Setting up a Dellaware corporation to do my trading

Discussion in 'Professional Trading' started by Daal, Apr 20, 2007.

  1. LOL, yeah that $455 they show is buried in an offshore account, LOL.

    This is the better Bright

    But, in all seriousness, I agree that you should seek professional help with all this. And, you have to be really careful even with picking out who to get advice from....I've seen some smart people fall for some really bad advice, only to have it come and bit them in the butt, big time.

    Paying taxes is simply a necesdary evil.

    #41     Apr 23, 2007
  2. Buzzy,

    The KPMG shelter was offered to me about 7 years ago and I turned them down flat. My first question was , "Does this transaction have a substantial business purpose?"

    They would not let you take documents out of the room , but you could have counsel with you.

    It was a meritas firm that advised me not to do it.

    I also used a Meritas firm when i moved to europe and their help was invaluable. All these guys are interested in running up the hourly bill, but the advice has been right on target.

    At one point I considered changing citizenship to avoid taxes and I got great advice that this was a stupid idea.
    #42     Apr 23, 2007
  3. gov


    bestfriend, may I ask what citizenship you hold; iow what was a bad idea?
    #43     Apr 23, 2007
  4. bestfriend: having a second citizenship is ALWAYS a good idea, if you acquire it from the right country.
    On the other hand, RENOUNCING US citizenship might not be a good idea, but you don't always automatically lose or have to renounce your US citizenship if you get a second one (or third or fourth ....). that depends on the other country.
    There are a lot of misconceptions about dual or multiple nationality. It seems you got BAD advice. Here's a good FAQ.

    Brief overview on dual citizenship

    In general, countries define citizenship based on one's descent, place of birth, marriage, and/or naturalization. That is, you might be a citizen of a given country for one or more of the following reasons:

    You were born on territory belonging to, or claimed by, that country (often called ius soli, or sometimes jus soli -- Latin for "right of the soil").

    One or both of your parents were citizens of that country (often called ius sanguinis or jus sanguinis -- Latin for "right of the blood").

    You married a citizen of that country (though please note that the practice of granting immediate, automatic citizenship to a foreign spouse is far less prevalent today than it was decades ago).

    You (or one or both of your parents) obtained that country's citizenship by going through a legal process of naturalization.
    The exact details will, not surprisingly, depend on the laws of the country in question. For example, the US limits its application of ius sanguinis by requiring American parents to have lived for a certain period of time in the US before foreign-born children can be entitled to US citizenship by birth. Many countries (Switzerland is one example) do not confer citizenship via ius soli at all, and those which do generally make exceptions for children of foreign diplomats. Automatic citizenship via marriage is rare nowadays; more commonly, marriage may allow one spouse a "fast track" to immigration to the other spouse's country, but a period of non-citizen permanent residence would still be required before the immigrant spouse could obtain a new citizenship via naturalization.

    Since there can be several ways to acquire a given country's citizenship, it is possible for someone to be considered a citizen under the laws of two (or more) countries at the same time. This is what is meant by dual (or multiple) citizenship.

    For example, my son has been a dual citizen of both the US and Canada from the day he was born. He is a citizen of the US (via ius sanguinis), because his parents are both US citizens who fulfilled the US's legal requirement of residency in the US prior to his birth. And he is also a citizen of Canada (via ius soli), because he was born in Canada and neither my wife nor myself were in Canada as foreign diplomats.

    I, too, am a dual citizen of both the US and Canada -- a citizen of the US because I was born in the US, and a citizen of Canada because I went through the Canadian naturalization process (an action which did not cause me to lose my US citizenship).

    Countries usually frame their citizenship laws with little or no regard for the citizenship laws of other countries. In my son's case, for instance, the US does not care that Canada thinks he is a Canadian citizen, and Canada does not care that the US thinks he is a US citizen.

    In some (but, please note, not all) cases, a country may seek to restrict dual citizenship by requiring one of its citizens born with some other citizenship to renounce (give up) the other citizenship upon reaching adulthood. Similarly, newly naturalized citizens in some (but not all) countries are required to renounce their previous citizenship(s); the US has such a requirement, for example, but Canada does not. And in some (but, again, not all) cases, a country will automatically revoke the citizenship of one of its citizens who acquires another country's citizenship by naturalization, even if no explicit renunciation was involved.

    Where one country requires a citizen to renounce the citizenship of another country, this renunciation may or may not be acknowledged or accepted by the other country. This can sometimes lead to sticky legal situations. Also, countries which require such renunciations differ in how seriously they treat this requirement. In some cases (such as Singapore), an applicant for naturalization may be required by his new country to go to an embassy or consulate of his old country and renounce his old citizenship in a manner prescribed by his old country's laws. Other countries (such as the US in recent years) may treat their own naturalization oaths' renunciatory language as essentially meaningless and take no steps to enforce it at all.

