Best Country for Trading (Tax efficiency)

[Maverick2608]

However, i.e. in Germany there is no differentiation between longterm and short-term capital gains and day-trading income will only be subject to 25% capital gains, regardless how long you hold the asset and how big your position is.

Does somebody know alternative countries where regular capital gains tax apply, even for daytrading income?

That goes for Sweden for sure. 30% capital gains tax irrespective of volume of trading or how long you hold the assets. Sweden also have something called "investment saving account" with much lower taxation, but only for long trading and only with local brokers.

Are you sure that you are not taxed as business income in Germany, if you reach a certain volume and frequency of trading?

 

[p4trick88]

yes very certain, though I do believe it won't stay forever as all left-leaning mainstream political parties want to abolish it and make it subject to regular income tax, the same way they just did in Portugal.

That goes for Sweden for sure. 30% capital gains tax irrespective of volume of trading or how long you hold the assets. Sweden also have something called "investment saving account" with much lower taxation, but only for long trading and only with local brokers.

Are you sure that you are not taxed as business income in Germany, if you reach a certain volume and frequency of trading?

 

[luisHK]

Does anybody have a list of countries in Europe or elsewhere, where countries don't differentiate between longterm and short-term capital gains? For example, in the Netherlands, Spain and Portugal trading income will be treated as regular income and therefore subject to regular income tax.

I didn´t stress much the issue as I no longer trade actively and do my best to get my trading income to 0 at the end of the year, but asked the tax lawyer about this upon moving to Spain 3 years ago and he was adamant the trading income would be taxed as capital gains in Spain ( up to 23% back then, up to 26% from 2022)
Not sure whos right, you or him ( a member of a midsize law firm in Madrid), I´ve noticed years ago one must take with a pinch of salt input from lawyers and consultants.

 

[p4trick88]

I didn´t stress much the issue as I no longer trade actively and do my best to get my trading income to 0 at the end of the year, but asked the tax lawyer about this upon moving to Spain 3 years ago and he was adamant the trading income would be taxed as capital gains in Spain ( up to 23% back then, up to 26% from 2022)
Not sure whos right, you or him ( a member of a midsize law firm in Madrid), I´ve noticed years ago one must take with a pinch of salt input from lawyers and consultants.

Thanks for the feedback luishk. I will contact some lawyers in Spain shortly to reconfirm. I read multiple times on the internet that daytrading income will be treated as business income, but will certainly double check. In the meantime Greek and Croatian tax consultants advised me that regular capital gains tax shall apply with 15% and 10% respectively. You should take this advice with a grain of salt as well though, and double check with local authorities again.

 

[guest_trader_1]

Thanks for the feedback luishk. I will contact some lawyers in Spain shortly to reconfirm. I read multiple times on the internet that daytrading income will be treated as business income, but will certainly double check. In the meantime Greek and Croatian tax consultants advised me that regular capital gains tax shall apply with 15% and 10% respectively. You should take this advice with a grain of salt as well though, and double check with local authorities again.

In Spain look for "fiscalidad en operaciones bursátiles", you can find an example of a few numbers that might come across in this article:

https://samuraifinanciero.com/fiscalidad-del-trading/

 

[p4trick88]

amazing article angry trader - exactly what I was looking for. I will cross-check with more local tax consultants, but if this is correct, which it seems like, I will switch from Portugal to Spain.

 

[luisHK]

In Spain look for "fiscalidad en operaciones bursátiles", you can find an example of a few numbers that might come across in this article:

https://samuraifinanciero.com/fiscalidad-del-trading/

Thanks for the link, author also states trading profits will be considered capital gains, but that it wasn t the case until recently.
Worth noting, from this year there is a new tax tier, 26% over 200k income ( from Renta del ahorro I think, rates are higher on income from work)
Note as well one doesn t need to declare their individual trades as is the case with some countries, just the total result is enough ( with always the possiblility for the Tax authorities to ask for more details later)

 

[guest_trader_1]

Thanks for the link, author also states trading profits will be considered capital gains, but that it wasn t the case until recently.
Worth noting, from this year there is a new tax tier, 26% over 200k income ( from Renta del ahorro I think, rates are higher on income from work)
Note as well one doesn t need to declare their individual trades as is the case with some countries, just the total result is enough ( with always the possiblility for the Tax authorities to ask for more details later)

I guess the next question would be if you guys prefer to open a limited company, "empresa de responsabilidad limitada" and avoid that 26% somehow. I need this information as well at some point. I read somewhere that opening a company for trading in Spain does not help that much compared to a sole trader entity.

So yeah, we need professional help here.

 

[luisHK]

I guess the next question would be if you guys prefer to open a limited company, "empresa de responsabilidad limitada" and avoid that 26% somehow. I need this information as well at some point. I read somewhere that opening a company for trading in Spain does not help that much compared to a sole trader entity.

So yeah, we need professional help here.

Sorry, I´m unfamiliar with trader friendly corporate set ups in Spain, even unfamiliar with equity traders as a whole in Spain to be fair.
Watch out for Wealth Tax if moving to Spain, the threshold to pay some is pretty low (around 1.2million from memory) but it depends on the province, in Madrid one has to make the declaration but there´s nothing to be paid, in Barcelona afaik it´s quite different

 

[d08]

In addition to finding out if regular capital gains tax will apply to trading in Croatia, Greece and Italy, what do you guys think of trading through an Armenian bank account?

I believe you can fairly easy open a bank account in Armenia, without needing a company or local job. Armenia is not part of CRS and doesn’t have a DTA with many countries such as Portugal.

I’m using IBKR HK. Couldn’t I tell IBKR that I’m living in Armenia, or even a third country to add confusion, while actually living in Portugal? How would the Portuguese authorities find out about my trading income?

If Armenia is part of CRS, they share information. So Portugal should know you have an account with IB. What you're suggesting worked decades ago but not anymore, from what I understand.