Anyone Trading from Tax Free Haven?

So if you relocate to a tax haven, do you have to ensure you trade or have your brokerage and bank accounts also in a tax free haven to avoid the possibility of some nasty taxes.

How do double taxation agreements normally drop? For example, if Andorra concludes an agreement with Spain and you have your brokerage in Madrid, would the Spaniards go "one of us has to tax you, if Andorra won't we will, thank you very much - next"?

You are taxed in the country that you are resident (unless you are american). As Andorra has no income tax, there is no tax on your trading profits.
 
Has anyone from EU (not living in Cyprus) is using Cyprus based company for trading. I've just found some information that corporate tax is only 10% and there is no tax from trading profits(although i'm not realy sure about this). The advantage is that Cyprus has a lot of agreements with other EU countries to avoid double taxation.
So I imagine one can be a tax resident of FR, UK, Germany or some other EU country (I mean one can be permanently living there) but with a company based in Cyprus which is used to do all the trading. And at the end, profit of this company is taxed in Cyprus(10% or 0%) but due to tax treaty between Cyprus and the EU country of your residence you dont have to tax this income another time.
Am'I right or I misunderstood how it works?
Any experience with setup like this?
 
So I imagine one can be a tax resident of FR, UK, Germany or some other EU country (I mean one can be permanently living there) but with a company based in Cyprus which is used to do all the trading. And at the end, profit of this company is taxed in Cyprus(10% or 0%) but due to tax treaty between Cyprus and the EU country of your residence you dont have to tax this income another time.
Am'I right or I misunderstood how it works?
Any experience with setup like this?


As long as the cyprus company is doing the trading WITHOUT your intervention, leadership or personal advice, it will work. But if you are involved any more than visiting the shareholder`s meetings: TAX evasion!!!! Most european administrations will consider your cyprus setup a nullum or mailbox for your home based activities.

But I wonder about the possibilies of Greece!

Regards
 
As long as the cyprus company is doing the trading WITHOUT your intervention, leadership or personal advice, it will work. But if you are involved any more than visiting the shareholder`s meetings: TAX evasion!!!! Most european administrations will consider your cyprus setup a nullum or mailbox for your home based activities.

But I wonder about the possibilies of Greece!

Regards

That is exactly what I was thinking. But when I was reading offerings of these companies that will setup this Cyprus company for you (and one of the stated reason is always trading and taxes), it was written in these offerings that this way it is completely legit (or maybe it was written that way, that this is the way how to avoid paying 30% in your home country).
So probably it's not legit but I should find some tax specialist in my country just to confirm.

The thing is, I've moved recently to one EU country and I realized that the tax here is more than 30% (comparing to 15% where I was living before) so I'm looking what are the options
 
The thing is, I've moved recently to one EU country and I realized that the tax here is more than 30% (comparing to 15% where I was living before) so I'm looking what are the options

Think it through, your cypriot company has lots of money in the account after some successful trading which is legally not your money, it's the company's. So you decide to pay some of it to yourself as either a salary or a dividend perhaps.

The country you are resident in has taxes on both of these income streams and so you would write on your tax return at the end of the year what you earned and pay the tax accordingly like any other resident of the countrywhere you live. 30% 40% whatever it is, PLUS you'd have already paid 10% in Cyprus! :eek:

The alternative is to write a big Zero on the tax return and say that you have had no income. This only works to a point before they investigate your lifestyle, expenses etc and realise that you are living in their country, with a posh car and 3 kids and your income cannot possibly be zero. Then you get done for not declaring overseas earnings and fined. :-0

The only thing the company does is allow you to delay paying yourself the money until you want it. For example, UK dividend taxes are quite low up to a certain amount per year, so you could drip feed the money out of the company over several years as dividends without going into the next tax bracket. :idea:

However, if you're good at what you do, you'll find the money stock piles in the company's account because you are not paying it to yoursef as quick as you're earning it and you can't spend it without paying masses of tax! :mad:

Hope that helps
 
Please avoid any introducing services. You can do pretty much everything on your own.

