Best Country for Trading (Tax efficiency)

[dw31583]

Guys, thanks for advice!

As of now, my trading system is not coded, and even if I do code it, looks like there will be other issues like reliability / security of servers located in tax havens, not to mention possible misunderstanding with tax authorities, as Mtrader pointed out.
(I wonder if HFT and algo guys explored this thing with servers in tax havens, but their issue is being close to stock exchanges)

DW, few pages back you wrote about being perpetual traveler, that you were not sure about tax status of PT day trader. Have you found more info on that?
I wonder how AEOI will change landscape for PTs next year.

Also, out of all Mediterranean countries, which one is the best in terms of taxes for day traders trading thru corporation?
Montenegro and Bulgaria look good, although, being post-communist, they don't have an established record of protecting private property.
Gibraltar and Cyprus look pretty good, which of them is better? or are there any better choices in that region?

What you guys think?

Well, I simply can't understand why this guy (Mtrader) spreads false information. Let's check his statements step by step.

"In short: If you live nowhere for 6 months, you will be taxed on your ENTIRE WORLDWIDE INCOME in your native country." False. There are only two countries in Europe which taxes you if you don't live there and if you don't have another tax residence. These are Hungary and Finland. If you're none of those citizens and you become a non resident in your country of citizenship then you're tax free on the income that you make elsewhere as long as you don't become a resident in another high-tax country.

"What address will you use for your broker, your bank, your drivers licence, your passport... Travelling around is also very expensive as you need good accomodation, good internet to trade..." This is the reason why PTs use countries like Panama, Malaysia, UAE, etc. because there you can become a resident easily and you have to spend only 1 day/180 days in the country to remain a resident. Consequently if you wanna become a PT and you have a European passport then apply for a residence in Panama, rent a cheap apartment and travel around and you're good to go. Panama doesn't tax foreign sourced income, you can remain a resident even if you visit the country just once every year and you gonna have an address and a tax residence that you can use for your banking needs.

"People should stop dreaming. Go to a low tax country and all problems are solved. And you can still travel around if you wish." You should stop spreading these false information just because you're envy of his success. If he can afford to move to save taxes then don't try to block him.

 

[dw31583]

Guys, thanks for advice!

As of now, my trading system is not coded, and even if I do code it, looks like there will be other issues like reliability / security of servers located in tax havens, not to mention possible misunderstanding with tax authorities, as Mtrader pointed out.
(I wonder if HFT and algo guys explored this thing with servers in tax havens, but their issue is being close to stock exchanges)

DW, few pages back you wrote about being perpetual traveler, that you were not sure about tax status of PT day trader. Have you found more info on that?
I wonder how AEOI will change landscape for PTs next year.

Also, out of all Mediterranean countries, which one is the best in terms of taxes for day traders trading thru corporation?
Montenegro and Bulgaria look good, although, being post-communist, they don't have an established record of protecting private property.
Gibraltar and Cyprus look pretty good, which of them is better? or are there any better choices in that region?

What you guys think?

Btw @luisHK 's answer is also good.

Like I said, if you live in Panama/Malaysia/Hong Kong/Singapore/etc. and not you but a program is trading on a server in Dubai then your trading income is tax free in these countries.

"I wonder if HFT and algo guys explored this thing with servers in tax havens, but their issue is being close to stock exchanges"

MTrader spreads false information thus confuses you. Listen, HFT companies are mostly owned by Americans. American citizens are f*cked, they can't save on taxes no matter where they move/place their companies. The structure that I'm talking about can work only if you move also! You can't make your income tax-free from Germany just because your server is located in Dubai. You have to move! You have to physically relocate to another territorial tax country if you're not a US citizen. This is what makes this possible. If you move to Malaysia then your foreign sourced income is tax-free.

Consequently if a HFT company would be owned by a Malaysian non US citizen resident then it would be tax-free even if the server is located in New York. In fact, the US laws clearly states that a non resident's trading income that is not connected to connected to the US is tax free. It's not connected if the trade was not made by your employee in a fixed place of business. If you have computers in the US and you're running your code on them and those computers are trading on the Nasdaq or on the FX market while you're sleeping in Kuala Lumpur as a Belgian citizen then it's totally tax-free.

 

[Mtrader]

Eternal traveller:
http://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/index_en.htm

 

[Mtrader]

You should stop spreading these false information just because you're envy of his success. If he can afford to move to save taxes then don't try to block him.

Why should I envy him? I moved already to a low tax country because of my trading income. LOL.
I did it, you" study" it for years.
He should take professional advice, so surely not to be found on ET.

