Successful traders: why don't you move to a 0% capital gains tax country?

[luisHK]

About the high costs of relocating : yes and no

Obviously places like HK are expensive (and for continental europeans 100sqm in HK like mentionned by Volpunter means more 70/75sqm back home) but there are many low tax countries which have low cost (Malaysia springs to mind with its easy to obtain 10years visa program, including no cap gain or taxes on offshore income).
It's much easier to grow one's capital if it's not taxed, be it on a 50k or 50mil yearly income.
I don't like much anymore the lifestyle in HK , but more expensive places are usually for the most succesful or ambitious, there are plenty of alternatives accomodating various lifestyles. Plus as already mentionned many high tax cities also have high costs ( folks from Oslo or Paris for instance will understand, although accomodationwise they are much cheaper than HK)
Worth of note though for those with kids, in relatively cheap countries, international schools will possibly cost them more than a high end accomodation

 

[dealmaker]

About the high costs of relocating : yes and no

Obviously places like HK are expensive (and for continental europeans 100sqm in HK like mentionned by Volpunter means more 70/75sqm back home) but there are many low tax countries which have low cost (Malaysia springs to mind with its easy to obtain 10years visa program, including no cap gain or taxes on offshore income).
It's much easier to grow one's capital if it's not taxed, be it on a 50k or 50mil yearly income.
I don't like much anymore the lifestyle in HK , but more expensive places are usually for the most succesful or ambitious, there are plenty of alternatives accomodating various lifestyles. Plus as already mentionned many high tax cities also have high costs ( folks from Oslo or Paris for instance will understand, although accomodationwise they are much cheaper than HK)
Worth of note though for those with kids, in relatively cheap countries, international schools will possibly cost them more than a high end accomodation

Agreed, why pay all that cost of HK and inhale that dirty air on top...

 

[jk90029]

About the high costs of relocating : yes and no

Obviously places like HK are expensive (and for continental europeans 100sqm in HK like mentionned by Volpunter means more 70/75sqm back home) but there are many low tax countries which have low cost (Malaysia springs to mind with its easy to obtain 10years visa program, including no cap gain or taxes on offshore income).
It's much easier to grow one's capital if it's not taxed, be it on a 50k or 50mil yearly income.
I don't like much anymore the lifestyle in HK , but more expensive places are usually for the most succesful or ambitious, there are plenty of alternatives accomodating various lifestyles. Plus as already mentionned many high tax cities also have high costs ( folks from Oslo or Paris for instance will understand, although accomodationwise they are much cheaper than HK)

Worth of note though for those with kids, in relatively cheap countries, international schools will possibly cost them more than a high end accomodation

Furthermore, depending on trading style in how often you trade, one should calculate the yearly brokerage, even though the country does NOT have CapGainTax.

For example, for the country like HK, there is stamp(trading tax) of 0.3% no matter where you live. Let someone start with 100K and keep annual after-tax return rate of 20%. If he trade once evey day, he is paying 240*$300=72K plus brokerage. It means after one-year his cash is 120K and he pays 240*300*1.2=86.4K

In this way for his 40 years (from age 40 to age 80), a partial series 240*300*(1+1.2+1.2^2+1.2^3+....)

for(i in 1:40) cat(" \n For i=", i, " ", 1.2^(i-1), " ", a+1.2^(i-1))

For i= 1 1 1
For i= 2 1.2 1.2
For i= 3 1.44 1.44
For i= 4 1.728 1.728
For i= 5 2.0736 2.0736
For i= 6 2.48832 2.48832
For i= 7 2.985984 2.985984
For i= 8 3.5831808 3.5831808
For i= 9 4.29981696 4.29981696
For i= 10 5.159780352 5.159780352
For i= 11 6.1917364224 6.1917364224
For i= 12 7.43008370688 7.43008370688
For i= 13 8.916100448256 8.916100448256
For i= 14 10.6993205379072 10.6993205379072
For i= 15 12.8391846454886 12.8391846454886
For i= 16 15.4070215745864 15.4070215745864
For i= 17 18.4884258895036 18.4884258895036
For i= 18 22.1861110674044 22.1861110674044
For i= 19 26.6233332808852 26.6233332808852
For i= 20 31.9479999370623 31.9479999370623
For i= 21 38.3375999244747 38.3375999244747
For i= 22 46.0051199093697 46.0051199093697
For i= 23 55.2061438912436 55.2061438912436
For i= 24 66.2473726694923 66.2473726694923
For i= 25 79.4968472033908 79.4968472033908
For i= 26 95.396216644069 95.396216644069
For i= 27 114.475459972883 114.475459972883
For i= 28 137.370551967459 137.370551967459
For i= 29 164.844662360951 164.844662360951
For i= 30 197.813594833141 197.813594833141
For i= 31 237.37631379977 237.37631379977
For i= 32 284.851576559724 284.851576559724
For i= 33 341.821891871668 341.821891871668
For i= 34 410.186270246002 410.186270246002
For i= 35 492.223524295202 492.223524295202
For i= 36 590.668229154243 590.668229154243
For i= 37 708.801874985091 708.801874985091
For i= 38 850.56224998211 850.56224998211
For i= 39 1020.67469997853 1020.67469997853
For i= 40 1224.80963997424 1224.80963997424


Therefore after so much amount he pays tax to gov, no one can survive. In short, even if HK has cheap living expense(That is NOT true), one should not trade HK stocks. In some sense, one may choose country with CapGainTax, instead of HK without CapGainTax (Too much trading tax).

