Should you trade/invest as a natural person or as an onshore company

[Bill D]

Let's assume you have the choice whether to trade/invest as a natural person or as a company (onshore) in your country of residence, and that the tax will be more or less the same in both cases.


For a crypto/defi/stocks/etf, investor and day trader with crypto sof.


What should you consider before making a possible mistake to incorporate(onshore company) vs staying as a natural person ?
I thought of some elements but I would love to get some other ideas/advices before mistaking


Advantages as a company :



-Salary and dividends would in the long term be a useful proof of source offunds, however I was wondering if the initial hassle of setting up the company and transferring your asset to that company, with loan/or initial contribution certificate, wouldn't be such a hassle on theshort term that it would be as big as the relief you would get in thelong term. (crypto sof) VERSUS just getting capital gains will always be a problem for some banks about a crypto sof

-if you transfer your assets to the company via a loan or contribution certificate, is it enough for banks/brokers, will you meet more hassles than if you just opened a broker/bank account as a natural persons to deposit these assets ? Or the same ?


-Also,if someone intend to have a transactional type of trading, witharbitrage (example withdraw 200keur from a platform and next daydeposit it to an other platform), I guess there doesn't exist anybank account which would provide it for a natural person, and onlycorporate bank accounts would accept that ?


-the cost of banking could be much bigger for companies, it could be 500 eur/month for some banks versus more or less free for natural persons. But can you have an account for natural person which would let you day trade and transact as a pro ?


-as company you might be able to have more leverage and access to moreproducts on some brokers


-the accountancy and mandatory audits will be for sure costly and a hassle, but on the other side will grant you access to any bank and solidify a sof and can be useful forever


Drawbacks of a company :


-thereal time data fees for trading, it can be several hundred euros amonth ?


-"limited liability" is useless for a day trader ?

-there are almost no costs that you can deduct as an investor/day trader



What other elements should one consider to know if it worths it to incorporate an onshore company as a vehicle of trading/investments, what else should be considered as crypto/stock investor/trader ? (out of the fiscal matter)

 

[Mercury]

The main issue with crypto, as a company or a person, is cashing out to Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then a company will just add extra costs and admin burden.

For instance Mt Pelerin offers a Swiss bank account opening and cash out service for an overall negotiable fee of less than 2%.
You end up with cash (USD, EUR, CHF) in a Swiss bank easily transferable to EU, US or Asia.
Remain to know bank maintenance/transfer fees and AUM minimum threshold.

 

[Bill D]

The main issue with crypto, as a company or a person, is cashing out to Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then a company will just add extra costs and admin burden.

Cashing out is just one step, the problem is once you cashout to a bank, it doesn't mean you will be able to access every brokers, because compliance will always apply to the next bank, so you would be stuck with a high fee broker which accepted your crypto platform withdrawals and not all low fees brokers. Assuming you already cashed out profits and invested in stocks and tradfi.

For instance Mt Pelerin offers a Swiss bank account opening and cash out service for an overall negotiable fee of less than 2%.

this is a cashout solution, not a day trading solution. Assuming the target is to be able to day trade, stocks on any main brokers, crypto, deposit, withdraw, convert, arbitrage, at wishes : a transactional type of account, is it possible to reach it as an individual, i guess not ? But it might be possible as a company ?(account musnt have 2% fees obviously)

You end up with cash (USD, EUR, CHF) in a Swiss bank easily transferable to EU, US or Asia.
Remain to know bank maintenance/transfer fees and AUM minimum threshold.

still this does not give you the freedom, as next financial intermediary would also apply compliance.
Wouldn't it also limit your freedom about where you can relocate later ? Some country might want to see that you had a company, audited, profitable, which distributed salary and dividends, to let you incorporate there, I am thinking for example about andorra. And same for the banks, they could have such requirements ?

But at the same time day trading/investing through a company might carry so much more cost (broker tax on real time data, etc) and hassle that it would make it worst than the problem it is meant to solve.
trying to compare trading as a natural person in a EU onshore country VS trading throught a company in a EU onshore country, with all the drawbacks and benefits each solution can give

Am I wrong to think that having had an audited onshore company with high salary+dividends for your day trading could be something useful for all your life ? (unlike having just capital gains as a natural person, for example someone with crypto investment sof)

 

[Mercury]

still this does not give you the freedom, as next financial intermediary would also apply compliance.
Wouldn't it also limit your freedom about where you can relocate later ? Some country might want to see that you had a company, audited, profitable, which distributed salary and dividends, to let you incorporate there, I am thinking for example about andorra. And same for the banks, they could have such requirements ?

This is something I don't get.

If you transfer money from your own Swiss personal bank account, due diligence has supposedly been made by the reputable Swiss bank. When asked, you can just reply it's savings. Moreover, no issue to tell the truth: It's capital gains from crypto investments. All has already been cleared by the Swiss bank.