I would like to know how many people on ET would go to Panama/Malaysia/Hong Kong/Singapore/Monaco or Dubai. Even for US citizens it is no problem, they should just resign from American citizenship and wait 10 years. So they are not excluded.

I have a girlfriend who lived a few years in Dubai. It was horrible she said. Lots of problems with religious police apparently. Just sitting with a few friends in a park in the evening could already cause problems.
I also know two families that moved to Monaco. They left again. One lived in a castle in Scotland. Their millions $ flat in Monaco was smaller then the garages in their castle.
Second family said it was depressing in winter to be in Monaco.
The grass is not always greener somewhere else.

People watch too much movies and let their fantasy run. And most of them never were on the locations they dream about.

 

[dw31583]

Eternal traveller:
http://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/index_en.htm

View attachment 168819

You insert a picture of a text where the first sentence is this: "There are no EU-wide rules that say how EU nationals who live, work or spend time outside their home countries are to be taxed on their income."

The text you highlighted means literally nothing and it's definitely not valid for those who wants to cut their ties with their home country and become a PT. All it means is if you don't do anything, you keep your home, car, cat, dog, children, wife, wines, cigars, watches, bank accounts, insurance coverage and your cow in the country of your citizenship/current residence and you don't spend more than 6 months in another country than you're likely to remain a resident. It's true, there is no rocket science here.

If you however cut your ties with the country where you presently reside and you travel around and you're not Finnish, Hungarian, American or Eritrean then you don't have a tax residence anywhere. Needless to say you should pay attention to each of those countries' rules and laws where you spend time as a tourist. If however you spend max. 60 days / year in a country, even if you spend 60 days every single year in that country and you don't have a home there then you don't have a tax residence.

For instance if you're let's say Polish and you cut your ties with Poland and you spend the next year in 6 different countries then you don't owe taxes to Poland. I repeat myself, you must cut your ties with your country first! However just because you don't have another residence it doesn't make you a resident in Poland if you have cut all your ties with them. Indeed, it's better to have a residence somewhere (ie Panama) but it still works.

In fact the same website that you linked says that if you spend your time between 3 or more EU countries then you may not have a residence anywhere.

US citizens' case are not that straightforward. If you're American and you make so much that it's worth to renounce your US citizenship then you likely have million of dollars. If that's the case then you have to pay a so called exit tax to the US on your entire net worth and only after that you can escape the US taxation.

Btw we agree in a couple of things. For instance I'm not willing to move to Monaco nor to Dubai because of the exact reasons you just said. I didn't find anything special about Monaco. It's tiny and boring. Dubai is a scam basically where you can drive your Ferrari but forget the women. So I agree with you, it's crucial for him and for everyone to find a solution that works. A country where you don't have to pay 50%+ not even 30%+ but you have a decent life.

 

[Hittfeld]

Hi all!
Maybe there a re theoretical ways to have no tax base, trade by a robot in foreign lands, move from country A to B to C to D and avoid the country that issued your passport, .....but:

How please can my robot open a brokerage account, how can I open a bank account to feed the broker account from, what will my robot put into the w8BEN form, where they now ask for your tax ID and tax authorities?

Thanks to dw..... and MT.... for all there information. Helpful, but won`t help you with your decision to leave your country - no keys to a permanent room or camper allowed- , go to a country you don`t know how it works, how the people there tick, and learn the fuc...g local language.

And before you park your money in a corporate setup: It`s not your money anymore, the company may have a surprising fate and you might lose control of it under foreign laws faster than your educatedb guess thought possible.

 

[Mtrader]

If you cut your ties with your country, you will have no drivers license, no passport or ID card, no address for opening an account with a brokerage firm, no bank account.... You will have to stay in Schengen and never take a plane even not within Schengen as you will have no ID or passport anymore for border controle.

Can you read correctly? "If you spend less than 6 months a year in another EU country, you will normally remain tax-resident in your home country". So, or you are taxed somewhere else, or in your native country, but you will be taxed. Cutting your ties will not help as you need some address where you reside or you will get in trouble.

Hittfeld confirms:

• robots will not work as I told already. So this BS with servers... is pure nonsense. That story will never be accepted, especially not if the robot makes a lot of money.
  
• Moving to another country is not that simple, and many of these places are not acceptable anymore once you would have lived there a year and you would know in reality what it is.