Yes you can, but if your daily earnings are good, the additional time it takes by going it alone could amount to more than the fees of the introductory service. Eg. You manage to make appointments with the right people in broken spanish but they happen to be a week apart. What do you do?

I never went through with it but the lost hours at work would have cost me a lot more than letting this agency woman do all the running around and i just turn up at the end to sign the forms with appointments all one after the other on the same day.
 
Think it through, your cypriot company has lots of money in the account after some successful trading which is legally not your money, it's the company's. So you decide to pay some of it to yourself as either a salary or a dividend perhaps.

The country you are resident in has taxes on both of these income streams and so you would write on your tax return at the end of the year what you earned and pay the tax accordingly like any other resident of the countrywhere you live. 30% 40% whatever it is, PLUS you'd have already paid 10% in Cyprus! :eek:

The alternative is to write a big Zero on the tax return and say that you have had no income. This only works to a point before they investigate your lifestyle, expenses etc and realise that you are living in their country, with a posh car and 3 kids and your income cannot possibly be zero. Then you get done for not declaring overseas earnings and fined. :-0

The only thing the company does is allow you to delay paying yourself the money until you want it. For example, UK dividend taxes are quite low up to a certain amount per year, so you could drip feed the money out of the company over several years as dividends without going into the next tax bracket. :idea:

However, if you're good at what you do, you'll find the money stock piles in the company's account because you are not paying it to yoursef as quick as you're earning it and you can't spend it without paying masses of tax! :mad:

Hope that helps

Yes it helps. Indeed very nice and clear reply easy to understand, thanks!

Just to be sure 2 more precisions:

1) When you're saying "you could drip feed the money out of the company over several years" you are basically saying that you have to tax (with this 30% tax rate) only the money that you withdraw from your cypriot company to your personal account. So you dont tax anything until you send it to your personal account (and until you register it as your capital gain income).

2) But of course you have to tax the whole profit of the company in Cyprus each year according to local cyprus rules for companies (let's say 10%).
BUT is this completely true? Is'n it true only in the case where country of my tax residence has double tax treaty agreement with Cyprus? And if there is no such treaty, I have to tax the profit of this company additionally in the country of my tax residence(plus 10% in Cyprus), because laws consider this as a offshore company controlled by me (as described 2 posts before you reply) and I have to tax the profit of the company using rules of country where I'm resident? Or am i making it just too complicated and the profit of the company is taxed only in the country where the company is registered nevermind the country of residence of the owner of the company? aaargh, to complicated :)
 
1) When you're saying "you could drip feed the money out of the company over several years" you are basically saying that you have to tax (with this 30% tax rate) only the money that you withdraw from your cypriot company to your personal account. So you dont tax anything until you send it to your personal account (and until you register it as your capital gain income).

That's correct. But for example in the uk, you get £6k or so tax free so you could effectively pay yourself only 6k a year for a long time and never pay tax. Obviously, this doesn't work as it costs more than that for most people to live but you get my point. 30% is a lot to pay in tax if you could spread it over a longer period and pay say 20% by staying in a lower tax bracket.


2) But of course you have to tax the whole profit of the company in Cyprus each year according to local cyprus rules for companies (let's say 10%).
BUT is this completely true? Is'n it true only in the case where country of my tax residence has double tax treaty agreement with Cyprus? And if there is no such treaty, I have to tax the profit of this company additionally in the country of my tax residence(plus 10% in Cyprus), because laws consider this as a offshore company controlled by me (as described 2 posts before you reply) and I have to tax the profit of the company using rules of country where I'm resident? Or am i making it just too complicated and the profit of the company is taxed only in the country where the company is registered nevermind the country of residence of the owner of the company? aaargh, to complicated :)

The company is taxed in the country where the company is incorporated for the majority of cases. There are double tax agreements and a long list of criteria to show that your company is actually resident somewhere. There are rules on what a company needs to prove in order to be set up. Eg. a rented property, or an acting agent etc which obvioulsy costs that need to be factored in. If there is no DT agreement, yes, you pay tax in both!