    As a general rule, dual citizens are not entitled to any sort of special treatment by their two countries of citizenship. Each country will usually consider the person as if he were a citizen of that country alone. Some people describe this sort of situation by saying that a given country "does not recognize dual citizenship" -- but this usage can be confusing, because it might mean either that a country passively ignores other countries' claims on its citizens, or that it actively prohibits its citizens from also being citizens of other countries.

    Citizenship frequently carries with it legal obligations relating to taxes, military service, and/or travel restrictions. Again, since countries usually insist on dealing with their citizens without regard to any other citizenships they might hold, and tend to frame their laws regarding citizenship obligations without regard for the laws of other countries, a dual citizen could possibly find that a country which considers him a citizen, but in which he does not live, expects him to pay taxes (possibly in addition to taxes he is already paying in his country of residence); considers him liable to be drafted into its army (even if he has already served or is currently serving in the other country's army); and may forbid him to travel to certain countries, including possibly his other country of citizenship.

    In practice, such situations are often smoothed over via tax treaties and the like, but conflicts could (and sometimes do) occur. Also, be aware that most countries (the US is the main exception) base liability for income tax on residence (where one lives) and/or source of income, not solely on citizenship; thus, dual citizenship usually does not automatically translate into double taxation.

    Citizenship claims by a country over a given individual could happen even if the person in question never sought recognition as a citizen of that country -- or even if the person was totally unaware that he/she was a citizen of that country according to its laws. Accordingly, anyone who is planning to travel to an ancestral homeland -- even for a brief vacation trip -- would be strongly advised to check that country's citizenship laws carefully beforehand. Otherwise, the trip could run into unpleasant snags if you discover, say, that Country X considers you to be one of its citizens because your father (or even your grandfather!) came from Country X -- and that, as a result, you need a passport issued by Country X in order to leave -- and in any event you can't leave until you have put in a year's worth of military service in Country X's army -- and when consular officials of the only country where you thought you were a citizen try to intervene in your behalf, they are told to get lost because your case is strictly an internal matter between Country X and one of its own citizens (i.e., you)!

    On the other hand, dual citizenship can have distinct advantages. In particular, a person with dual citizenship has greater flexibility in his or her choice of where to live and work. Thus, it behooves anyone with dual or multiple citizenship -- or with the possibility of claiming such a status -- to investigate the pros and cons of the specific situation very carefully.
    #44     Apr 24, 2007
  5. guys,

    I hold US citizenship.

    Unless one renounces US citizenship, he is liable for taxes on his worldwide income. Most people are aware of that....but Euros are taxed based on residency.

    Apart from this , most people are not aware that if you renounce citizenship from the US, and if you have paid more than a total of $500k in tax in the 5 years preceeding the year in which you renounce, the US will continue to tax you as if you were a citizen for 10 additional years.......and they said leaving the USSR used to be difficult!!!

    Plus, if you care, your scofflaw ways will be published in the Congressional record by publicity-seeking politicians.

    The best place to go if you change your citizenship and are a trader, is, in my opinion, The Netherlands.

    You would be taxed aqt the rate of 1.2% of your capital (win, lose or draw), and they have a highly developed legal system. But....the weather sucks. That's just my choice for pure lkegal reasons and I am sure there are others.
    You cannot get dual citizenship there any longer. The Meritas lawyer I used had dual citizenship but the law had since been changed.

    Besides, I am not about to give up Uncle Sam. I mean, heck,if I am on a plane that is hijacked, I want to be the first hostage shot.
    #45     Apr 24, 2007
  6. bestfriend,

    I am not advocating tax evasion.

    I have looked into this a bit myself. You can get around the expat tax by selling all of your assests in America and then purchasing in a foreign country before you formally expat. Then the US can come after nothing. Especially if your money is in a tax haven country, like Switzerland where income tax evasion is not a crime.
    #46     Apr 24, 2007
  7. Dandxg,

    While you may not be advocating anything here, what you are describing is simply placing your assets outside the reach of US authorities, even if you would owe US tax.

    This is a procedure for effecting tax evasion, and not a procedure for tax avoidance. The Swiss will , I believe, extradite you for tax fraud.
    Brazil will not...the most notorious case being that of Joe Conforte.

    I am not interested in evading taxes, hiding assets, etc. and am not suggesting you are. Even something as simple as an offshore corp to defer tax--say, an offshore insurance company, can get caught up in the personal holding company rules.
    #47     Apr 24, 2007
  8. KS96


    Where did you hear those myths about
    the Netherlands?

    I am a resident, with dual citizenship,
    and as for the 1.2%...please point me to
    its source so I can get rich!
    #48     Apr 25, 2007

    We haven't had rain for 33 days now, so I suggest you all beter move here!
    #49     Apr 25, 2007
  10. KS96,

    In The Netherlands you would be taxed at the rate of 30% of an assumed earnings rate of 4%. That amounts to 1.2%.
    There is case law to support this position, unless you are operating as a business. This is known as "box 3" income.

    The actual case law related to a trader who came off the Amsterdam floor and began trading from his own location. He tried to deduct his losses and was denied, thus establishing a precedent that you can use that your profits are not from a business, but rather from investment gains.
    #50     Apr 25, 2007