Best Country for Trading (Tax efficiency)

alexanderhu said:
If that is the special savings or whatever it's called account, then you're wrong. That is for investors, not for traders. I have confirmed this with Swedish advisors and if you trade on it then you should pay regular income tax. Same goes for Netherlands' 1.2% wealth tax on investments. It is useless for traders who open and close positions frequently. Same goes for Switzerland as well. Furthermore, bear in mind that in many countries you become a tax resident the very day you rent or buy an apartment whether you live there or not. The rules are generally way more complex than a simple 183 days stay.
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There's a recent thread here where the poster got confirmation from tax authorities there that capital gains would be treated as such, but never as income in Sweden. Investeringssparekonto seems to have been used by swedish traders on this forum, but has serious limitations, the main one beeing possibly products have to be traded on scandinavian exchanges. looked into this around 5 years back, it allowed a bunch of derivatives as well. No plan watsoever to move to sweden in the near future so ahven't checked back in years.

Below the thread, and the post :

https://www.elitetrader.com/et/thre...ries-to-trade-from.288687/page-5#post-4667491

"I contacted the Swedish tax authorities this year. They confirmed that Sweden – as opposed to any other country I have explored – does not tax trading income as business income but exclusively as capital gains irrespective of frequency of trading, volume, education, prior or current profession etc.

That means 30% tax.

Furthermore, there is the added benefit of using the “investeringssparekonto (ISK)” where you are currently taxed around 0.5% of total capital. However, you can only use the local banks, which is a significant drawback since they do not offer the order types of bigger international brokers and most likely inferior execution. Also, you cannot short stocks or use non-listed derivates e.g. CFDs. In practice, therefore, ISK is only relevant for longer term investments. But depending on the amount of longer term investments, ISK can pull the effective taxation significantly below 30%.

The effective taxation for any meaningful level of income for a trader living in Sweden is thus a good deal lower than the effective taxation for a trader living in New York.

On top of that, health care and education including universities are free. In fact you or your children get paid to study.

The immigration situation is a problem, but sentiment is changing.

Caveat: If your trading income is very irregular – i.e. if you often turn in an annual loss, Sweden is not attractive due to the inability to carry losses forward."


About Nederlands, the situation has seen heated discussions in this thread, with various opinions, but it was far from obvious trading profits would be treated as income. One of the latest input was about a higher rate than 1.2% for the bigger portfolio introduced. The poster Ditch came up with several links in dutch supporting the idea one wouldn't be taxed on income- again from memory, rather distant, this thread has been going on for years.
 
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schweiz said:
Wrong. Because then thousands of people owning a flat/house in Spain, Portugal, Italy, Greece, Turkey... would be tax resident overthere. And I know personally that this is not true.


https://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/index_en.htm
Each country has its own definition of tax residence, yet:
  • you will usually be considered tax-resident in the country where you spend more than 6 months a year
  • you will normally remain tax-resident in your home country if you spend less than 6 months a year in another EU country.
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I don't want to argue with you because I know that you're wrong, you think that you're not and this is the situation when you think that you're right and there is no way to convince you. As a human to human, I don't want you to have any negative consequences of what you're doing so please seriously consider hiring a professional tax advisor in all the countries where you live or rent/own an apartment.
 
lol, just noticed the poster I quoted above is Maverick2608, already very active about Sweden in the previous pages... Indeed Sweden looked like a very capital friendly country when I used to go more often in Scandinavia, and Stockholm like a cool place to live.
 
luisHK said:
Check the thread below, there is a link to the spanish advisor, my understanding reading on the topic when i checked was there was a lot of wishful thinking in their interpretation, planned rather than implemented changes to the Beckham law. Tried to contact them but with no avail.
I'd understood the wealth tax in Madrid was also reintroduced during the financial crisis, but with a higher threshold, from memory 2 million euro for 2017 or 2018 and somewhat lower rates than in other parts of Spain. Understood while looking for updates it had been decided only recently to cancel it altogether for 2019. Big difference for me as at the moment most of my income is passive. Reading tax treaties, dividends and interests from some low tax markets where i have non negligible investments are 10 and 15% from the spanish side. Not bad, especially for a Madrid fan.

