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No capital gains tax in Caribbean/Central America - what does it mean in practice?

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gmbh

Active Member
Hello,

does anybody know what it practically means if a country does not charge capital gains tax?

More specific: Does it mean that you do not have to pay tax on your income from investing/trading?

There are many Caribbean countries which do not have a capital gains tax, but does this really mean that you do not have to pay any taxes on your investment/trading gains?

For example, in Switzerland capital gains are also tax free, but only if they are not your main income, as far as I know.

In short: I search for a Caribbean country or a country in Central America which does not charge taxes on income from investments/trading. Would be also nice if the people there would not have the slave mentality like the Europeans. I can not stand this for many more years and I am actually residing in Cyprus which is still better than Germany for example. But not free enough, especially now with all this Corona surveillance bullshit.

Would be really nice if somebody could provide some information.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
does anybody know what it practically means if a country does not charge capital gains tax?

It means........they do not charge capital gains tax conf/(%.

More specific: Does it mean that you do not have to pay tax on your income from investing/trading?

Yes

There are many Caribbean countries which do not have a capital gains tax, but does this really mean that you do not have to pay any taxes on your investment/trading gains?

Yes. But read the tax rules of the specific country.

For example, in Switzerland capital gains are also tax free, but only if they are not your main income, as far as I know.

That is correct.

In short: I search for a Caribbean country or a country in Central America which does not charge taxes on income from investments/trading.

Any tax free Caribbean country and you will be fine. Central America I have no experience with.
 

gmbh

Active Member
Yes. But read the tax rules of the specific country.
I can not find any clear information about that and I think I do not have the knowledge to read through and interpret all the official tax laws correctly. Even here in Cyprus for example the tax advisors tell you different views because even for them it is not clear what the law says.

Any tax free Caribbean country and you will be fine. Central America I have no experience with.
Yes but most of the Caribbean and Central American countries charge income tax as far as I know. So yes, the easiest way would be to move to one of the income tax free islands. But if I could also move to all the countries/islands there that do not charge capital gains tax (but income tax) it would be much better.

Do you maybe know if I would not pay any tax on income from trading shares, commodities, etc. on these islands with 0% capital gains tax, even if I do it as main income?
 
Last edited:

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Isn't that only if you have a company offshore, Territorial tax system.

If you live there and use a local company or receive funds from in country you are liable.

Is that correct?
 

gmbh

Active Member
@Martin Everson

Would be great if you could complement the list of Caribbean countries which do not charge tax on trading income as main income activity, from your real experiences. This is completely different than information from tax advisors, so I would really appreciate it.

I think tax free for sure are the following countries because they simply just do not charge income tax, so it does not matter how I earn my money as an individual. I would prefer this so I do not have the hassle with offshore companies, business bank accounts and to file tax returns.

Cayman Islands
Bahamas
Bermuda

Are these the only Caribbean options one has to definitely not pay any taxes?
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Do you maybe know if I would not pay any tax on income from trading shares, commodities, etc. on these islands with 0% capital gains tax, even if I do it as main income?

Better you pick a specific country where you are serious about living than me review the entire list :confused:. I very much doubt you want to move to a country solely based on zero taxes. Other factors are important too for you I am guessing


Are these the only Caribbean options one has to definitely not pay any taxes?

There are others i,e St Kitts & Nevis, BVI etc. But you still might be subject to lesser taxes in some islands like social security etc.

Btw I live in the Bahamas as you may know.
 

Golden Fleece

Active Member
Are these the only Caribbean options one has to definitely not pay any taxes?
 

gmbh

Active Member
Better you pick a specific country where you are serious about living than me review the entire list :confused:. I very much doubt you want to move to a country solely based on zero taxes. Other factors are important too for you I am guessing
Sorry, I did not mean that you should review the entire list. I just thought that there are anyway just a few more countries which do not charge tax on trading income and I thought you maybe know these countries.

You are right, other factors are important too, but the most important factor for me is not giving much money to any government. Not really to have more for myself, but for the reason that I do not want to support any government and their surveillance states, especially since Corona.

So I do not have a preference. All the Caribbean islands look very nice (except St. Kitts & Nevis) and I think life there is not so different, at least if I compare the small islands, or is this assumption wrong? But yeah, before I move there I would visit a few to get a real impression. I wanted to do it this year but at the moment it is too unpredictable what governments do and I can not be stuck in the Caribbean while my family is in Cyprus.

