is it possible to bank a day trading UAE FZ company

[Bill D]

Several consultants I saw said that you cannot get any business bank for your FZ if you are day trading FZ (whether tradfi or crypto), some even propose you to open a consultancy licence or whatever ecommerce instead, while in reality you're trader...(RAK, IFZA, ajman ...)

I see that everyone is advicing to got to UAE (residence+business) for these activities including crypto trading, so I am a bit puzzled. I am talking here about possible UAE natural person residence+local FZ, and weighting it against other solution in EU (like romania, bulgaria, cyprus etc)

Some uae consultant even propose some workaround which I don't want to do, I want to always say truth to the bank/emi about the activity, and not produce anything false, as all is legitimate, despite being mostly from crypto trading gains+defi, and a part in securities (stocks etc). This make even more sense now that all audits will be required in uae.

Knowing that, will it be in any case possible to get access to some sort of banking, for a UAE day trading FZ, whether it could be some offshore emi or not, which will permit to pay yourself a salary to your real uae personnal bank account, and ideally be able to freely transact/arbitrage and so on between brokers/platforms. Or do I risk to end up stucked after all process done ?
the initial funding of the FZ could be via lending cryptos + euros + securities (stocks, etfs)

The other question is will international brokers like IB accept to open the account such a FZ ?

Then the company would be used to day trade, and then I would need to grant myself the profits a salary+dividends (which will also be a better source of funds for later) + interest up to the thin capitalization rules limits
For example in this way : crypto platform/tradfi broker -> business offshore EMI-> personnal bank account (salary payment/and or dividends)

Or is it actually impossible to bank your UAE day trading FZ and will I have more chance/easiness to that same setup within the EU (for example in romania/bulgaria/cyprus/...where I will have audited corporate accounts) using the EU EMIS/BANKS ? (as EU resident/citizen and local LLC)

*the initial funding of the FZ could be via lending cryptos + euros + securities (stocks, etfs) as a natural person, to the FZ*

 

[zaybxc]

Is it necessary for a private person who trades his own assets like crypto to do it through a company in UAE?

In the end you are not selling goods or providing services to people where an invoices is needed, you are just managing your own assets.

Isn't it possible to open a company in UAE only to get the visa to be allowed to live there (without even opening a business bank account for the company) and then trade your assets privately and use banks abroad like in Switzerland?

 

[Clank]

Is it necessary for a private person who trades his own assets like crypto to do it through a company in UAE?

In the end you are not selling goods or providing services to people where an invoices is needed, you are just managing your own assets.

Isn't it possible to open a company in UAE only to get the visa to be allowed to live there (without even opening a business bank account for the company) and then trade your assets privately and use banks abroad like in Switzerland?

Not even need a company for a visa you can get a freelance permit with visa.

 

[Forester]

Talk to @Fred (here at OTC). To the best of my knowledge, he is really well-oriented re: UAE and able to answer all your questions. (Aren't you somewhere here, @Fred ? )

 

[Bill D]

Is it necessary for a private person who trades his own assets like crypto to do it through a company in UAE?

In the end you are not selling goods or providing services to people where an invoices is needed, you are just managing your own assets.

Isn't it possible to open a company in UAE only to get the visa to be allowed to live there (without even opening a business bank account for the company) and then trade your assets privately and use banks abroad like in Switzerland?

yes possible I guess, things to consider though, with reserve being all the questions asked in my thread and considering a clean setup (real day trading company) :
-Regular trading as a natural person could be considered a business and subject to 9% tax
-you might want to incorporate as a company to be able to pay yourself an exempted salary
-you might want to capitalize the company through a loan to pay yourself interest tax free (in the thin capitalization and arm length rules)
-you might want to behave as a company to have more transactional type of bank/emi accounts to be able to trade the way you wish
-you might want to be a company to get paid a salary which gives a much better track record and more freedom in the future than have a SOF mostly from crypto trading, for example if you approach IB and as a SOF have mostly crypto trading, it risk get rejected, not sure you can appeal that

maybe I am wrong but I think a proper audit is a help for the banks, wherever you are incorporated

the bad side will be a lot of audit and accountancy work in the short term, I guess it can get really really hard to calculate for some type of defi stuff and protocols, more serious responsability if you do some mistake.

 

[Bill D]

Yes of course it is possible. Its just a matter of whether the consultant knows what they are talking about. Most don't.

consultants I talked seemed to have lot of experience and either said to trade under own name either proposed some workaround/lie which I do not want as it does not fit my activity and no way I start in a spiral of lie.
They say man cannot open a bank account for day trading FZ, but I am a bit surprised.
I am not talking about opening a bank account to tell them you do ecommerce when you are day trader in real. I am talking of straightforwardly opening an account for your activity that you can use to work not to cashout.

Is it possible in a straightforward way to get it ?
Meaning, you say to the bank/Emi, that you are here to trade/day trade your own portfolio, not something else.
I am talking in worst case it can even be offshore bank ?
Or will I have more chance for it with a EU setup (local llc+residence) ?