If you are looking for a low tax set up in the EU, again, check out Gibraltar, there are several set ups possible, you basically don't need any if u plan to live there and trade afaik, and there are only short stay requirements under the cat 2 investor program, but again if you are a EU citizen, plan to live in Gib and get your income from trading financial markets, 2 law firms I got feedback from confirm it would be tax free.
We went there last summer to check the place (second time for me in Gib, and a few more times in nearby Costa del Sol), not that bad of a place , wife and daughter who speak much better english than spanish keen on moving there this year, but I'll probably give it pass because sports wise there is not much for kids, whereas one of the most successful schools in western Europe for daughter is just outside Madrid, so it is another plus.

https://www.elitetrader.com/et/threads/trading-for-a-living-taxes-in-eu.318391/page-10

You can jump to halfway through the thread, to read more direct feedback from lawyers there :
https://www.elitetrader.com/et/threads/gibraltar.319989/page-4

To make it faster here are the links to the Beckham law related website :

https://www.spectrum-ifa.com/financial-advisers-in-spain/spanish-tax-201/the-beckham-law-in-spain/
https://www.spectrum-ifa.com/beckham-law-2018/
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Thank you but I don't think I'd like to live in Gibraltar to pay less and I'm not that sure if that would work. I contacted an advisor in Gibraltar back in 2017 and they said that frequent trading may be taxable as locally sourced income and thus subject to regular tax rates. Paying 15% in a comfortable and safe EU country is so far okay for me.

If your income is passive, then you may consider the Portuguese non habitual resident tax scheme, Malta, Cyprus, Ireland or the UK if you qualify as a non domiciled in any of these four English countries but Cyprus is more rigorous than the other three. Italy is another option is you're willing to pay €100k a year to exempt your foreign sourced passive income from taxation.

Gibraltar is indeed a nice, safe and comfortable place to live but it's not for me. My problem with most of these tax schemes that exempts foreign sourced passive income is that they were not designed to help traders to save on taxes so even though some may get away with it, I don't think it's worth the risk when there are so many low tax countries in Europe. You can pay 15-20% flat in very safe and clean countries like Hungary, Estonia, Czech Republic, etc. so these not 100% sure tax strategies are not for me.
 
By the way, another nice and new option in the EU where the personal income tax rate is flat 10% from 2018 is Romania. I think it may be safer than Bulgaria and you can pay the same 10% on your trading income and 5% on dividend income. Some social security applies on the first X Euros just like in Bulgaria but that applies in almost all the EU countries anyway. At least it is capped at a certain level, unlike in Switzerland. Also, you can create a company and pay 1-3% tax on the first €1 million of revenue. Note that, this tax is based on the revenue, not on the profit. Combined with the 5% dividend tax, it's not bad either.
 
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alexanderhu said:
I don't want to argue with you because I know that you're wrong, you think that you're not and this is the situation when you think that you're right and there is no way to convince you. As a human to human, I don't want you to have any negative consequences of what you're doing so please seriously consider hiring a professional tax advisor in all the countries where you live or rent/own an apartment.
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ROFLMAO. :D

What if you have a house in Spain and also one in Germany? Double residency and double taxation? LOL.:banghead:
 
schweiz said:
ROFLMAO. :D

What if you have a house in Spain and also one in Germany? Double residency and double taxation? LOL.:banghead:
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I won't answer your question for three reasons: 1) It would take a long time to explain everything in a way that the readers would get a clear picture about how cross border and multi jurisdictional taxation works. 2) You would still find a forum where they say otherwise and would ignore the laws. 3) I won't do this for free for you.

I highly recommend for you to seek professional advice if you have homes in multiple jurisdictions, you have companies in multiple jurisdictions and especially if you claim to be living in one country where you don't actually live. I would gladly explain how this work in the reality and how a tax office would treat your situation but based on your behavior I have the impression that we're not on good terms so I'm not going to save you money. I can only repeat myself, as a human to human, seek professional advice.

schweiz said:
I thought you know everything? LOL.
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That's cute and kinda ironic from you.
 
Hi, I just found this thread and hope you don't mind me asking a dumb question. I am from South Africa. What I want to know is what is the effective tax rate on profits from trading equities and equity derivatives for a US resident in say California, trading an Interactive Brokers account. Is the trader taxed at his highest marginal tax rate? or is there some sort of lower flat rate for trading profits?
 
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