How much taxes do you pay for Daytrading?

[p0box4]

I have made a quick example calculation on the taxes in Belgium (as i know it, for a self employed business owner). Please note that these are the easiest calculations, there are a few more options which could save you a few % but are to complicated to include in my calculation.

Lets assume you made 100K€ turn over AFTER expenses like car lease, internet and electricity, ...

You pay yourself a pre tax income of 36K€, you pay 45% taxes on this 36K€ income (16.2K€) so this gives you a monthly income of 1650€ or 19800€ each year. (Roughly 23K USD)
Might sound low but the average income in Belgium is 1873€ and there is more to come.

So after you pay yourself an income, you have to pay social contribution based on your income you paid yourself, which in my example would be 7605,08€ each year which includes administration fee.

Based on the social contribution i have to pay town taxes, i my case 7%, which comes to 522,36€.

So then there is a remaining net profit of 55872,56€.
And now i have to pay the 25% taxes on ALL my profitable trades.
So back to the 100K€, how did we get there, lets assume i made 200K€ profit and 90K€ loss, the 10K€ are expenses like the car lease, internet and electricity which gives us the 100K€ net after expenses.
Meaning i have to pay 25% on 200K€ which comes to 50K€ meaning after all expenses (my personal income, social contribution, ...)

I end up with a overal profit of 5872,56€.
Now this money is still in my business, if i want to get it out i have to give myself some sort of dividend, which in this example will be taxed at 15%.

In the end i will get on my personal bankaccount: 19800€ (personal income) + 4991,68€ totaling 24791,68€.
Which means i total i would have paid 75% taxes.

In a normal situation where i would pay 25% on the net turn over(profitable trades minus lossing trades) which is the 55872,56€ minus expenses and minus personal income, i would have to pay 13968,14€ and i would end up with 41904,42€ in my business.
Now if i would wanted to transfer all this money to my personal account i would end up with
29333,09€ + 19800€ (personal income) = 49133,09€ which would mean 51% taxes.

So conclusion, because in Belgium i would need to pay taxes based on only the profitable trades i would end up paying 75% taxes.
If i would have to pay taxes based on a more normal system (turn over minus expenses minus personal income, minus social contribution and town taxes) i would end up paying 51% taxes.

The funny thing is, speculative income is the only tax form in Belgium (and probably in the world) where losses are not deductible ...

Again, these are basic calculations, there are a few more options to save some taxes however i did not include these since it would be to complicated for my calculation.
For example you could deduct a few % of the 10K€ expenses i used as an example, however this probably will never be more then 2K€.

 

[zdreg]

The speculation tax we used to have has nothing to do with the 25% for speculative transactions. The speculation tax was a tax of 33% if you sold for a profit within 6 months of buying the stock.

The 25% is a special tax for speculative transactions, if you are normally managing your assets meaning just doing a few transactions each year like most "normal" people do then you do not have to pay taxes on the profits, if you are however actively managing your assets and actively trading then the profits will be taxed at 25%.

At least this is how my accountant explained it to me.
And again, this is for Belgium.

yes but like most countries belgium have special deals for the super wealthy a la actor gerald depredeau etc. who has moved to belgium from france.
https://www.telegraph.co.uk/news/wo...d-Depardieu-to-sell-everything-in-France.html

 

[p0box4]

yes but like most countries belgium have special deals for the super wealth a la actor gerald depredeau etc. who has moved to belgium from france.
https://www.telegraph.co.uk/news/wo...d-Depardieu-to-sell-everything-in-France.html

True, however we are talking about day trading income.

Edit: The reason why Depardieu moved to Belgium was because of some kind of "rich people" tax in Frace of 75% for everybody who made more then 1 million/year.
This tax was removed again after 2 years.

 

[Sig]

I have made a quick example calculation on the taxes in Belgium (as i know it, for a self employed business owner). Please note that these are the easiest calculations, there are a few more options which could save you a few % but are to complicated to include in my calculation.

Lets assume you made 100K€ turn over AFTER expenses like car lease, internet and electricity, ...

You pay yourself a pre tax income of 36K€, you pay 45% taxes on this 36K€ income (16.2K€) so this gives you a monthly income of 1650€ or 19800€ each year. (Roughly 23K USD)
Might sound low but the average income in Belgium is 1873€ and there is more to come.

So after you pay yourself an income, you have to pay social contribution based on your income you paid yourself, which in my example would be 7605,08€ each year which includes administration fee.

Based on the social contribution i have to pay town taxes, i my case 7%, which comes to 522,36€.

So then there is a remaining net profit of 55872,56€.
And now i have to pay the 25% taxes on ALL my profitable trades.
So back to the 100K€, how did we get there, lets assume i made 200K€ profit and 90K€ loss, the 10K€ are expenses like the car lease, internet and electricity which gives us the 100K€ net after expenses.
Meaning i have to pay 25% on 200K€ which comes to 50K€ meaning after all expenses (my personal income, social contribution, ...)

