Securities trading Company location

[Alain Delon]

Hi,

I would welcome some idea on where to incorporate my company.

Shareholder: a Panama foundation
Director: me, a resident of a country with no tax on foreign income (like UAE, HK, Panama)
Activity of the company: invest in Stocks (some US Stocks), invest in Bonds, short term trading, long term holding, dividend collection, interest (coupon) collection.
Assets managed: 10m USD, all belonging to the owner (the foundation). No outside money!

Requirements for the company (in order of importance):
- no tax (i.e. no tax on (1) capital gain, (2) interest income, (3) Dividends)
- protection from creditors (ie if someone wants to recover the assets of the company)
- low cost to run (max 3k / year)
- easy to run, ie no headache
- not too difficult to open a bank account ( I can travel, but not to a remote island)
- double tax treaty with USA (to reduce withholding tax on US dividend from 30% to 15%)

Location I have been reading about (but happy to hear about others)
1. Belize/ Seychelle: no tax, high protection from creditor, low cost to run (<1k / year), no filing / easy to manage, no tax treaty with USA
2. Cyprus: no tax (I think), protection from creditor (? no idea), high cost to run (c. 3k / year due to audit requirement), tax treaty with USA
3. Estonia: no tax if you take the money out as salary (but can a foundation do that?), protection from creditor (? no idea), tax treaty with USA
4. Singapore: tax status is not clear
5. Hong Kong?
6. New Mexico or Wyoming LLC: no tax (assuming trading US stocks is not considered doing business in the US), big headache (many form to fill, IRS might want to know who the UBO is and not be happy with a Panama foundation), average cost (2k / year ?), easy to open bank account I suppose.

Thanks,
Alain

 

[JustAnotherNomad]

Bulgaria? It shouldn’t matter much, unless you receive lots of dividends from US companies.

 

[Alain Delon]

Thanks JustAnotherNomad!
Bulgaria seems to have a total of 15% tax (10% corporate and 5% withholding on dividends paid). No?
My number one criteria is no tax on Capital Gain, Interest, Dividends. So this might not be the best. Except if you know something I don't.

From more research it seems that
- Cyprus has tax on Interest
- Hong Kong does not have tax on Capital Gain, Interest, Dividends. So I would not need to apply for Offshore tax exemption (reducing the operating cost slightly).

Any other views?

 

[mr00000]

Hi Alain!

My question is very similar to your problem, i want to buy stocks, REITs and ETFs for long-term, but bypassing inheritance taxes in US when passing my assets to them, transfering only shares of my company instead the financial assets. As brazilian citizen and resident (our currency lost much value in 2019-2020), I am looking for safety in my investments and in the jurisdicton choice. Do you already choose a "perfect" jurisdiction? I was looking for a cheap way to maintain this structure, and found that US and UK has low maintance fees, but they demand an annual account report i guess. Panama corporation is a good choice for this? And which jurisdiction to banking, US too?

 

[Alain Delon]

The problem with UK is the 20% tax on Corporate profit which will apply to your investment income.
The problem with a US LLC is the IRS reporting might be (or not) a pain.
I do not know about Panama.
The only jurisdiction that I found so far that exempt all types of investment income is Hong Kong (other than the Belize, Seychelles, etc.).

I hope we will hear other views.

 

[JustAnotherNomad]

Have you considered Singapore? I know someone who has a company there, but I don’t know if it works for everybody.

 

[Alain Delon]

From what I read, it seems that if the core business of the company is Trading in Shares, the profit of this trading will be subject to corporate tax, no?

 

[JustAnotherNomad]

I have no idea, just thought it might be worth looking into...

 

[aquarius]

I'm looking into the same and after some study have shortlisted Gibraltar, HongKong and Cyprus, and maybe Singapore. Would be interesting to hear get some further views on this.

 

[CaptK]

Can we just take a moment to check what you said.

You have 10M to invest and only want to pay 3K running costs. Notwithstanding other fees which bring your basic costs to about 6K.
I can guarantee your bank fees are gonna be more than 3K yearly.

Whos funds are they because that will play a factor in how and where you set up.

Lets take a quick example
Panama Foundation will cost you about 5K all in at the minimum ( you will be hit with other fees somwhere along the line).

UAE company another 10K.
Again plus disbursements.

So you are 15k+ for a proper set up. With the amount of money you are talking about dont skimp on your set up. You will live to regret it.

I client of mine made the same mistake with a BVI-Caymen scenario. 1500 and 2200 respectively but banking was a nightmare for him. Thats when I got involved and changed his structure to purely UAE which was a lot more expensive 50K. He now has no worries, no issues with banking, can easily get to the UAE when he needs to.

My opinion is spend the money to do it right now so your not chasing your tail later.

 

[aquarius]

Hi,

I would welcome some idea on where to incorporate my company.

Shareholder: a Panama foundation
Director: me, a resident of a country with no tax on foreign income (like UAE, HK, Panama)
Activity of the company: invest in Stocks (some US Stocks), invest in Bonds, short term trading, long term holding, dividend collection, interest (coupon) collection.
Assets managed: 10m USD, all belonging to the owner (the foundation). No outside money!

Requirements for the company (in order of importance):
- no tax (i.e. no tax on (1) capital gain, (2) interest income, (3) Dividends)
- protection from creditors (ie if someone wants to recover the assets of the company)
- low cost to run (max 3k / year)
- easy to run, ie no headache
- not too difficult to open a bank account ( I can travel, but not to a remote island)
- double tax treaty with USA (to reduce withholding tax on US dividend from 30% to 15%)

Location I have been reading about (but happy to hear about others)
1. Belize/ Seychelle: no tax, high protection from creditor, low cost to run (<1k / year), no filing / easy to manage, no tax treaty with USA
2. Cyprus: no tax (I think), protection from creditor (? no idea), high cost to run (c. 3k / year due to audit requirement), tax treaty with USA
3. Estonia: no tax if you take the money out as salary (but can a foundation do that?), protection from creditor (? no idea), tax treaty with USA
4. Singapore: tax status is not clear
5. Hong Kong?
6. New Mexico or Wyoming LLC: no tax (assuming trading US stocks is not considered doing business in the US), big headache (many form to fill, IRS might want to know who the UBO is and not be happy with a Panama foundation), average cost (2k / year ?), easy to open bank account I suppose.

Thanks,
Alain

Have you decided and moved forward? How did it go?