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Does using offshores raise red flags? Are there alternatives for day traders?

Notaman

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Apr 3, 2024
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Hello Offshore Corp'ers

I have been day trading cryptos for multiple years now and recently started to investigating offshore companies. Everything sounds very good, even a bit too good, as they are easy and cheap to create and run.

My concern is that will they raise red flags on tax authorities? I have been mostly looking at Cayman, BVI, Panama, etc. Can we somehow hide the ownership and director of these offshore companies? How
are the big bouys doing this? Or what's the alternative best setup for a day trader trading own funds?

Btw. any good agent recommendations for setting up these companies?
 
Hello Offshore Corp'ers

I have been day trading cryptos for multiple years now and recently started to investigating offshore companies. Everything sounds very good, even a bit too good, as they are easy and cheap to create and run.

My concern is that will they raise red flags on tax authorities? I have been mostly looking at Cayman, BVI, Panama, etc. Can we somehow hide the ownership and director of these offshore companies? How
are the big bouys doing this? Or what's the alternative best setup for a day trader trading own funds?

Btw. any good agent recommendations for setting up these companies?
Depends on where you live but in most 'civilized' countries it will raise flags. It also depends what you consider as red flags. Depending on your threat model a red flag can be cause for a simple routine research/information verification as part of the clerks everyday process or a cause for a full blown investigation. The former might not be a trigger you would want as for example you might be in the grey area of something within your business while the latter can be absolutely fine if everything you do is to the letter of the law (let them be wasting your tax contributions).

Take a look at a recent topic posted where Netherlands list concealment of ownership as suspicious. Wild stuff but worth considering depending on your risk model. The Dutch banking association, NVB, published a Financial Crime Threat Assessment of 20 threats. However if your books are in order and everything you do is above board there is nothing to fear. Everyone gets audited eventually.

Ownership and directors can be hidden through what is referred to in the industry as 'nominees'/nominee services. They are relatively cheap to get and many registration agents offer them. While you can find information about this by using the search bar, the mentor group gold forums further explain in detail as well as how you can do some of these nominee services yourself. Other aspects such as why a nominee director of yours and 1000 other companies is more scrutinized by tax authorities and why you would want a more unique one is also discussed.

Hiding the owners doesn't equate to hiding your profits and not paying tax. The days of such offshore schemes are long gone. That is not to say there aren't use cases for offshore structures even to the extent of taxes but what you see in the movies or even the media is not exactly how it is. A lot of what you ask about has been discussed many times on here. An account upgrade on this forum is worth it if your time is valuable and want to quickly gain a lot of knowledge in short period of time.
 
My concern is that will they raise red flags on tax authorities? I have been mostly looking at Cayman, BVI, Panama, etc. Can we somehow hide the ownership and director of these offshore companies? How
are the big bouys doing this? Or what's the alternative best setup for a day trader trading own funds?
It's hard to hide anything the way the world looks now. You shouldn't focus so much on hiding or evading taxes but more on being transparent and reducing taxes.

Your goal should be to pay as little corporate tax as possible, followed by personal income tax. The former requires that you have "substance" in the company you register, for example, in the Caymans, i.e., a real office, water, heating, telephone, and one or two employees plus a director. This can be costly and must obviously outweigh what you can save with such a setup. The latter, personal tax, is hard to do much about unless you simply move. You can't sit in a highly taxed country and work for an offshore company and think you can avoid paying half of everything you own and earn to the tax authorities; that's over. If you want to avoid this, then you have to move.

You need to investigate things a bit more closely and decide what you want before you start anything. You need to earn a lot of money for it to be worthwhile, or be in a situation where you've gotten into trouble with the tax authorities or other creditors you'd like to get rid of.
 
Ok, got it. Another related issue: let's imagine that I'm running a one-man HFT with 10k transactions per day. Are there any ways to bundle the transactions in to the accounting so that:
1. Accountant won't be mad at me and charge me $$$, even with using automated software
2. Won't be work intensive for me

Or what's the best way to carry HFT or other mid-frequency operations?
 
You really need to speak with an tax professional about your last questions. In some countries you can bundle it while in others you will will face hefty fines from the bad tax man, worst case they will accuse you for fraud and money laundering.
 
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What about banking, any suggestions for a foreign owned Nevis company ?
 
When selecting a Bahamian bank for Nevis-based company, prioritize those experienced in managing offshore accounts and compliant with international regulations like FATCA and CRS. Opt for banks offering robust online banking services, a strong reputation for reliability, and the ability to handle multicurrency transactions. Always compare fee structures and seek advices to ensure you choose the best solution for your needs.