Why would the next receiving financial institution ask what is the SOF? Highly regulated banks do not trust each others?
If so, you would need to provide SOF supporting docs on any transfer to new FI.
It's a never-ending story because money could also come from other personal bank accounts transfers at multiple levels, all banks supposed to have already checked your money provenance as well.

Who bears the money laundering risk? I assume it's only the Swiss bank, not the next FIs?

 

[newguyhere]

This is something I don't get.

If you transfer money from your own Swiss personal bank account, due diligence has supposedly been made by the reputable Swiss bank. When asked, you can just reply it's savings. Moreover, no issue to tell the truth: It's capital gains from crypto investments. All has already been cleared by the Swiss bank.

Why would the next receiving financial institution ask what is the SOF? Highly regulated banks do not trust each others?
If so, you would need to provide SOF supporting docs on any transfer to new FI.
It's a never-ending story because money could also come from other personal bank accounts transfers at multiple levels, all banks supposed to have already checked your money provenance as well.

Who bears the money laundering risk? I assume it's only the Swiss bank, not the next FIs?

At least in the guidelines I have read, the bank should not assume that the sending bank has done due diligence.

 

[vehzag]

The main issue with crypto, as a company or a person, is cashing out to Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then a company will just add extra costs and admin burden.

For instance Mt Pelerin offers a Swiss bank account opening and cash out service for an overall negotiable fee of less than 2%.
You end up with cash (USD, EUR, CHF) in a Swiss bank easily transferable to EU, US or Asia.
Remain to know bank maintenance/transfer fees and AUM minimum threshold.

Which bank is this?

 

[fanban]

I always prefer to do business, trade and invest as an business and not personal. Your options to get a way cheaper in taxes is way bigger than with personal activity!

 

[Mercury]

Which bank is this?

You'll have to ask Mt Pelerin.

 

[Frankie]

Not worth it:
1. Much harder to find banks/brokers that onboard a company vs natural person. Every account opening involves getting a notarized/legalized CoI and other documents - can be up to $500-1k to get these documents depending on structure complexity.
2. Pricing is higher - as you wrote, data costs for 'professional' traders are a few hundred bucks per month (per brokerage)
3. Banks will ask for higher minimums
4. Since you're the only owner, it doesn't provide you with any asset protection as the corporate veil can and will be pierced if needed
5. Yearly audits, accounting costs
6. Depending on your jurisdiction your entire revenue/profit can be published online (or behind a $50 paywall, which is still bad)
7. Zero CRS protection as everything is reported on your personal TIN level.

The only pro I can think of is that if you want to sell your entire portfolio you can sell the shares of the company. Which will be simpler.

Of course it all depends on your circumstances.

 

[Meta]

Let's assume you have the choice whether to trade/invest as a natural person or as a company (onshore) in your country of residence, and that the tax will be more or less the same in both cases.


For a crypto/defi/stocks/etf, investor and day trader with crypto sof.


What should you consider before making a possible mistake to incorporate(onshore company) vs staying as a natural person ?
I thought of some elements but I would love to get some other ideas/advices before mistaking


Advantages as a company :



-Salary and dividends would in the long term be a useful proof of source offunds, however I was wondering if the initial hassle of setting up the company and transferring your asset to that company, with loan/or initial contribution certificate, wouldn't be such a hassle on theshort term that it would be as big as the relief you would get in thelong term. (crypto sof) VERSUS just getting capital gains will always be a problem for some banks about a crypto sof

-if you transfer your assets to the company via a loan or contribution certificate, is it enough for banks/brokers, will you meet more hassles than if you just opened a broker/bank account as a natural persons to deposit these assets ? Or the same ?


-Also,if someone intend to have a transactional type of trading, witharbitrage (example withdraw 200keur from a platform and next daydeposit it to an other platform), I guess there doesn't exist anybank account which would provide it for a natural person, and onlycorporate bank accounts would accept that ?


-the cost of banking could be much bigger for companies, it could be 500 eur/month for some banks versus more or less free for natural persons. But can you have an account for natural person which would let you day trade and transact as a pro ?


-as company you might be able to have more leverage and access to moreproducts on some brokers


-the accountancy and mandatory audits will be for sure costly and a hassle, but on the other side will grant you access to any bank and solidify a sof and can be useful forever


Drawbacks of a company :


-thereal time data fees for trading, it can be several hundred euros amonth ?


-"limited liability" is useless for a day trader ?

