Another good country to trade tax free for those living inside the U.S. is called 'Roth IRA'. Pump it up when you are young - when you are older (59 1/2) & get good at trading you may able to have enough so you can leave the principal untouched and pull out some of the profits to live - imagine that.
Yes, the only ower Yes, the only power nearly all of us have is to stop buying major corporate products. And if we didn't buy stuff we didn't need, then we wouldn't need to earn so much and so would pay less total tax. But the calculated dilemma is that we are conditioned to be willing slaves to corporate convenience. Look in the mirror...
Right guys so can we agree that the only place to trade totally tax free in Europe is Monaco and suck up the crazy property prices? Or am I wrong?
An option for us U.S. citizens is mentioned in this topic that I am planning on looking further into in about a year: https://www.elitetrader.com/et/threads/anyone-trade-from-the-us-virgin-islands.91096/
Hi Guys, did in the meantime anyone get answers regarding being a DayTrader and having Malta as a base being a PT under their residence program? I also spoke with different advisors and being a daytrader you really get different answers by even high-level tax advisors and I am a little confused. Any hints for good advisors with experience with traders are appreciated. Best greetings
Hi there, Since this year here in Hungary you can effectively pay 0% tax on your trading profits if you opt for a special tax status that is even encouraged by the government. Someone said that the corporate tax rate is 9% flat in Hungary but it's not accurate because the company must pay a 2% trade tax to the city where it's located so the effective tax burden is 11% on the corporate tax payer. The personal income tax on dividends is indeed 15% flat but there is an additional 19.5% healthcare levy on all dividends, however once you have paid about €2,000 in a tax year then you don't have to pay more that year and from then on only the 15% charge applies. However, there is an interesting option for those who would like to grow their balance without paying any tax on it (or very little, depending on how you view it). If your company's annual turnover and assets are less than approximately €3 million, then your corporate body may qualify for a special tax status provided the company's annual turnover and assets will stay below €9 million. In other words, if you form a company and put €25,000 into it and you start trading, then you can likely request this status. Once the revenue (not profit) reaches approx. €9 million in a single year or the asset reaches or exceeds €9 million then the company must pay the regular 9%+2% corporate tax rate. So, as long as the entity is in this tax status, there is a 0% corporate tax on retained profits within the above mentioned limits. If you pay yourself a salary or a dividend, then the company must pay a 13% tax based on the distribution plus a 20% trade tax based on the tax. Let's say you made a profit of €100,000 in your company and you pay yourself the required minimum wage of approx. €5,700 a year plus €14,300 in dividend. In this case your company must pay €2,600 tax based on the €20,000 you withdraw in various ways and another €520 trade tax based on the €2,600 tax. This represents 3.1% effective corporate tax burden. The more you leave in the entity relative to what you make with the company, the lower your effective corporate tax burden may be. On the personal side you'd have to pay about 35% in taxes and other levies on the €5,700 wage and 15% tax plus about €2,000 healthcare levy on the dividend. Your net income would be about €13,860. The effective tax rate in this scenario on the personal side is about 30.7%. This can be lowered if the numbers are different. Other examples: #1 Corporate profit: €150,000 Minimum wage: €5,700 Dividend: €24,300 Total corporate tax burden: €4,680 Effective corporate tax rate: 3.1% Net retained profit after taxes and withdrawals: €115,320 Net salary: €3,705 Net dividend: €18,655 Total net income: €22,360 Effective personal tax rate: ~25.5% #2 Corporate profit: €300,000 Minimum wage: €5,700 Dividend: €44,300 Total corporate tax burden: €7,800 Effective corporate tax rate: 2.6% Net retained profit after taxes and withdrawals: €242,200 Net salary: €3,705 Net dividend: €35,655 Total net income: €39,360 Effective personal tax rate: ~21.3% This is not a tax advice and should not be relied on as such. Please seek a professional tax advisor in Hungary to clarify your tax situation. These numbers may be inaccurate and other taxes may apply. The requirements to qualify to this tax status are not complete. Message me directly if you have a question.
@alexanderhu So if you have fed your little corporate monster with lots of profits: One day you decide to close the firm, take the money and move on to the Bahamas, Monaco or some other nice place..... how much tax to pay so the the corporate cash is now your very private cash? Thanks
You have three options. You can either distribute the retained profits as dividend and your company pays a 13% tax based on the distributed dividend and if you put your Hungarian Trading Ltd. into another EU Holding Company then you may avoid the withholding tax assuming that you want to liquidate the company after you became a tax resident in a country which does not tax foreign sourced income so you may pay that 13% (plus the 20% trade tax based on the 13%) only. Another option is to switch back to normal corporate tax mode and pay the 9% corporate tax and the 2% trade tax which is 11% in total because in this case the trade tax is based on the retained profit and not on the 9% corporate tax. Alternatively you may find a way to extract the amounts as salary but whether you'd have to pay tax on that to Hungary depends on many circumstances such as whether's your a tax resident or not, you live in a treaty country or not, etc. So basically you may defer your corporate tax liability with this tax treatment and you may not pay more at the time you decide to liquidate your company. In fact, you may pay less because instead of paying 11% each year, you pay 13% (+ 20% based on the 13%) on the money you take out only so assuming that the compound interest works in your favor, you may save big time. As far as I know there is no other tax that you'd have to pay at the time of liquidation so the system based on my current knowledge doesn't punish you for closing your company. In my opinion this scheme is simply a tool to grow your money at a faster rate by delaying the corporate tax liability as long as your entity qualifies for it or until you decide to close your company; - whichever happens earlier will be the time to pay. If your company reaches the €9 million threshold then it has 4 years to spend some or all the money on for instance on properties. What the company spends on real estate will be considered as spent on income generating assets and will not create a base for corporate tax. What you don't spend in 4 years, you have to pay the 9%+2% in the fifth year. I think this is quite generous. These information may not be totally accurate, may not be complete, other requirements may have to be met, other taxes may apply and the tax rates may differ. Seek professional advice. As a personal note, I don't think it's a good idea to move from Hungary (from Central Europe) to the Bahamas considering that Hungary is one of the safest country on the planet while the Bahamas is clearly not one of them. Also, I'm not sure if it's worth relocating to Monaco to pay that much money for an apartment to save this very little percentage of your income that you can channel to a company to pay little tax. You can buy an apartment in Hungary for €100k, decent one for €200k and lavish ones for €250k+ so Hungarians are not in a hurry to move to Monaco to run away from the 15% income tax or from these corporate tax options. Also, there are other options to pay ~5% tax on the first ~€35,000 of revenue on your own name without using a company.