If he do NOT trade often, then sometimes he choose country with trading tax, just because of tax accumulation.

 

[Pasternak]

JK, why on earth do you keep mentioning this stamp tax in the HK That is completely irrelevant unless you trade HK stocks

 

[jk90029]

JK, why on earth do you keep mentioning this stamp tax in the HK That is completely irrelevant unless you trade HK stocks

Forgive me for the duplicating. I just happen to think about the accumulation of the trading tax.

It won't happen again.

 

[volpunter]

I second that..

JK, why on earth do you keep mentioning this stamp tax in the HK That is completely irrelevant unless you trade HK stocks

 

[Piman78]

I have a question for successful traders in here making >$150k / year.

Why do you stay in the US or other high tax country? Why don't you pack up and go to a 0% capital gains tax country, or set up a corporation abroad in which your capital can grow tax free?

What are your reasons? Not criticizing you, just trying to understand your thought process. I'm sure there are valid reasons.

They say there is no place like home. Some people will genuinely feel that way and believe that there are more important things in life than money I guess.

Others many not resent paying taxes due to the public services that the government provides with taxes collected - you know, things like healthcare, education, a legal system, a road network etc... Things that no country can live without.

Plus there are other options anyway. In the UK for instance, you can 'trade' tax free with spread betting. A spread bet is essentially just a Contract For Difference (CFD) between the broker and their client rather than a CFD traded on a DMA exchange, see Tax, CFDs and spread betting

Anyway, to answer your question those are the reasons I can think of -
1. They like 'home'.
2. They don't resent taxation (most Americans will find this hard to believe I know).
3. There are legal ways to avoid capital gains tax on financial speculation.

 

[Piman78]

USA is my home. It's where my wife, child and family are. I would never move to another country save taxes. My goal is to one day owe $1M in taxes and have a party when I pay it.

1245

Brilliant!!!

Good luck with your quest

 

[jk90029]

They say there is no place like home. Some people will genuinely feel that way and believe that there are more important things in life than money I guess.
[/URL]

It might be true for most. But not always.

Suppose you make Big money from abroad than in US with same work. You may fly there and visit home every year, paying airfare from the big income from abroad. It depends on situation. If someone offer 50K more in abroad, then I WILL NOT fly.

But with annual 100K or more, I will choose to fly abroad. Also for the trader for 40 years (30 to 70), the difference might be more than annual 100K. Total might be 40*100K=4M for 40 years, depending on the initial seed amount.

Which one do you choose between the 4M and home?

*************************************************************************

A simple example is as follows. Suppose you have seed of 100K, and they charge CapGainTax of 20% in country A and 35% in country B. With the same trading logic in each A and B country, let your before-tax return rate is annually 30% compounded.

Then over the 40 years

A) The after-tax return will be anuually 30*0.8=24% so that your 100K becomes 100*1.24^40 = 545591.3K after 40 years
B) The after-tax return will be 30*0.65 =19.5% so that 100K becomes 100*1.195^40 = 124370.2K

Therefore the difference will be 545591-124370 = 421221K=421M, just by the reason of different CapGainTax rate. Also it is mainly because of the long-term compounding effect. Annual return in 24-19.5=4.5% makes 421M more, if my math is correct. Welcome any correction for possible error. / Noe that B is highest bracket rate in US 1040 and some country offers as much as 20%.

 

[i am nobody]

People post here about opening a fund in Luxemburg. I did some time ago research to open a fund (SIF) in Luxemburg. I wanted to reside in Belgium because they don't tax gains on shares.

My findings:

1. minimum capital is 1.250.000 euro.
2. startup will cost between 10.000 and 50.000 euro
3. you need a licence ( in my case from the FSMA) which is for non bankers almost impossible to get. They also ask you a lot of questions about experience, education, management system, protection of investors.....
4. yearly audit by Ernst&Young
5. you need a depositary bank
6. you need a fund administrator
7. yearly cost 50.000 to 100.000 euro
8. there are limitations about what you can trade and how much of the total capital can be commited in 1 market
9. in most cases minimum investment per investor is 125,000 euro

Conclusion:

1. too much starting capital for most people here
2. too expensive cost for most people here
3. impossible to get a licence for most people here (i used my contacts in the banking world but was nevertheless refused)
4. if Belgium can prove that the fund is managed for inside Belgium (which is the case if your domicile is there) you will pay about 50% taxes on all the profits from the fund. they will also ask you to proof that you are at least 183 days a year in Belgium. so keep dreaming about using Belgium and still living in the US. and yes they will check your internetactivities.