I have the same problem that you have guys but I think I understand this problem in a whole different way with a bit more knowledge about this matter. Now I'm going to share my thoughts with all of you because I hope that someone can argue with me and someone can find a solution to all of us. I'm an EU citizen so I can take a residency in another country and potentially I could escape the taxes. However the problem is way more complicated than this. I'm trading currencies, full-time, on a daily basis, as a day-trader. The things I'm going to share below are facts. You can check the rules with each country. I'm thinking about my relocation since 2013 but I still can't find a good place to live without paying taxes. Jurisdictions mentioned in this thread: Territorial basis taxation (foreign sourced income is tax-free): Hong Kong: short-term capital gains are considered personal / trading income whether you trade under your name or via your HK company. If you trade with a foreign broker under your name it's still taxable. If you have an offshore (foreign) company then the local rules applies to your company since the effective place of management is located in HK thus it's taxable. Singpore: absolutely the same like HK. Malaysia: same. Panama: same UK: spread betting is tax free only if it's not your main source of income and if you're not trading regularly so there's no tax benefit. As a non-domiciled resident it's the same like in HK because your income will not be treated as foreign sourced income. Malta: there's a special tax regime for foreigners that is almost the same as the non-domiciled resident in the UK so still no tax benefits. Spain: there's a special tax regime for foreigners that make your foreign sourced income tax-free but there's no benefit as a local trader. Portugal: the same like Spain. Gibraltar: there's a special tax regime for wealthy foreigners but you're not allowed to trade or being employed in Gibraltar so you cannot live and trade there. Even if you would use an offshore company the company would be regarded as resident and it would be taxable plus you would lose your special status because you it's considered as gainful occupation. Places without capital gains tax: Switzerland: Again, if you're trading then it's taxable and I may surprise you but the tax rates in Switzerland are pretty high! There's a special tax regime for non-Swiss citizens, called "lump-sum taxation". By opting for this type of taxation you can pay a flat rate, negotiated with the local tax office but you no gainful actives are allowed so you cannot trade forex. Switzerland doesn't have CFC (controlled foreign company) rules so you may think that you can setup an offshore company and you're good to go but unfortunately it's not true since if you're a Swiss resident and you control your company then your company is a Swiss resident as well and thus taxable. Netherlands: Same, trading is considered personal income thus taxable. Belgium: Same. Bulgaria: Same. Thailand: Same. Places without personal income tax: Monaco: interestingly your trading income in Monaco is tax-free only if you trade under your name. If you setup a local or a foreign company (because you want limited liability for instance) to trade with then your company is subject to a 33.33% tax. You can lower your effective tax rate if you pay a huge salary for yourself because the personal income is tax-free but the tax man may not like this strategy according to local sources. Places without personal & corporate tax (the only solution): You can trade on your own name and through a company as well in these countries: UAE, Bahrain: you don't want to live there unless you're married. Sex outside of marriage is illegal and you would spend years in jail. Funny but true. Bahamas, Cayman Islands, Isle of Man, Jersey, Bermuda, Turks and Caicos Islands, British Virgin Islands and many more Caribbean Islands: you don't want to live there if you get used to a first world country. Brunei: Personally I wouldn't live there. Interesting places: Estonia: It's a European country that doesn't levy corporate income tax instead you have to pay a flat 20% tax when you distribute the profits from your company. So you can legally earn tax-free profits with your local company and you can accumulate tax-free profits and you can retain your profits in your company as long as you want. You have to pay the 20% tax only on the money you pay to yourself as dividends for instance. Important notes: Places without capital gains tax: this is beneficial to you only if you're clearly not trading otherwise you have to pay taxes. Territorial basis taxation: if you trade then there's no benefit whether you trade under your name or via an offshore company. trading via offshore company: no benefit regardless of your country of residence because the company is subject to the local tax rules if the effective place of management is not located outside of your place of residence. As a trader it's impossible to claim that your company is a foreign resident while you're trading with the company. Even if your country of residence doesn't tax foreign income. offshore trust: even more complicated but there's no benefit. Since you want to trade with the money held in the trust you need some control over those funds. If you trade with it then your trust will be regarded as resident for tax purposes in your country of residence whether you're the beneficiary or not. offshore foundations: the same with trusts. ================================================= So, please feel free to ask anything and I'd be happy if someone would say that I'm wrong with something and I can live in a normal first world country without paying taxes If you want to hide your income from the authorities without being caught then it's harder and more expensive than ever before. To be honest I know a solution that lets you hide your income and the chance to get caught is almost zero but it's a bit expensive. Please feel free to approach me with your question. I'm not a tax advisor but I may be able to help you and please don't forget to correct my mistakes.