-there are almost no costs that you can deduct as an investor/day trader



What other elements should one consider to know if it worths it to incorporate an onshore company as a vehicle of trading/investments, what else should be considered as crypto/stock investor/trader ? (out of the fiscal matter)

Hey friend. I'm in a similar situation. For what it's worth: I tried to be a natural person with capital gains from crypto and it's a hassle. You find a bank which is okayish with that, you get some papers/legal opinions, but it's a hassle. Every new professional who wants to see SoF is either "ok, good" or "we don't understand crypto, aren't you a money launderer?" I'm planning to switch to the "this is my company, those are my dividends" way.

This is something I don't get.

If you transfer money from your own Swiss personal bank account, due diligence has supposedly been made by the reputable Swiss bank. When asked, you can just reply it's savings. Moreover, no issue to tell the truth: It's capital gains from crypto investments. All has already been cleared by the Swiss bank.

Why would the next receiving financial institution ask what is the SOF? Highly regulated banks do not trust each others?
If so, you would need to provide SOF supporting docs on any transfer to new FI.
It's a never-ending story because money could also come from other personal bank accounts transfers at multiple levels, all banks supposed to have already checked your money provenance as well.

Who bears the money laundering risk? I assume it's only the Swiss bank, not the next FIs?

Nah... They will all want to see the documents. I guess "transfer from own name from a reputable Swiss bank" will attract less scrutiny "transfer from a suspicious third-party Seychelles firm". I guess if it's inside one country it may be easier. But they still need some documents.

 

[Mercury]

Nah... They will all want to see the documents. I guess "transfer from own name from a reputable Swiss bank" will attract less scrutiny "transfer from a suspicious third-party Seychelles firm". I guess if it's inside one country it may be easier. But they still need some documents.

Are you saying that when you transfer money from your bank A personal bank account to your bank B personal bank account, bank B asks systematically how did you fund bank A?

I have personal bank accounts (real banks not EMIs) in multiple countries, no bank never asked me SOF when I transfer money between my accounts, though over a certain amount some banks may ask the purpose of the transfer.

The day financial institutions will ask SOF for each transfer between 2 personal bank accounts has not come yet, but will definitely be the trigger for 100% decentralized crypto adoption.

 

[Meta]

Are you saying that when you transfer money from your bank A personal bank account to your bank B personal bank account, bank B asks systematically how did you fund bank A?

I have personal bank accounts (real banks not EMIs) in multiple countries, no bank never asked me SOF when I transfer money between my accounts, though over a certain amount some banks may ask the purpose of the transfer.

The day financial institutions will ask SOF for each transfer between 2 personal bank accounts has not come yet, but will definitely be the trigger for 100% decentralized crypto adoption.

Yep, bank B asks me for documents. I can not say "systemically" as it is not for every transfer, it's more like once per bank and I don't have that many accounts. But anecdotically it happened to my friends and certainly happens to me.
The last one was a transfer to N26 in Germany, about 100k EUR from my personal account outside of EU. N26 even wanted to re-identify me. Happened that they don't accept passports from my country as ID documents anymore so I am probably losing that account - triggered by an "OWN FUNDS TRANSFER".
Maybe not always and not for every transfer, but the checks are present.

 

[vehzag]

Yep, bank B asks me for documents. I can not say "systemically" as it is not for every transfer, it's more like once per bank and I don't have that many accounts. But anecdotically it happened to my friends and certainly happens to me.
The last one was a transfer to N26 in Germany, about 100k EUR from my personal account outside of EU. N26 even wanted to re-identify me. Happened that they don't accept passports from my country as ID documents anymore so I am probably losing that account - triggered by an "OWN FUNDS TRANSFER".
Maybe not always and not for every transfer, but the checks are present.

Key phrase here is outside Europe
In SEPA they cannot do that

 

[TheCryptoAnt]

The main issue with crypto, as a company or a person, is cashing out to Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then a company will just add extra costs and admin burden.

Ditto, to the point that after the next bull run I'm going to move most of my money to tradfi and exclusively trade the BTC CME futures contract.

This way I can avoid answering questions and providing trade reports to people who can barely understand what I'm doing. The number of Google Meets I've had in the last three years to explain precisely how I trade, show my screen, etc... makes me dizzy.

/rant

 

[Dreamy]

The main issue with crypto, as a company or a person, is cashing out to Fiat at reasonable cost.
If you can find banks that accept your crypto SOF then a company will just add extra costs and admin burden.

For instance Mt Pelerin offers a Swiss bank account opening and cash out service for an overall negotiable fee of less than 2%.
You end up with cash (USD, EUR, CHF) in a Swiss bank easily transferable to EU, US or Asia.
Remain to know bank maintenance/transfer fees and AUM minimum threshold.

Could you be so kind as to tell us more? You mean Mt Pelerin can help me open a new Swiss bank account, accept my crypto, and send fiat to my new Swiss bank account for 2% of the amount? And the Swiss bank will not ask the source of origin of the funds, since it will be enough for them to simply see that these funds were sent from Mt Pelerin? I wonder which Swiss banks they open accounts in?

