Best Country for Trading (Tax efficiency)

AlphaBeta · Jul 27, 2013

Thanks for the reply. You guys confirm me in believing, that as a trader in the US markets, I have to be a resident of a country among those with a tax treaty with the US. And as I am a EU citizen, I have to exclude countries, that are obviously being considered as offshore tax havens by the EU.
Wow ... after this excersise, I'm left with very few, very exotic destinations for residency, I would never have thought of otherwise. This is interesting.

Peternam · Jul 27, 2013

Quote from moarla:

If you are qualified as professional trader you pay normal taxes in switzerland Belgium Netherlands. etc....
The best way to do trading is the following: (if you dont want to live in a boring place like the Bahamas AND ITS NOTHING FOR YOU GUYS FROM THE USA)
-put your residence in a place where you are taxed only on the income generated in that place (f. example in europe Malta, UK or ....
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Are you sure about the UK ?

Peternam · Jul 27, 2013

Quote from Sanaz3:

How come nobody mentioned Iran as a Tax efficient place...all you hear about this country is "Ahmadinejad"... " nuclear program"

I am a native of Iran myself and know that Banks in Iran pay relatively higher interest rates on long term deposits (i.e. 5 year investments) compared to Canada for sure. For example, I see Royal Bank pays 2% interest on 5-year GIC's (Guaranteed Investment Certificates) whereas Banks in Iran pay around 17-18% for similar investments.
http://www.rbcroyalbank.com/products/gic/gic-interest-rates.html

Bank Saman for instance, pays fixed 18.44% interest on long-term 5-year deposits/investments. As for the income tax purposes, Iran does NOT have a strict policy as far as I know, but any taxes on capital gains from investments would certainly be deducted by the banks, but again that's not a high percentage.

Living in the picturesque and scenic northern Iran by the shorelines of the Caspian sea, for a foreigner would definitely be a good option. Any foreign citizen residing in Iran could open an account for themselves and collect the interests while enjoying life there.
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On similar investments but probably in the local Iranian currency ?!

Peternam · Jul 27, 2013

Quote from failed_trad3r:

Yup

It's funny how the nutty people call europe "socialist" and then say thank god USA isn't. They don't realize the USA is more socialist than Europe! But in a different way. It's Socialism for the rich and government only!

Fact 1: Debt in USA is huge compared to Europe, even though Social Security is almost non-existent. Where does the money disappear to? Area 51?? I thought debt was socialist.

Fact 2: There is almost no protection for the employees and consumers of USA. Yet taxes on rich are decreased, who doesn't need more protection. Warren Buffett agrees, he paid less tax, in a FAIR TAX calculation, than his receptionist.

Fact 3: the USA taxes Americans outside the country, the only western country to do that. the USA wants you to pay taxes, local, state and federal. THREE levels. The bureaucracy is immense. Might I say, USA have more tax bureaucracy than most other western lands. And you thought tax bureaucracy was socialist...

Fact 4: No healthcare for the working people. There is medicaid for the illegals, private healthcare for the rich but nothing for the middle class. Middle class get shafted! Middle Class without a job are SOL! The benefit of paying a 10% lower tax is negated by the fact they can't afford any healthcare, because they don't have a job! So what if you get cancer while having a job? Well, the employer fires you, because you can't work anymore, and then you don't have your employers healthcare anymore! Oops!

CONCLUSION: The nutty people are in charge of USA and have been for a long time. America is more socialist than Europe.
America is also more communist than Europe, based on fact 3.

Bush right Obama left? NOOO!!!

Bush communist Obama communist!
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Well said !

Peternam · Jul 27, 2013

Quote from usman88:

Another option is Pakistan. It is a pretty safe country except for some areas bordering Afghanistan.

Tax rate is 30% on income but tax system is one of the most inefficient in the world which means you dont need to report your income. You can freely openly bank accounts and all major international banks have large presence here (RBS/Citibank/HSBC/Standard Chartered Bank/Barclays) not to mention local banks which are quite big.

In $3000 per month, you can have a 2000 Sq. Yards house in main locality and live like a king with a driver, 2 guards and 2 servants for the house. Another $4000 per month and you can be driving cars like Mercedes S-class, BMW 7 series, Lexus etc

Internet connections are decent with 4MBPS costing $50/month which is more than enough for scalping.

The best stuff You can trade all markets

Asian markets open at 7:00am
European markets open at 2:00pm
US markets start at 7:00pm

Nothing can beat this!

Bank accounts offer interest upto 12% per annum (profit paid monthly!!!). KSE which is a local stock exchange has been one of the worlds best performing stock exchanges in the last decade
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You live there ?

Peternam · Jul 27, 2013

Quote from Ghost of Cutten:

Property costs in Monaco are not too much more than central London or Manhattan, and HK/Singapore are comparable. You can get a decent singleton place for about 30k a year rent. Given that most liveable metro centres cost at least 15-20k a year for a proper apartment, you should just view it as an extra 10-15k a year 'tax'. If you can't afford that then you are not making enough for it to be worth becoming a tax exile.

21% is a pretty good rate, depending on the quality of government services. If you are in a 1st world country then that is good actually, in fact it is a bargain in order to get political stability, working utilities, reasonable policing and courts, a semi-competent government etc. Most of the G7 takes 35-50% of GDP in taxes, and high earners can end up paying 60-70% on their total income, once sales taxes/VAT are included. I would not go through the hassle and downsides of expatriation just to save 21% (and even in 0% tax countries, you still pay sales tax). Remember you will also probably have some long-term capital gains at lower annualised rates, and deductions like pension contributions or tax-breaks on savings accounts etc. For example, rich people living off capital gains in the USA pay a mere 15%. HK/Singapore is 16% flat tax. It's not worth moving full-time to boring holes like Monaco or Bahamas just to save 15-16%.