I end up with a overal profit of 5872,56€.
Now this money is still in my business, if i want to get it out i have to give myself some sort of dividend, which in this example will be taxed at 15%.

In the end i will get on my personal bankaccount: 19800€ (personal income) + 4991,68€ totaling 24791,68€.
Which means i total i would have paid 75% taxes.

In a normal situation where i would pay 25% on the net turn over(profitable trades minus lossing trades) which is the 55872,56€ minus expenses and minus personal income, i would have to pay 13968,14€ and i would end up with 41904,42€ in my business.
Now if i would wanted to transfer all this money to my personal account i would end up with
29333,09€ + 19800€ (personal income) = 49133,09€ which would mean 51% taxes.

So conclusion, because in Belgium i would need to pay taxes based on only the profitable trades i would end up paying 75% taxes.
If i would have to pay taxes based on a more normal system (turn over minus expenses minus personal income, minus social contribution and town taxes) i would end up paying 51% taxes.

The funny thing is, speculative income is the only tax form in Belgium (and probably in the world) where losses are not deductible ...

Again, these are basic calculations, there are a few more options to save some taxes however i did not include these since it would be to complicated for my calculation.
For example you could deduct a few % of the 10K€ expenses i used as an example, however this probably will never be more then 2K€.

Is it possible though to form a corporation in a low/no tax country which does all the trading, and simply pays you an annual dividend which is the net profit (or pays you a salary equal to it's net profit), and in that way avoid the 25% "daytrading" tax?

 

[p0box4]

Is it possible though to form a corporation in a low/no tax country which does all the trading, and simply pays you an annual dividend which is the net profit (or pays you a salary equal to it's net profit), and in that way avoid the 25% "daytrading" tax?

Theoretically, yes this could be possible.

However Belgian law will tax me from where i am managing my business.
So if i would for example create a business in Bulgaria (low taxes) but i keep living in Belgium then i will get taxed as if my business where in Belgium since i am managing my business from Belgium. If i would find somebody in Bulgaria who could become my business partner and did the day to day management of the business, then i would only pay income taxes in Belgium based on the income i decide to pay myself and 10% on the remaining balance in Bulgaria which i can then wire to my bank account for no further taxes.

 

[schweiz]

All this was already extensively discussed in another thread.

"
Best European Countries to Trade from"

If you don't make consistently 500-1000K a year most REALISTIC solutions are not for you. And the happy few who make enough, can afford professional advice.

 

[Handle123]

I been using Texas as my residence for 40 years, we have some of the highest percentage of real estate taxes in the country approx. 1.81%, but I rather pay this percent which cept for small increases but we pay no state income taxes. Each county has different rates, higher in big cities and lower in the country.

Those of you who want to take trading expenses off, buy a Texas farm or ranch, buy a few calves and when they get full grown, sell what you won't eat and take one to the butcher. Any expenses you do trading, just about everything can be used in farming/ranching.

http://appraisaldistrictguide.com/texas/exemption/agricultural.html
http://www.phyllisbrowninglandandra...land-or-ranch-property-what-you-need-to-know/

And get oneself a Tax specialist that has many farms/ranches as clients, they will save you bucks.

 

[deaddog]

I heard a trader on youtube comment about paying 50% income taxes. Is it that high everywhere? (I live in Canada.)
How do daytraders even make a living if they have to pay such a high tax rate?

In Canada day trading is taxed as income. It is a progressive tax system so the more you make the more tax you pay.

By the time you get to 50% tax you will be making enough to afford a decent accountant who will show you how to write off all your expenses such as your annual trip to Vegas to attend Traders Expo.

Concentrate on trading. Like they say don't let the tax tail wag the trading dog.

 

[elitenapper]

I been using Texas as my residence for 40 years, we have some of the highest percentage of real estate taxes in the country approx. 1.81%, but I rather pay this percent which cept for small increases but we pay no state income taxes. Each county has different rates, higher in big cities and lower in the country.

Austin has some of the highest real estate taxes in Texas. I'd imagine rates are far lower for ranches in remote areas, e.g. near the Big Bend National Park (my favorite park).

Those of you who want to take trading expenses off, buy a Texas farm or ranch, buy a few calves and when they get full grown, sell what you won't eat and take one to the butcher. Any expenses you do trading, just about everything can be used in farming/ranching.

http://appraisaldistrictguide.com/texas/exemption/agricultural.html
http://www.phyllisbrowninglandandra...land-or-ranch-property-what-you-need-to-know/

And get oneself a Tax specialist that has many farms/ranches as clients, they will save you bucks.

You are referring to capital gain taxes right .. since all commissions and fees can be reported as expenses.

 

[Maverick2608]

Since no one seems interested in the Swedish “investeringssparkonto,” I thought I would add Swedish women to the equation.