Although you said that the US cannot tax you if you trade from another country is not correct. All depends of the fact whether there is a double tax treaty between the US and the country you, or your robot resides in. If there is no double tax treaty the us WILL tax you. They have your w8BEN form.
Since FATCA all brokers have for each account to prove where the owner resides. If there is no answer, the owner is a robot or you are living "nowhere", the US will consider you as US citizen and tax you directly on your account before you can take your money as your account will be blocked.

Keep on dreaming. You read to many books and have no real experience at all.
Things can get very complicated so take professional advice. Don't try to play the "professional".

 

[luisHK]

I have a girlfriend who lived a few years in Dubai. It was horrible she said. Lots of problems with religious police apparently. Just sitting with a few friends in a park in the evening could already cause problems.

Hell of a source of information this thread is !
There is no religious police in Dubai, and your mention of public parks in Dubai sounds eerily similar to Imnobody's story a while back about Dubai.

As of DW claiming AGAIN one has to forget about girls in Dubai without any experience there, it hints that he might indeed be much of a armchair world traveller, it's really not difficult to at least stopover in Dubai for a few days to get an idea, especially for someone that seems so curious to explore migration possibilities. This idea would probably be that in Dubai the dating and prostitution scenes are quite good. Top notch clubs and bars as well.

Next Hittfeld is going to hint the lifestyle for europeans in Dubai is similar to the one they have in Saudi Arabia, as well as complain about the price and availibility of bratwurst and we'll have gone another full circle on the topic.

As of people without a tax residency not beeing able to get a passport or drivers license and forced to walk across the borders in their Shenghen prison, really ?

Worst case IF you can t get a new passport overseas you go back to your home country, get a letter from someone that you are now (as in newly) staying with them, and apply for a new passport, but this can work in other countries as well.

Still i agree it's begging for problems to make significant amounts of money and not sort out tax residency ( yet, in Asia there are a whole bunch of europeans who live on temporary visa,or 1 year multiple entry business visa, which are not proper residency documents and they don't seem to be hassled by their tax authorities back home - I can see problems in other areas though, where one needs to show his tax residency, dealing with some HK banks at the moment for instance, and it's better not to have a EU residency) a bank statement is enough as a proof of adress for most administrative duties, at least to open other bank accounts as well as a brokerage account, and it's not like you need to return your driving license and close all your accouns once you move countries.

FWIW whereas i have tax residence and a fixed abode in a low tax country, and brokerages, DLs, passport, corporations, bank accounts in several countries i still don't have my name attached to any utility bill nor property deeds nor rental agreement. But it's also possible to get a such a document (like a rental lease) in a country where one has no proper residence if needed.

 

[swinging tick]

before you park your money in a corporate setup: It`s not your money anymore, the company may have a surprising fate and you might lose control of it under foreign laws faster than your educatedb guess thought possible

Could you please give examples of such scenario?

 

[dw31583]

If you cut your ties with your country, you will have no drivers license, no passport or ID card, no address for opening an account with a brokerage firm, no bank account.... You will have to stay in Schengen and never take a plane even not within Schengen as you will have no ID or passport anymore for border controle.

Can you read correctly? "If you spend less than 6 months a year in another EU country, you will normally remain tax-resident in your home country". So, or you are taxed somewhere else, or in your native country, but you will be taxed. Cutting your ties will not help as you need some address where you reside or you will get in trouble.

Hittfeld confirms:

• robots will not work as I told already. So this BS with servers... is pure nonsense. That story will never be accepted, especially not if the robot makes a lot of money.
  
• Moving to another country is not that simple, and many of these places are not acceptable anymore once you would have lived there a year and you would know in reality what it is.

Although you said that the US cannot tax you if you trade from another country is not correct. All depends of the fact whether there is a double tax treaty between the US and the country you, or your robot resides in. If there is no double tax treaty the us WILL tax you. They have your w8BEN form.
Since FATCA all brokers have for each account to prove where the owner resides. If there is no answer, the owner is a robot or you are living "nowhere", the US will consider you as US citizen and tax you directly on your account before you can take your money as your account will be blocked.

Keep on dreaming. You read to many books and have no real experience at all.
Things can get very complicated so take professional advice. Don't try to play the "professional".

Well, if you would understand how false your statements are then you'd be laughing. No offense, this is just a fact. Go to the nearest PWC, KPMG or Deloitte and they'll be glad to tell you how it works. What I can't understand about people like you is why you don't take your research at least and check the facts? How could you lose your passport? How could the US tax non residents' money market trading when the law says they can't? Anyway, you should definitely seek professional advise, that's for sure.