Forex tax haven question

Hello everybody
I have researched about the tax issues regarding forex trading;
(eg I pay income tax not CGT because of frequency of my trades)

what I was wondering was...
If I leave the UK in new tax year and become resident in Tax haven e.g.Antigua, Tallokiki, Monaco and continue to trade using PCs and online brokers , like most of you,
(still retaining Brit citizenship), does the direct access aspect of Forex trading have any bearing
on whether I have to pay tax or not (e.g. to UK ). Can't get clarity on this.

Would really appreciate any info!

You dont need to leave the country.

You can create an offshore company. And trade from here. You wont pay tax on profits
as its not your money (its the companies money).

After a few years you can move to an offshore haven and take your money out of the company and spend it. But you might not be able to move back to UK for a years after...

Note im not a Tax expert so the above could be all wrong, do your own research.

Donaldduke has hit the nail on the head. 'Offshoring' yourself isn't the preserve of large companies and, frankly, it makes sense for anybody that generates more than a few grand a year in tax.

Check out http://www.offshoreconsultants.co.uk

It's surpisingly straightforward to get a company incorporated in, for example, the Caymen Islands (big windy hurricane thingy permitting) alongside a bank account in Denmark (including Cashpoint card) with all the Directors in the UK. None of these countries, plus many others, have any formal jursidiction arrangements with each other, so you get the choice to use Gordon Brown's lost revenue to buy the Aston Martin DB9 you (possibly) deserve.

donaldduke said:

You dont need to leave the country.

You can create an offshore company. And trade from here. You wont pay tax on profits
as its not your money (its the companies money).

After a few years you can move to an offshore haven and take your money out of the company and spend it. But you might not be able to move back to UK for a years after...

Note im not a Tax expert so the above could be all wrong, do your own research.

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yep those are some very good ideas and i believe they are all legal

starter of this thread should research this point and talk to a professional tax accountant

although if you do want to move to warmer climes, dubai and monaco are two nice sunny places i've visited and know of off the top of my head that have zero income tax rates.

but why move if you can have an offshore setup with no tax anyway. then you can live anywhere.

oh yes. you can move anywhere and tell the Inland Revenue you are no longer resident, but if you move back to the UK within 12 months of declaring non-residency, you are liable for UK tax on all earnings from whenever you made the declaration.

Outside of the 12 months, you are free of uk tax obligations.

Arbitrageur said:

why move if you can have an offshore setup with no tax anyway. then you can live anywhere.

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Are you guys sure about this?!?! I mean, if it was easy as opening up an offshore company with an associated offshore bank, wouldn't everyone be doing this? Why would people even pay tax?!?!

fx_geezer said:

Are you guys sure about this?!?! I mean, if it was easy as opening up an offshore company with an associated offshore bank, wouldn't everyone be doing this? Why would people even pay tax?!?!

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If you pay yourself, you will be taxed on that as a UK resident, but if you want to re-invest your profits, it is a good way to do this without taxman interference.

Note UK tax authorities have recently stopped companies from using a CFC (controlled foreign company) for tax avoidance. It is only a matter of time before they stop individuals doing the same thing.

Disclaimer: I may or may not know what I'm talking about. Please check it for yourself.

Done some more research on this whole offshore company business. It all seems a bit messy.

It looks like the easiest way is just to leave the UK, become a resident in a tax haven like Dubai, and just trade from there.

Hong Kong has no tax on investments as long as they are personal & not for a trade or business - also no vat gst or import duty

But didn't the UK just say that they won't be taxing foreign income in order to attract more companies to the UK?

I am a bit confused... doesn't the UK have any form of anti-avoidance rules? Wouldn't setting up an offshore company but still performing the trading itself from within the UK mean that the offshore company has no valid raison d'être except to avoid paying your annual taxes?

Wouldn't trading from the UK also imply that the management AND operations of the company are being performed in the UK itself? does that not actually matter to the UK Tax Authorities?

Is the UK some kind of oddity in allowing this, or is this in fact common in many European countries?

What does Gordon Brown being tougher on rich people who offshore mean? I thought I saw something in the news a while back about the UK cracking down on rich people using offshore companies... but what were they doing that was illegal and different than the advice given in this thread?

I find this stuff fascinating, so if anyone can shed some light it would be much appreciated. Thanks!

I think they make sure it sounds complicated so the tax lawyers can get work lol if it was all straight forward, everyone would be doing it but because it's not, you must be able to afford the high fee's of the tax assistants.

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.

BSD,
regarding UK some subtle - yet expensive - changes are in the works. Regarding CH its not as easy: You are taxed on the assumption, that your income is a minimum of 5 times your annual rental expenses ( which are expensive over here - only topped by London). And that tax is fixed - profits or loss or illness - no deductions.

And for german nationals the german authorities will claim an additional tax for some 6 years (überdachende Besteuerung) to collect the difference to the highest german tariff (like Steuerklasse 1 no kids - even if you giot a bunch of those).

ANd finally: the germans practised the very same system until 198? .

Regards

Hittfeld

Hi Hittfeld,

that's true what you say.

re the British system, are they thinking of getting rid of that ?

Because what's good for Germans is that as the UK is not classified as a tax haven by Germany the 6 year period one would get as you rightly remark by moving to Switzerland doesn't apply in the UK case.

That would really be a pity if the UK would get rid of that.

I truly believe that both you in Switzerland and the UK attract very many high net worth individuals with your favorable taxes for foreigners, that go on to spend a lot of money in your countries.

PS, "Heidiland" eh, love it !

BSD said:

Hi Hittfeld,

that's true what you say.

re the British system, are they thinking of getting rid of that ?

Because what's good for Germans is that as the UK is not classified as a tax haven by Germany the 6 year period one would get as you rightly remark by moving to Switzerland doesn't apply in the UK case.

That would really be a pity if the UK would get rid of that.

I truly believe that both you in Switzerland and the UK attract very many high net worth individuals with your favorable taxes for foreigners, that go on to spend a lot of money in your countries.

PS, "Heidiland" eh, love it !

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Hi BSD,

if you`re a german tax subject, professional advice mostly would be to move to NL or B first - and go to CH after a having spent 2 years there. Interim taxation in NL or B should be almost nil - aside from road tax for your car.

Regards

Hittfeld

Good advice again Hittfeld.

Just gotta watch out for speeding tickets in Belgium.



Good trading

Arbitrageur said:

although if you do want to move to warmer climes, dubai and monaco are two nice sunny places i've visited and know of off the top of my head that have zero income tax rates

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arent you supposed to pay social insurance contribution in Monaco around 50% of your income?

maxima said:

arent you supposed to pay social insurance contribution in Monaco around 50% of your income?

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who cares? who wants to live in such cramped conditions I was reading though if your from the UK (like cypriot easyjet guy) then you can live in monaco, and commute to london to work there 4 days a week... so I guess if you don't live in Monaco all the time, it wouldn't feel so cramped.