Which bank would be ok if you approach for a business bank account for day trading FZ? or which offshore Emi ?(without telling them any lie on the real activity)

If You find an offshore EMI, will it be accepted by the Uae personnal bank account to receive a salary ?

 

[JimBeam]

The other question is will international brokers like IB accept to open the account such a FZ ?

They open personal fairly easily after you pass all the KYC.
Not sure for companies (have no experience).

Then the company would be used to day trade, and then I would need to grant myself the profits a salary+dividends (which will also be a better source of funds for later) + interest up to the thin capitalization rules limits
For example in this way : crypto platform/tradfi broker -> business offshore EMI-> personnal bank account (salary payment/and or dividends)

Getting a license for this is probably not possible in Dubai (unless you have 100M+ capital and right qualifications).
So, I think that's not possible to obtain this kind of license in UAE.

Or is it actually impossible to bank your UAE day trading FZ and will I have more chance/easiness to that same setup within the EU (for example in romania/bulgaria/cyprus/...where I will have audited corporate accounts) using the EU EMIS/BANKS ? (as EU resident/citizen and local LLC)

*the initial funding of the FZ could be via lending cryptos + euros + securities (stocks, etfs) as a natural person, to the FZ*

Personal banking is not a problem.
Business banking would be very difficult to get.
Especially if you just mention crypto - then you're done.

If you plan to trade ONLY your personal funds (do not offer this as a service to anyone else) you have two options:
1. Set up a company so you get visa/emirates id and trade with personal funds from a personal account.
2. If you have the cash, buy 2M AED property to get a golden visa and trade your personal funds.

 

[drumtraks]

I've bluntedly asked this in writing to 2 banks and the answer was "Absolutely no problem" in both cases (UAE FZ with consulting/management license). The company is investing its own money, the bank couldn't care less. Day trading or holding it a year won't matter. This changes if you're investing clients' money.

Still, you can simply trade with a personal account as capital gains aren't taxed.

 

[zaybxc]

If you plan to trade ONLY your personal funds (do not offer this as a service to anyone else) you have two options:
1. Set up a company so you get visa/emirates id and trade with personal funds from a personal account.

In this scenario don't you have to pay 9% tax as OP is suggesting?

-Regular trading as a natural person could be considered a business and subject to 9% tax

 

[PiersBlack]

I've bluntedly asked this in writing to 2 banks and the answer was "Absolutely no problem" in both cases (UAE FZ with consulting/management license). The company is investing its own money, the bank couldn't care less. Day trading or holding it a year won't matter. This changes if you're investing clients' money.

Still, you can simply trade with a personal account as capital gains aren't taxed.

What exactly did you ask the banks?

I'm assuming in this scenario (operating under a license saying consulting/ecommerce/whatever) your company bank account can't interact with traditional crypto exchanges (Binance, etc.), can it? It would be too obvious.

Do you need to resort to OTC desks and such for buying/selling?

 

[algotrader]

I'm assuming in this scenario (operating under a license saying consulting/ecommerce/whatever) your company bank account can't interact with traditional crypto exchanges (Binance, etc.), can it? It would be too obvious.

Do you need to resort to OTC desks and such for buying/selling?

The main brokers all offer ETNs, ETFs and CFDs on crypto these days. This gives you counterparty risk but so does trading with crypto exchanges. And if I have to choose between IBKR/Saxo and Binance/FTX then I prefer going with the former. What exactly is the advantage of trading crypto with traditional crypto exchanges?

 

[drumtraks]

zaybxc, short answer: No.

What exactly did you ask the banks?

I'm assuming in this scenario (operating under a license saying consulting/ecommerce/whatever) your company bank account can't interact with traditional crypto exchanges (Binance, etc.), can it? It would be too obvious.

Do you need to resort to OTC desks and such for buying/selling?

I believe the exact question was "We intend to have some exposure to crypto and put some of our assets into a crypto exchange. Can we withdraw the money we do from trading back into our business bank account?"

There is no law that prohibits a company from selling/loaning its assets. Technically it's no different from buying a car or an office.

Again, it is a completely different story if you're investing your clients' money.

 

[JimBeam]

In this scenario don't you have to pay 9% tax as OP is suggesting?

Yes

The way I see it:
If you're trading ONLY your own funds - why would you need a company?
You do not offer this as a service to anyone.
You're not a fund manager.
You just manage your own money.

 

[zaybxc]

If you're trading ONLY your own funds - why would you need a company?

I'd open a company only to get the EmiratesID so that I can rent an apartment in Dubai and be tax resident in the UAE; the company would do nothing and wouldn't even have a business bank account.

Then I would open accounts on CEXs (Binance, Kraken, etc) and personal bank accounts in other countries (like Switzerland) as UAE tax resident.
And only trade my own cryptos as a private trader.

But OP wrote in his comment #5 that "Regular trading as a natural person could be considered a business and subject to 9% tax",
so now and wondering if my plan makes sense.

 

[Bill D]

They open personal fairly easily after you pass all the KYC.
Not sure for companies (have no experience).

There are some other brokers I couldn't open as a natural person after months, like saxo Bank, because for crypto sof it kept getting back of fourth with new compliance officier and they kept asking document which platforms do not provide, so I hope IB is easier.