There are others i,e St Kitts & Nevis, BVI etc. But you still might be subject to lesser taxes in some islands like social security etc.

Btw I live in the Bahamas as you may know.
Thank you. Dominica for example charges income tax but no capital gains tax. Do you know if they would charge income tax (up to 35%) or capital gains tax for (day)trading?

And could you say me if I would be tax resident in the Bahamas with the "annual residency" or is it necessary to have the "permanent residency"?

Because this site says the benefit of "no income tax" is only possible with the permanent residency, if I understand correct.
 

CyprusLaw

Active Member
I can not find any clear information about that and I think I do not have the knowledge to read through and interpret all the official tax laws correctly. Even here in Cyprus for example the tax advisors tell you different views because even for them it is not clear what the law says.

I think there was a similar discussion in a different forum. CGT is very clear from both the law and relevant Tax Authority directives.

CGT at the rate of 20% is imposed on gains arising from the disposal of immovable property situated in Cyprus or the disposal of shares in companies that own Cyprus-situated immovable property. CGT is also imposed on disposals of shares in companies that indirectly own immovable property situated in Cyprus where at least 50% of the market value of the said shares derives from Cyprus-situated immovable property. Shares listed on any recognised stock exchange are excluded from CGT.

In the case of disposal of company shares (in companies that own Cyprus-situated immovable property), the gain is calculated exclusively on the basis of the gain relating to Cyprus-situated immovable property. The value of the immovable property will be its market value at the time the shares were disposed of.

The taxable gain is generally calculated as the difference between the disposal proceeds and the original cost of the property plus any improvements as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. In the case of property acquired before 1 January 1980, the original cost is deemed to be the value of the property as at 1 January 1980 on the basis of the general valuation conducted by the Land Registry Office under the Immovable Property Law.

Other expenses that relate to the acquisition and disposal of immovable property are also deducted from the gain, subject to certain conditions (e.g. interest costs on related loans, transfer fees, legal expenses).
 

gmbh

Active Member
I think there was a similar discussion in a different forum. CGT is very clear from both the law and relevant Tax Authority directives.

CGT at the rate of 20% is imposed on gains arising from the disposal of immovable property situated in Cyprus or the disposal of shares in companies that own Cyprus-situated immovable property. CGT is also imposed on disposals of shares in companies that indirectly own immovable property situated in Cyprus where at least 50% of the market value of the said shares derives from Cyprus-situated immovable property. Shares listed on any recognised stock exchange are excluded from CGT.

In the case of disposal of company shares (in companies that own Cyprus-situated immovable property), the gain is calculated exclusively on the basis of the gain relating to Cyprus-situated immovable property. The value of the immovable property will be its market value at the time the shares were disposed of.

The taxable gain is generally calculated as the difference between the disposal proceeds and the original cost of the property plus any improvements as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. In the case of property acquired before 1 January 1980, the original cost is deemed to be the value of the property as at 1 January 1980 on the basis of the general valuation conducted by the Land Registry Office under the Immovable Property Law.

Other expenses that relate to the acquisition and disposal of immovable property are also deducted from the gain, subject to certain conditions (e.g. interest costs on related loans, transfer fees, legal expenses).
Thank you, and yes, CGT seems to be clear in Cyprus. but it seems not clear how the tax authority classify daytrading/trading as main income, respectively if it is tax free or if they charge income tax.

But please let us not discuss again about the Cyprus tax laws in this thread.
 

CyprusLaw

Active Member
Thank you, and yes, CGT seems to be clear in Cyprus. but it seems not clear how the tax authority classify daytrading/trading as main income, respectively if it is tax free or if they charge income tax.

But please let us not discuss again about the Cyprus tax laws in this thread.
Profits from disposals of corporate 'titles' are unconditionally exempt from CIT. 'Titles' are defined as shares, bonds, debentures, founders’ shares, and other titles of companies or other legal persons incorporated in Cyprus or abroad and options thereon. According to a circular issued by the Cyprus tax authorities, the term includes, inter alia, futures/forwards on titles, short positions on titles, swaps on titles, depositary receipts on titles, repos on titles, units in stock exchange indices on titles, and units in open-ended or closed-ended collective investment schemes (including, inter alia, undertakings for collective investment in transferable securities [UCITS], investment trusts and funds, mutual funds, and real estate investment trusts [REITs]). This derives from Circular 2008/13 which is still applicable for defining titles.
 
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