Nice post. Still, it`s about taxation theory, not the practice, which often deviates. I wouldn`t agree regarding Switzerland, Bulgaria and ..still.. Greece. Could you send me info regarding your costly solution via board mail? Thanks
Please explain your thoughts about Switzerland and Bulgaria first! I was talking to Swiss tax advisors and they told me that if you're trading then it's considered personal income thus subject to taxes.
What about Czech? I believe they have 15% flat rate and you can deduct a big lump sum for costs (I think 30% or 40%). That is pretty good. I have no idea about social taxes though. Or do you want to completely avoid taxes?
In CH you are to pay taxes and social security contributions. If you are not under a lump sum agreement this will be variable 10-30% and 9.5%. You could reduce this by trading via a corporate setup ( the setup pays ca 19% on profits - your dividends can be constructed to avoid or reduce personal tax and social security). You could also run your own ETF or wikifolio - exchange traded and listed. Profits within these certificates are not taxed, capital gain if you finally sell will be free. Regarding lump sum I don`t agree as well. Just read carefully : http://www.kpmg.com/CH/en/Library/A...nts/Tax/pub-20150309-lump-sum-taxation-en.pdf But lump sum ain`t cheap any more. And you`ve got to pay annualy same fixed sum, even if you made losses after losses.
@i am nobody : yes, I frequently give tax advice. Please feel free to correct my mistakes though. @Hittfeld: The last time I've checked it was not available for traders nor for hedge fund managers. Not to mention that you pay regular taxes on your Swiss sourced income and trading income is definitely locally sourced so there's no benefit. I guess you misunderstood me, I never said that you cannot achieve 10-30% taxes in Switzerland but I'm looking for zero taxes or for a fixed amount like the lump-sum tax agreement.
Bulgaria: flat rate 10%. What about the following construction: Open an offshore company and put your money there. That is not illegal. Make a contract with that offshore company: They will hire you to trade the company's money. Which is what fund managers do, so completely legal. There are traders who work in a foreign country to manage money in Luxembourg because taxation is lower there. And that was always accepted, till now.
@i am nobody: First you have to prove that you're clearly not the beneficial owner of that company. It may be possible via an offshore trust if you exclude yourself from the class of beneficiaries. Otherwise you're using this structure solely for tax-avoidance thus the local tax man has the right to disregard your structure. If you cannot prove that you're not the ultimate beneficial owner then you have to show that there's a real economical reason why you have setup the company in a foreign low-tax jurisdiction and what other income the company has other than the money you make as a trader since if that's the only income and there's no other operation offshore then they can also claim that you control the company since there's no other operation. Btw there's a special tax regime for these type of arrangements in Switzerland, UK, Singapore, Hong Kong, US, etc. so it's highly regulated. Basically you have to prove that you're trading with someone else's money and you're not entitled to more than 20% of the profits and you have multiple clients not just one and they're not related to each other in order to avoid the taxation on the trading income. It's important to understand that the trading income is always a locally sourced income except if there's an exemption granted by the authorities. For instance: https://www.gov.uk/uk-tax-on-investment-managers-and-non-resident-investors
What about the Cadbury Schweppes case in 2006? The Court judged that trying to pay lower (or none) taxes is an ECONOMICAL reason and therefore accepted. Cadbury Schweppes won that case.