How to collect forex profits and not have to pay taxes or just a minimum tax?

icedee

New Member
I trade forex and I would like to find a legal way to collect profits and pay very little or no taxes. So far I have been thinking about establishing a company in Panama and use 2checkout. It's real. Please advise a working method. Thank you (I am an EU - Czech Republic citizen. In my country 15% of profits are paid)
 

avalanche

Trusted Member
Business Angel
I trade forex and I would like to find a legal way to collect profits and pay very little or no taxes. So far I have been thinking about establishing a company in Panama and use 2checkout. It's real. Please advise a working method. Thank you (I am an EU - Czech Republic citizen. In my country 15% of profits are paid)
> legal way
> Panama
> EU citizen

something is not right. are you EU resident as well by chance? ns2
 

icedee

New Member
Yes, I reside in the EU. What's wrong to think about and want to optimize taxes and keep them as small as possible? Please advise those of you who can.
 

GiGoGo

I make things happen
Business Angel
There's no legal way to avoid the 15% if you reside in Czech Republic. You can do some tax planning and setup a company offshore so you can deduct expenses but the moment you withdraw money for yourself you still need to pay the 15% dividend tax
 

hernanday

Building Trust
Entrepreneur
I trade forex and I would like to find a legal way to collect profits and pay very little or no taxes. So far I have been thinking about establishing a company in Panama and use 2checkout. It's real. Please advise a working method. Thank you (I am an EU - Czech Republic citizen. In my country 15% of profits are paid)
I see you are a new member.
It is hard to do what you are trying to do. In the last 30-40 years Western governments have been trying to plug every legal way to do this.

Without speaking to your specific situation, generally you have to leave your country to a tax haven for residence. You then run your business from the tax haven and travel where you want, but try to stay out of high tax places more than 3 months but definetely below the 180 or so days. This would be the only 100% LEGAL non-grey zone way to do it, where your status cannot be challenged.

There are a variety of grey ways to do it, but they can be potentially challenged by your local tax authorities. The least risky of which would be to do the trades outside of your jurisdiction under a corporate entity like a foundation, where you don't technically own it. You may at some future point receive the profits/distributions. But you'll need to not reside in Czech when you get or you will be made to pay taxes. You then take your profits back to czech and pay no taxes because you didn't live in czech and were not a resident when you received the money. That of course has its risk too. The tax authorities could try to argue you were still a resident in that 1-2 years you gave yourself the profit. They could try to claim you still had a house, license, bank account, health card, wife, kids, etc. so you must cut all ties to Czech BEFORE you do this. Better to not even enter it.
 

lionel234

Active Member
I see you are a new member.
It is hard to do what you are trying to do. In the last 30-40 years Western governments have been trying to plug every legal way to do this.

Without speaking to your specific situation, generally you have to leave your country to a tax haven for residence. You then run your business from the tax haven and travel where you want, but try to stay out of high tax places more than 3 months but definetely below the 180 or so days. This would be the only 100% LEGAL non-grey zone way to do it, where your status cannot be challenged.

There are a variety of grey ways to do it, but they can be potentially challenged by your local tax authorities. The least risky of which would be to do the trades outside of your jurisdiction under a corporate entity like a foundation, where you don't technically own it. You may at some future point receive the profits/distributions. But you'll need to not reside in Czech when you get or you will be made to pay taxes. You then take your profits back to czech and pay no taxes because you didn't live in czech and were not a resident when you received the money. That of course has its risk too. The tax authorities could try to argue you were still a resident in that 1-2 years you gave yourself the profit. They could try to claim you still had a house, license, bank account, health card, wife, kids, etc. so you must cut all ties to Czech BEFORE you do this. Better to not even enter it.
Hernanday, do you think this could work without the need of setting up a trust or foundation?
i mean if i for example register on IB or another international broker . Taxes in my home country should be paid the day the stocks / currency / materials is sold ...

So lets say the day you decide to sell your stocks etc, you register yourself as tax resident in another country ( i belive most brokers accept that you changed your tax residency ) and do the withdrawal by then , could that work?
 

hernanday

Building Trust
Entrepreneur
Hernanday, do you think this could work without the need of setting up a trust or foundation?
i mean if i for example register on IB or another international broker . Taxes in my home country should be paid the day the stocks / currency / materials is sold ...

So lets say the day you decide to sell your stocks etc, you register yourself as tax resident in another country ( i belive most brokers accept that you changed your tax residency ) and do the withdrawal by then , could that work?
The problem is not your broker, the problem is your tax office, once you make over a certain amount or spend a certain amount but your taxes aren't matching they investigate you. Then they audit and demand endless paper work. Then they will challenge your residency as a non-resident and dig into your broke information. Then they see you said you were a resident for 364 days in a year, then on the last day you claim to be a non-resident and just so happen to get a big fat check? They aren't dummies, their job is to presume you are guilty and cheating them until your paper work proves otherwise. Their job is to catch you.

Now this all varies by country, because different countries, different laws right.

But if you register yourself as a tax resident of Bermuda on January 5, 2020, and sell your stocks the same day, it won't work. Tax man works off of tax year not tax day. The right way to do this. Is basically completely detatch yourself from home nation (lets just say Germany as an example- but this is not specific to Germany as I'm not familiar with German tax law). No drivers license, no healthcard, no house, wife, kid, dog, cat, car, bank account, credit/debit cards, employees (if possible) etc. The less connections you have the better. Now if you get rid all the other stuff in January 2019 but the employees, your probably good... for 2020! sO YOu'd want to then acquire full residency/citizenship of tax haven nation like Bermuda etc. by 2019. Then ideally you'd want to get something in writing from German tax office saying they consider you a non-tax resident for the 2019 year. This makes it hard for them to come after you later (which is what they would do when they see all the money you bring into your German accounts in the future), then in 2020 you pay yourself out the profits and don't enter Germany at all. BY 2021, you can legally re-enter Germany with your money and pay no tax on that income.