If you trade full-time, capital gains will often be taxed as income, which is usually a much higher rate.

The best tax wheeze is moving to countries which don't tax foreign-source income, and then trading the non-local exchanges from there. MANY countries give 3-5 year initial periods for non-citizens, where they don't tax foreign source income at all. Just off the top of my head, UK, Colombia, Ukraine, Philippines, Romania are all like this. The major cities in these places are far more interesting locations to live in than the conventional tax havens like Bahamas or Monaco, where there is basically no social life of any interest and you will get bored in a few months. Once your 3-5 years is up, move to another one.

Many other countries, especially outside the first world, do not tax non-resident corporations, even if you are a resident of that country. So you simply set up an offshore trading co and voila, tax-free compounding. Use your savings for living expenses and you are in a de facto tax haven.

You should not base your location on where the economic future is, but on where the best quality of life is for you today and in the near-future. Your after-tax income is only part of that equation. By the time China is even at half US GDP per capita, you will be old and most of your life will have passed by. You could live an easy life in Bahamas, or hang out with Eurotrash and racing drivers in Monaco, but good luck trying to do anything interesting there except get drunk, fuck gold-diggers, and top up your tan.

For most 1st world residents, the best place to live is the country they grew up in, where there friends and family are, where they are familiar with things. Recreating a social network from scratch is an arduous task, and even if you do it well, it's not as good as putting in the same work to improve things in a place where you already have a network. You know the system, the language, the culture, and the places in your home country, all that knowledge disappears when you go abroad. Even moving from USA to Canada, or UK to Ireland, or Australia to New Zealand, is quite a big change and significantly disadvantages you in many ways.

IMO long-term expatriation is only worth it under the following conditions:

i) you live in a shithole 3rd world country and can't have a good life there, even if you work hard
ii) you live in a reasonable 1st world country, but your profession is taxed at punitive rates such that you cannot hope to achieve financial independence (e.g. Scandinavia with 50-70% tax rates on self-employed high earners), and you cannot use tax reduction methods such as pension contributions, low-taxed savings accounts, or corporations to pay a more reasonable tax rate
iii) you want to live somewhere abroad for a year or more for its own sake (e.g. you like travelling or the expat lifestyle, you are single with no kids, some of your friends are going abroad to work etc)
iv) you have a spectacularly hot and interesting non gold-digger girlfriend(s) in some low-tax (for expats) jurisdiction like Russia/Ukraine, Colombia, Romania, Bahamas, Phillipines etc, and want to see if things work out when you live close by or together, before considering a visa marriage or relocating her back to your home country. Odds are against this working, and you can have a problem if it doesn't work out, but it can be fun to try. The downsides of 3rd world living are ameliorated significantly if you have some prime pussy to assist your transition, and help with translation, local knowledge of the best nightlife and leisure spots, getting deals at local prices instead of ripoff foreigner rates etc.
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What other countries give 3 to 5 years of initial tax free periods ?

Peternam · Jul 28, 2013

Quote from Dogfish:

Declare non residence for tax purposes to your home country and set up a company in Dubai for a residence visa. You only need to pass through once every six months to keep it valid and you will legitimately pay no corporate or income tax on any earnings and will have 100% ownership of your freezone company. Your home country will see you have legitimately left and pay no attention to you so long as you don't overstay on visits back there.
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Do you need to rent a place to have this residence visa ?

TraDaToR · Jul 29, 2013

Quote from AlphaBeta:

Thanks for the reply. You guys confirm me in believing, that as a trader in the US markets, I have to be a resident of a country among those with a tax treaty with the US. And as I am a EU citizen, I have to exclude countries, that are obviously being considered as offshore tax havens by the EU.
Wow ... after this excersise, I'm left with very few, very exotic destinations for residency, I would never have thought of otherwise. This is interesting.
More...

I guess ( not sure ) that if you are living in a UK low tax territory like Gibraltar, you claim exemption on W8 BEN as a UK resident. I can't see gib traders on NYSE or CME paying income tax in the US...

luisHK · Jul 29, 2013

Quote from AlphaBeta:

Thanks for the reply. You guys confirm me in believing, that as a trader in the US markets, I have to be a resident of a country among those with a tax treaty with the US. And as I am a EU citizen, I have to exclude countries, that are obviously being considered as offshore tax havens by the EU.
Wow ... after this excersise, I'm left with very few, very exotic destinations for residency, I would never have thought of otherwise. This is interesting.
More...

What you say doesn't make much sense. The tax treaties you benefit for filling w8ben are about witholding tax, on div for instance. If the country has no tax treaty with US, or no special agreement regarding witholding tax, you will be hit by a 30% witholding tax on most divs coming from US stocks and ETFs. Other taxes are involved, but most importantly for a trader, if you don't live in the US and are not a US citizen, you don't need to worry about your cap gains beeing taxed by the IRS.

Than if you are a EU citizen, there is no problem whatsoever with the EU if you trade through an offshore center, as long as you're not residing in the EU (and even than, there seems to be possible set ups in some EU countries already mentionned in this thread).

jsengxx · Jul 30, 2013

Hello,

IÂ´am a Portuguese citizen and and trading futures with a well known american broker. I wanÂ´t to develop my fiscal structure and was informed that the best way to do that is:

1. Form an IBC in Belize for trading per-posse only.
(I donÂ´t know if I will be wildhold 30% in the US when trading from a tax haven?)
2. I whas thinking off forming an LLC in Delaware whit the Belize IBC for asset protection (register house etc.) but I was informed that it was better to form a second IBC Belize and than registrar a Company Limited by Guarantee in the UK for this purpose.

What about this structure?

When you lose money nobody is knocking on your door and when you gain they will be knocking on your door to tax you 20% (in my case)!