So in summary, you pay Corporation tax on company profits where it resides and personal tax in the country where you reside on the money you take out of the company as wages or dividends.

Most people pay the tax in their home country willingly. They want to live there and contribute to the upkeep of it by paying their taxes fair and square. (y)

Disclaimer: This is definitely not tax advice and all of what i wrote above could be wrong!
 
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i have been trading for the last 10 year and I am based in UK. not tax on spread bets it's great.

No tax to you as such but the losses you incur and the spreads they take are effectively their profit, which is in turn taxed. By direct trading your losses are offset against tax.

Aren't there some rules about when Gambling is your main income, then it gets taxed like any other income?

Never been into it !
 
So in summary, you pay Corporation tax on company profits where it resides and personal tax in the country where you reside on the money you take out of the company as wages or dividends.

Most people pay the tax in their home country willingly. They want to live there and contribute to the upkeep of it by paying their taxes fair and square. (y)

Disclaimer: This is definitely not tax advice and all of what i wrote above could be wrong!

Again, thanks coopster for the answer! (and there's even a disclaimer as a bonus! :))

I agree with you about paying the taxes. Actually I'm not seeking to avoid them completely. I'm old enough and I know those schools, roads and other more or less useful stuff is not for free. I just think 34.50% is way too much (compared to 15% which I used to pay in Prague before moving here) so I'm looking for ways to lower this rate.
And when I found all this stuff about offshore companies I started to study it a little bit. Then I found out that i'is a little bit complicated (at the beginning) but also it is very interesting stuff to learn how big(and small) guys can avoid paying taxes. One then starts to think that maybe because of you big guys we small ordinary folks have to pay every year higher and higher taxes but because of that we also start looking for a ways how to avoid this higher and higher rates etc...
But I don't blame others who knows how to trick the system. I guess system(laws) is not good or just the law is not enforced or ... Ok I'll stop here because this discussion is not about the enforcing the law :)
 
Isn´t it as easy as to open a LLC in a tax free heaven, and then open a brokerage account in the LLC name?
I am considering doing this in Hong Kong or Singapore. And of course not moving there.
The LLC can be easily opened in 1 day, along with a bank account. Then with this open a brokarage account. (IB)
What am I missing?
 
Isn´t it as easy as to open a LLC in a tax free heaven, and then open a brokerage account in the LLC name?
I am considering doing this in Hong Kong or Singapore. And of course not moving there.
The LLC can be easily opened in 1 day, along with a bank account. Then with this open a brokarage account. (IB)
What am I missing?

That this is the oldest tax evasion scheme known to the agents of the IRS (USA), Steufa (Germany), HM..... and whatever their name is. As long as the trader isn`t located there its just evasion. If the local trader/GM is really employed the cure will be more expensive than the illness.

The taxman is -contrary to public belief- neither dumb or stupid - nor lazy. The special departments dealing with such schemes are highly motivated skilled and trained hunters looking for some decent prey.
 
That this is the oldest tax evasion scheme known to the agents of the IRS (USA), Steufa (Germany), HM..... and whatever their name is. As long as the trader isn`t located there its just evasion. If the local trader/GM is really employed the cure will be more expensive than the illness.

The taxman is -contrary to public belief- neither dumb or stupid - nor lazy. The special departments dealing with such schemes are highly motivated skilled and trained hunters looking for some decent prey.

Thanks!
Then this is not an option. :)
 
Guys few points here:
1. If they want to get you they will get you (taxman) so the solution is to be off the radar
2. Consider this, you can halve your taxes, would it be good to pay 15% instead of 30%? Just move through officially half your profits and pay taxes on it. You can get the access to the rest via many under radar ways. Advantage is taxman cant tell you are living off 200k or 100k by your livlfestyle but surely can tell between 20k and 200k. So give 'em some, don't de greedy and use the rest wisely.
3. Once well off try not to spend most of your profits, reinvest them. Once wealthy you will see the whole world of possibilities open to rich people. Multimillioners in USA pwy 12-15% of taxes not 40-50 reading the law might suggest. Money is power but use it wisely.
4. Europe has gone mad. Looking for options myself.
 
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