 

[Mercury]

Ditto, to the point that after the next bull run I'm going to move most of my money to tradfi and exclusively trade the BTC CME futures contract.

This way I can avoid answering questions and providing trade reports to people who can barely understand what I'm doing. The number of Google Meets I've had in the last three years to explain precisely how I trade, show my screen, etc... makes me dizzy.

/rant

Word.

That's my plan too.
Crypto > Personal Bank Account > Personal Brokerage Account (IBKR, Schwab International)

When questions arise about SOF, it's proceeds from Stock investments.

Could you be so kind as to tell us more? You mean Mt Pelerin can help me open a new Swiss bank account, accept my crypto, and send fiat to my new Swiss bank account for 2% of the amount? And the Swiss bank will not ask the source of origin of the funds, since it will be enough for them to simply see that these funds were sent from Mt Pelerin? I wonder which Swiss banks they open accounts in?

Read the Mt Pelerin link I provided, it's well explained.
For further details feel free to contact them.

Note that I have no connection with them and not used their OTC/Banking opening service (yet).

" ... The track record that we have built in Switzerland as a regulated financial intermediary specialized in crypto services gave us over the years a solid reputation among the local financial ecosystem, and we have developed relationships with most of the private banks here that can be used to help crypto clients open bank accounts.
When new clients contact us and express their needs for that service, we first onboard them through our regular KYC process, which is entirely done in-house. We know how privacy and data safety are important in the crypto world, which is why we always emphasize that point and stress the fact that all our clients benefit from Swiss secrecy.

Once that initial KYC is done, we then schedule a meeting to start drafting the file that we will use to present the client's case to the target private banks. When completed, that file will include a comprehensive portrait of the client's crypto wealth, its origin and its fiscal status.

Depending on the client's profile and wealth management needs, we will suggest the most relevant bank from our network (we only deal with private banks, which are focused on wealth management). With the client's approval, we will go on and request a bank account opening.

We then take care of all the follow-up work with the bank to ensure a swift process until the actual account is open and ready. Once done, we proceed to the actual cash out of the funds: the client transfers the crypto to our wallet in one or several transactions, which we then convert into the desired fiat currency through our liquidity network.

Finally, we transfer the fiat funds directly onto the newly opened private bank account, ready to be used. That whole process can be completed in less than a month!
On our side, we charge for that service an all-inclusive one-off fee of less than 1% of the amount transferred. That fee includes all our compliance work, the preparation of the circumstantial report for the bank and the assistance with the account's opening.

On the private bank's side, they usually apply an all-in-one fee (custody and transactions) around 1% of the asset under management. We can usually help negotiate that fee down thanks to our good relationships with banks. Of course, additional fees regarding tax consulting and restructuring may apply, but in all cases we will ensure that you pay the right price.
... "

 

[Amandograde]

Could you be so kind as to tell us more? You mean Mt Pelerin can help me open a new Swiss bank account, accept my crypto, and send fiat to my new Swiss bank account for 2% of the amount? And the Swiss bank will not ask the source of origin of the funds, since it will be enough for them to simply see that these funds were sent from Mt Pelerin? I wonder which Swiss banks they open accounts in?

nope, they ask very precisely every sat or shitcoins origin and how you got it while you are required to drop your panties by doing so.
that company will serve only as an introducer to smooth the transaction at best and discuss your life story with the bank instead of you doing it directly.

 

[Mercury]

nope, they ask very precisely every sat or shitcoins origin and how you got it while you are required to drop your panties by doing so.
that company will serve only as an introducer to smooth the transaction at best and discuss your life story with the bank instead of you doing it directly.

Correct.
The advantage of using an introducer is that you'll have to provide data only once and they will almost 100% guarantee (unless of course your crypto is "tainted" from illegal source) an account opening & cash out with an appropriate bank.

Begging by yourself you might have to drop your panties multiple times before you luckily end up with the right bank and outcome, but I understand some may like it.

 

[Jerry1911]

5. Yearly audits, accounting costs

Accounting yes, not necessarily audits. But even accounting can be avoided in certain cases.

6. Depending on your jurisdiction your entire revenue/profit can be published online (or behind a $50 paywall, which is still bad)

UK LTD tax resident elsewhere keeps this private.

7. Zero CRS protection as everything is reported on your personal TIN level.

Not if your company owns an active NFE subsidiary.

 

[Yrybak08]

Correct.
The advantage of using an introducer is that you'll have to provide data only once and they will almost 100% guarantee (unless of course your crypto is "tainted" from illegal source) an account opening & cash out with an appropriate bank.

Begging by yourself you might have to drop your panties multiple times before you luckily end up with the right bank and outcome, but I understand some may like it.

question Is, where do we find good introducers