Getting a license for this is probably not possible in Dubai (unless you have 100M+ capital and right qualifications).
So, I think that's not possible to obtain this kind of license in UAE.

Maybe for some prestigious or mainland, but there are also some FZ with activity like "investment" where you should be able to trade you personnal asset as a main activity with it (and staying relevant, no lie or workaround), and it cost just few k/year.

I've bluntedly asked this in writing to 2 banks and the answer was "Absolutely no problem" in both cases (UAE FZ with consulting/management license). The company is investing its own money, the bank couldn't care less. Day trading or holding it a year won't matter. This changes if you're investing clients' money.

Still, you can simply trade with a personal account as capital gains aren't taxed.

I think you had no isue because you had a main activity (in your case consulting management) that you could document for onboarding, and you asked to invest the profits from this activity. The question is what if the only activity is solely day trading (stocks, cryptos, forex)

If you're trading ONLY your own funds - why would you need a company?

I wrote a few reasons for it in last message in the thread, if you have several incoming and outgoing transaction to a personal account in same day to/from tradfi/crypto brokers, I think it would be blocked, I don't think bank allow transactional type of account for individuals and it can be hard to get one at all or am I mistaking. Also it could be nice to have the tax exempt salary, fund the company with debt, the flaw is the audit complexity for now.

But OP wrote in his comment #5 that "Regular trading as a natural person could be considered a business and subject to 9% tax",
so now and wondering if my plan makes sense.

We don't know still, I wrote "could" from 1 st january 2024, but there are conflicting elements in the FAQ and the decree, normally this will become clearer next months but not sure. There is a chance that the CT won't apply to natural person trading whatever the frequency, but there is a chance it could.

 

[JimBeam]

I wrote a few reasons for it in last message in the thread, if you have several incoming and outgoing transaction to a personal account in same day to/from tradfi/crypto brokers, I think it would be blocked, I don't think bank allow transactional type of account for individuals and it can be hard to get one at all or am I mistaking. Also it could be nice to have the tax exempt salary, fund the company with debt, the flaw is the audit complexity for now.

If you can use a crypto friendly bank somewhere in Europe or anywhere else. Make sure to update their KYC so they know you're tax resident of UAE.
Then from that bank transfer to and from your crypto/broker or your UAE bank if needed.
If you put "own funds transfer" in the SWIFT message and money comes from the same name (your name) - 99% chances that UAE bank won't ask you a thing.
This way you will have less chances to get your UAE account closed especially in case you work with crypto.

In Dubai there's no tax.
What's the point of having a tax exempt salary?

You could always put your money into the company and then pay yourself a salary but that's pretty pointless.
It's also "normal" for startups that you invest your own money into company until it's profitable - so nothing new - but there's really no point in doing so UNLESS you want to borrow money from bank (take a real estate loan or get a credit card).

 

[drumtraks]

Agreed with everything said above.

I’ll just add one more reason you might want a company: if you’re from a “difficult” country you might want to present a tax residency certificate and it’s easier if you have a good old fashion salary.

 

[JimBeam]

That's actually a valid reason!

I would even use two personal bank accounts for that and the account where I get the salary use to pay the rent/utilities and other living expenses so you could even present bank statements from that bank account (if needed anytime in future).

 

[drumtraks]

I think you had no isue because you had a main activity (in your case consulting management) that you could document for onboarding, and you asked to invest the profits from this activity. The question is what if the only activity is solely day trading (stocks, cryptos, forex)

As I said before when investing your company assets there is absolutely no problem trading. Not sure why you keep coming to this. If you want to have your sole formal trade license for this kind of activity you should be informed that this is the license used for using someone else’s money, such as funds do. These licenses are much more difficult to get as regulations differ. But I guess this out of scope as for what I understood you want to invest your own money.

 

[Nomader]

There are some other brokers I couldn't open as a natural person after months, like saxo Bank, because for crypto sof it kept getting back of fourth with new compliance officier and they kept asking document which platforms do not provide, so I hope IB is easier.

Maybe for some prestigious or mainland, but there are also some FZ with activity like "investment" where you should be able to trade you personnal asset as a main activity with it (and staying relevant, no lie or workaround), and it cost just few k/year.

I think you had no isue because you had a main activity (in your case consulting management) that you could document for onboarding, and you asked to invest the profits from this activity. The question is what if the only activity is solely day trading (stocks, cryptos, forex)


I wrote a few reasons for it in last message in the thread, if you have several incoming and outgoing transaction to a personal account in same day to/from tradfi/crypto brokers, I think it would be blocked, I don't think bank allow transactional type of account for individuals and it can be hard to get one at all or am I mistaking. Also it could be nice to have the tax exempt salary, fund the company with debt, the flaw is the audit complexity for now.

We don't know still, I wrote "could" from 1 st january 2024, but there are conflicting elements in the FAQ and the decree, normally this will become clearer next months but not sure. There is a chance that the CT won't apply to natural person trading whatever the frequency, but there is a chance it could.

Could you please share some names of these FZ's where you can trade your personal assets as main activity?