading company. There are all sorts of bizarre and complex issues regarding residency, so you probably need to talk to someone who specialises in tax.

 

[soldintime]

Could a UK resident register a company in Switzerland and trade from Spain?
What happens if you then become resident in Spain?
How would you get your offshored money without being taxed? Surely as soon as you import it into any country, it becomes taxable?

You become resident of Spain when you spend more than 183 days there. Spain will tax you on overseas earnings. If you are UK based and domiciled in the UK there are not any legal alternatives to reduced tax on trading. Most European countries tax on a worldwide income basis. If you control an offshore entity earnings will also fall under this. There is no legal way of getting away with this. Of course you can decide not to declare in Spain but it could come after you later in life.

However Malta in Europe has a unique position that it also has a non domicile rule that UK and European citizens can use and overseas income is not taxed as long as you do not remit that income within the same tax year. This does mean you have to live there. Also you have to become a non resident in the UK. That means on average you can't spent more than 90 days per year on a 4 year period.

I live of my trading and not being taxed makes a huge difference. It also feels good to know that everything I do is legal and I do not have to worry about a TAX investigation.

 

[soldintime]

What is a Maltese ITC? Is it possible just to register a Maltese trading company but trade SBs or CFDs from the UK and not pay tax on them?

The company will fall under controlled foreign entity in the UK and income from that will be taxed. Your only legal way as a trader is to move to a tax favorable country and become non-resident in the UK

 

[SanMiguel]

The company will fall under controlled foreign entity in the UK and income from that will be taxed. Your only legal way as a trader is to move to a tax favorable country and become non-resident in the UK

What does remitting the income involve? Does that mean taken out of the capital pot of money in your account?

Also, does a UK resident retain UK tax status if staying in the UK for 90 days? The HMRC site is confusing as it also meantins a 183 day period.

 

[soldintime]

Remitting income is basically profit that you transfer to your home country. When it comes to trading it is really hard to separate profit from capital. The tax man will treat any withdrawal made as income when you have made a profit.

 

[Hittfeld]

I am domiciled in Netherlands.
.....
After 3 years we are looking at moving somewhere else. We have enjoyed it but Island live is a bit small for us.

Yeah, lived and traded a couple of years on and from Ameland...... No island ever again for me! But maybe..the taxman.....

Btw: Is the tax advantage alone for a dutch trader big enough to move to Malta?

Thanks
Hittfeld

 

[SanMiguel]

Remitting income is basically profit that you transfer to your home country. When it comes to trading it is really hard to separate profit from capital. The tax man will treat any withdrawal made as income when you have made a profit.

So, basically anything withdrawn from the cash machine will be treated as income and taxed? ...but only taxed as capital gains not income?

 

[zupcon]

Also, does a UK resident retain UK tax status if staying in the UK for 90 days? The HMRC site is confusing as it also meantins a 183 day period.

When I did this I was restricted to spending no more than an AVERAGE of 90 days in the UK in any year, over I think a minimum of a 4 year period. The day you arrive and day you leave where not included, so you can efectively grab a few extra days by arranging appropriate flight times.

183 days is the total number of days that must not be exceeded in any single year, so if your absent for a couple of years without a visit, you could use up the allowance on a longer visit at some other time.

If you do this, make sure you keep all details of flights etc, because if they get a chance to screw you for a decent amount of tax, they'll definately have a pop, particularly if you retain any sort of business interests inside the UK. Its far better to make a clean break

 

[SanMiguel]

When I did this I was restricted to spending no more than an AVERAGE of 90 days in the UK in any year, over I think a minimum of a 4 year period. The day you arrive and day you leave where not included, so you can efectively grab a few extra days by arranging appropriate flight times.

183 days is the total number of days that must not be exceeded in any single year, so if your absent for a couple of years without a visit, you could use up the allowance on a longer visit at some other time.

If you do this, make sure you keep all details of flights etc, because if they get a chance to screw you for a decent amount of tax, they'll definately have a pop, particularly if you retain any sort of business interests inside the UK. Its far better to make a clean break

The thing is is that if I only had to stay in the UK 90 days a year then I would do that to retain my tax free trading status. However, the HMRC do not make it clear whether it is 90 days or 183.
If it's 183 days, then I will be looking to move elsewhere and get CGT free or CGT reduced taxes.

 

[soldintime]

Yeah, lived and traded a couple of years on and from Ameland...... No island ever again for me! But maybe..the taxman.....

Btw: Is the tax advantage alone for a dutch trader big enough to move to Malta?

Thanks
Hittfeld

Although born in the Netherlands I am married to an Australian and have lived for 11 years in the UK. So I am not that attached. I also would not compare Ameland with 10000 people with Malta with 400000 and a great climate. English is well spoken in Malta that helps.

Yes when you live of your trades alone TAX is a big thing as you put a lot of capital at risk.

I love the Netherlands and I have many friends there but the world is so much bigger and there are lots of other places to see and explore whilst trading.

 

[soldintime]

So, basically anything withdrawn from the cash machine will be treated as income and taxed? ...but only taxed as capital gains not income?[/QUOTE

I send you via PM a message to a website that answers all these questions. I am not sure if I can post it here. Basically if you do a few trades your profits are classified as CGT and you can use your CGT allowance. If trading becomes your life than all profit is treated as income and it will be taxed as income tax.

It all depends on you if you find the tax saving good enough to move to a tax friendly nation.

 

[SanMiguel]

So, basically anything withdrawn from the cash machine will be treated as income and taxed? ...but only taxed as capital gains not income?[/QUOTE

I send you via PM a message to a website that answers all these questions. I am not sure if I can post it here. Basically if you do a few trades your profits are classified as CGT and you can use your CGT allowance. If trading becomes your life than all profit is treated as income and it will be taxed as income tax.

It all depends on you if you find the tax saving good enough to move to a tax friendly nation.

Yes, please - I'll have a look.
The income tax if trading is your only profit is a concern...maybe I would need to set up my own trading business to get round that. Anyway, we'll see.

 

[soldintime]

Yes, please - I'll have a look.
The income tax if trading is your only profit is a concern...maybe I would need to set up my own trading business to get round that. Anyway, we'll see.

Well if you incorporate as an LTD you have some benefits. But still corporation tax and you have to extract the profits as dividends. It saves you a bit, but not as much as the 0% tax elsewhere.

 

[Counterspell]

Remitting income is basically profit that you transfer to your home country. When it comes to trading it is really hard to separate profit from capital. The tax man will treat any withdrawal made as income when you have made a profit.

What do you do with your non remitted money then? I can only think of becoming an Andorra/Monaco, etc. resident and deposit all your non remitted money into a bank account of those countries, but I wonder if you could then move that money to another country without having to pay any taxes.