US Brokers - Tax liability

[gmca686]

Bud Fox,
Unless the law on tax has changed in the last 2 years your statement is wrong. You have lived overseas for longer than a complete tax year, April to April, therefore in the eyes of the tax man you have established "non-residency" status. This frees you from UK income tax and CGT. The only exceptions are incomes from UK sources such as UK company pensions, which are taxed at source under PAYE. It does not matter that you are using a UK broker to trade. That is irrelevant!
I lived in Oman for 4 years and easily established this principle with the tax man. I didn't pay a penny income tax or CGT. Oman didn't have personal tax liabilities either, which was good.
regards, G McA

 

[Bud Fox]

G McA
I hope your right. But im still think im liable see this quote from IR20 document. see the attached pdf

Non-residents with a UK branch or agency
8.7 If you are neither resident nor ordinarily resident in the UK and carry on a trade,
profession or vocation through a branch or agency in the UK, you will be liable to capital gains tax on any gains on the disposal of assets in the UK which were used in the trade, profession or vocation, or by the branch or agency. You may
also be liable to capital gains tax if the activity ceases or you transfer the assets
outside the UK.

For me the key thing is the 'branch or agency" i.e broker is UK based regardless of my status as non-resident.

whether this applies with a US Broker im still not sure.

With regard to trading in Euroland im not sure about CGT liabilty.
Although i know Estonia has zero CGT, joining EU this year, and apparently a very nice place. A lot of local banks there are taking advantage of its CGT status by setting up brokerage services.

I think the other trick is to establish an offshore company or one in Luxembourg and trade shares through that. Quite a lot of people seem to be offering this stuff in the back of magazines like Economist/Newsweek.

The one trick on living in the uk is to get non-domiciled status. You have to convince the UK tax man that your not going to eventually live here-regardless of whether your resident. I think you can wangle this if your father was not born here. Quite a lot of the rich foriegners take advantage of this loophole and live here tax free. All there houses are owned by offshore shell companies etc.

Regards

Bud

 

[BBB]

Who was it that said: Only two things in life are certain - death and taxes! Looks like he could have been right!

T333 - Euroland = anywhere in the EU.

Well thanks for the advise folks. Much appreciated - even if you have burst my bubble! I think the case for moving overseas still holds though because of the higher standard of living (imo). Maybe there will be countries where their tax allowance is less than that of the UK.

Anyway, I'm going to ask my mates for a definitive answer on how they do it. I know they have set them selves up as companies, although I dont know for sure which country the company is registered. UK I assume. Some of them have Swiss bank accounts which may help I guess.

Anyway, I'll report back when I get an answer!

 

[Trader333]

BBB,

Sounds like your mates could be engaged in tax evasion which is illegal. I know of some people who got hit up to 10 years after doing this so beware any tactics that are questionnable.


Paul

 

[theknifemac]

Agree with Paul. I thought the UK tax rates were lower than most of Europe, thats why so many French people are working over here in the City and living it up in Kensington sur la Thames. If you don't live in the UK long enough to be taxed there then you will be subject to tax where you are working. I have heard that Cyprus has a low rate of tax but not sure if that is true any longer.

Possibly the other new entrants to the EU will have low tax rates. But the EU commissioners are always talking about harmonising tax amongst the member countries.

Stew

 

[nomish]

i have a question. how do comapnies such as Citibank and other institutions get taxed when they make profits on tradeS?

 

[knorrie]

chump

"However at the time (don't know what the status is now), it was perfectly legitimate to avoid paying tax if you were a) non-resident in the UK and b) not resident anywhere else for more than 6 (or was it 12 - hell this was 17 years ago now) months at a time. So if you genuinely just got 3 or 6 month contracts and moved around for each one, then fine, no tax".

This is exactly how most contractors misunderstood how their liability arises. Not legal at all.

What I mean by 'moving around' is moving from one country to another, not staying in any one for more than 6/12 months, depending on whatever each country's minimum stay for paying tax is. You are then essentially of 'no fixed abode'.

That's how this luxury tax-haven cruise liner for the super-rich works - you live full-time on the ship which just sails all round the world:

http://www.ibs-offshore.com/english/residensea.shtml
http://news.bbc.co.uk/1/hi/business/1917261.stm

BBB - maybe you could trade from a wee yacht and just move around various European ports for a few months at a time?

KenN

 

[BBB]

Well I spoke to one of my mates - a case of selective hearing on my part I'm afraid.

He said he does pay tax, but didn't on some of his assignments because they were less than 6 months.

An interesting section in The Sunday Telegraph this morning. It was about moving to France and Spain. In Spain, you pay tax at 45%. You pay if you reside their for 186 days of the year or more. May be get a cheap place in the Costas, and a flat in some Italian city near the Alps for the winter months. Living in two countries, 2 smaller properties (Im young, free, and half single so I dont need a mansion) so I dont have to pay tax in either. Just an idea, but I'll need a few more weeks like last week in the markets before this becomes viable though!!!!

KenN - lol - 'a wee yacht' !!!! lol. Dont you mean one of those inflatable dingies you see kids using on the beach


Oh well looks like I'll have to pay tax then. Still, I wont feel as ripped off donating to the coffers of some Euroland countries, as I'll actually get something back - like a decent police service, healthcare, clean safe streets, more honest politicians etc. But thats a different thread....

 

[theknifemac]

Oh well looks like I'll have to pay tax then. Still, I wont feel as ripped off donating to the coffers of some Euroland countries, as I'll actually get something back - like a decent police service, healthcare, clean safe streets, more honest politicians etc. But thats a different thread.... [/B]

BBB I think the honest pols rules Italy out then

Mac

 

[nomish]

There is an alternative solution to legaly not pay capital gains tax is to move to a country which does not tax Capital Gains.

However, getting resident status may not be so easy as self made traders are mostly self-employed. Which isnt so desirable for such countries to take on.

But if you trade under a company and expand to one of these countires you may have better chances of getting citizenship. There is also the time difference factor depending on the markets you are trading in.

 

[chump]

BBB,Knorrie,
A floating tax haven..LOL..there is always a new scam trying to get around tax...I don't note anybody stating that the IRS has made a ruling on this and until they do its' just another attempt that might come back to bite them in the wallet. For a start the ship must be registered somewhere and as such the country of registration may ultimately decide that if you inhabit a 'floating' extention of that country then you are in fact resident there also for taxable gains. Again I don't see anything in the article thats states this will not be the case.

Time residency is the biggest misunderstanding that people make about tax. You see time is ONLY the first criteria for determining tax,not the ONLY criteria.

If you don't qualify to pay tax on a time basis then you do so on the basis of where you perform the service if you do not qualify to pay the tax elsewhere on a time basis. There is NO such thing as a legal basis for country hopping to avoid tax. This is evading tax,very plain and very clear.

Cheers