Ultimately, to be tax free, you must become location independent. What you can do is run your business in Germany, have a manager for your business if it must be done in Germany and then be a resident of Bermuda, and limit your time in Germany to 3 months or less (like a tourist) to keep the business running smoothly. The idea that you will stay in Germany, Canada , USA, or some other highly industrialized nation and pay no taxes legally while living there is largely a fantasy of the past. There are a few exceptions, but the government is working super hard to plug them hence mandating reporting of TAX FREE income in many places.

For instance, in Canada, income earned from a foreign trust while living in Canada is actually tax free. However, they are going to close this loophole soon. How do I know, they now are demanding you report oversea assets and overseas trust and they are trying to challenge the trust as being self settled and demanding full documentation to prove it wasnn't self settled. Eventually, they are going to just tax these which is why they are demanding it be reported, despite being non-taxable!
 

icedee

New Member
Thank you very much for your comprehensive contribution. If I understood it correctly, so to have lower taxes, I have to change citizenship and move to a country where there are lower taxes. Ofshore society is therefore useless and probably as you say are good times gone. Thank you
 

GiGoGo

I make things happen
Business Angel
Ofshore society is therefore useless and probably as you say are good times gone.
No exactly, an offshore company can help you to pay less taxes by reinvesting the profits or deducting the expenses.
 

speedster

Building Trust
Entrepreneur
Thank you very much for your comprehensive contribution. If I understood it correctly, so to have lower taxes, I have to change citizenship and move to a country where there are lower taxes. Ofshore society is therefore useless and probably as you say are good times gone. Thank you
Not necessarily citizenship, but place of residence
 
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hernanday

Building Trust
Entrepreneur
Thank you very much for your comprehensive contribution. If I understood it correctly, so to have lower taxes, I have to change citizenship and move to a country where there are lower taxes. Ofshore society is therefore useless and probably as you say are good times gone. Thank you
Gigi is correct. An offshore company can be used with things like transfer pricing to basically export your profits offshore for years with no limits. You can do that for years successfully and legally to get out of paying the taxes. But once you want to spend the money in your home nation for personal expenses, you will need to become a non-resident of your high tax country for at least 1 year, probably closer to 2. There are of course ways around this, but the more you spend on personal expenses the more risk you run into.

Can I ask how much profits you are making to help give you best strategy? Also how much money do you have? What kind of business do you have?

Offshore society is still useful, but you need to carefully plan. You have a corporation offshore making the profits, it pays no taxes, and you eventually bring in the profits later tax free.
 

icedee

New Member
Gigi is correct. An offshore company can be used with things like transfer pricing to basically export your profits offshore for years with no limits. You can do that for years successfully and legally to get out of paying the taxes. But once you want to spend the money in your home nation for personal expenses, you will need to become a non-resident of your high tax country for at least 1 year, probably closer to 2. There are of course ways around this, but the more you spend on personal expenses the more risk you run into.

Can I ask how much profits you are making to help give you best strategy? Also how much money do you have? What kind of business do you have?

Offshore society is still useful, but you need to carefully plan. You have a corporation offshore making the profits, it pays no taxes, and you eventually bring in the profits later tax free.


I am currently working as a public servant. Another trade in the Forex market. I expect profits of $ 5000 a day.
 

fshore

Trusted Member
Business Angel
I am currently working as a public servant. Another trade in the Forex market. I expect profits of $ 5000 a day.
Forex trading is quite risky and if you end up losing a lot of money then it can be beneficial to be a tax resident of a high tax country, so you can deduct the loss against other income or future income (depending on specifics in you countries laws). So maybe start out with that in mind, until you actually earn a consistent high income over several years.
 

GiGoGo

I make things happen
Business Angel
Forex trading is quite risky and if you end up losing a lot of money then it can be beneficial to be a tax resident of a high tax country, so you can deduct the loss against other income or future income (depending on specifics in you countries laws). So maybe start out with that in mind, until you actually earn a consistent high income over several years.
Additionally, in countries like UK you have something called "Spread betting" and the profits are not taxed but you can't deduct the losses in the tax return.
 

GiGoGo

I make things happen
Business Angel
I am currently working as a public servant. Another trade in the Forex market. I expect profits of $ 5000 a day.
I suggest to trade small amounts for at least a year, only professional traders that spend 120% time on trading and have advanced market reports makes money, and not all the time, some even have big losses.

You know the 90/90/90 rule?
Is a basic rule of trading. It means 90% of new traders loss 90% in 90 days, generally.
 

icedee

New Member
I suggest to trade small amounts for at least a year, only professional traders that spend 120% time on trading and have advanced market reports makes money, and not all the time, some even have big losses.

You know the 90/90/90 rule?
Is a basic rule of trading. It means 90% of new traders loss 90% in 90 days, generally.
Thank you. I understand your concerns about trading. I have been trading for 10 years and I have come a really long way to profitable trading. I'm a profit trader and that's why I'm looking for a way to optimize taxes.
 

icedee

New Member
The result on the EUR / USD currency pair a few hours later. This is just a small example of how I do business.
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