Trading through company vs own name

[Sabar89]

Hello, i want to ask your opinion between trading through a company vs on my own name.
Example:
I have 1M on a broker(e.g. InteractiveBrokers) and i trade stock/options passively (few trades per month), and in one year i get 10% profits.

Now, i live in UAE and i theoretically don't have to pay taxes on that profit.
If i move in another country with some taxes, e.g. 10%, i will pay 10k in tax and get 90k as profit.

Now, if i want to trade trough a company, let's say BVI, i don't pay taxes in that country but i have many other expenses, like license, some accounting, in BVI case some substance like office and director, corporate bank account fee... So i easily reach 10k in cost per year.
At the end of the year, i still get 90k but with more headache.

People say that with a company i'm more protected, but for what i understood trough my research, even though i keep funds and trade with my company, if i have for example a fight in a court and i have to pay someone, still as UBO of the company ultimately they will take my funds from it as well. Then someone can argue that i can put trusts, holdings and nominee over the trading company, but in this way the annual costs will be more than just paying taxes.

So my point is, when and if is worth to use a company for trade stocks instead of my own name? And on the asset protection side, wouldn't be more simple to just pay some taxes if i live in a country with them and then with the left profits buy some crypto?

 

[Martin Everson]

So my point is, when and if is worth to use a company for trade stocks instead of my own name?

Use a company when there are IHT advantages or DTA advantages in terms of withholding taxes applied and your company is tax free or low tax and not taxed in place of residency. Btw...income would need to be more substantial than what you currently have to even consider this due to ESR etc.

And on the asset protection side, wouldn't be more simple to just pay some taxes if i live in a country with them and then with the left profits buy some crypto?

If you had option to just live in a taxed country but it has low taxes then just pay them otherwise relocate. In terms of asset protection it depends who or what your protecting your assets against i.e wife, third person, corporate body or a government. Asset protection is a vast topic when you start digging.

 

[uplana]

I pretty much agree with Martin, it depends on a lot of factors. Based on how things look right now and the way you’re describing your situation, I wouldn’t set up a company just yet. I’d stay in Dubai until you’re earning more and it actually makes sense to optimize for taxes.

 

[Sabar89]

Thanks guys, so for now, in my situation, is not worth the extra headache and the benefits are almost zero.

 

[GPT]

A proper asset protection structure makes you only liable for the amount dispersed to you and not the capital.

The question is, only you can answer that, do you need that? If so, then it's worth the costs.

 

[brianK]

I’d also say it depends on what you're trying to achieve. If your main goal is simply tax savings, now might not be the right time to set up a company.
However, if we’re talking about asset protection and you’re potentially at risk of someone coming after you, that’s a different discussion, but even then, you'll need to share a bit more context for anyone to give solid advice.

 

[Sabar89]

At the moment, as living in UAE i don't have any tax problem. No one is after me and i don't do/plan to do in the future weird things that can bring me problems.
Probably i got too much influenced from people selling these kind of company setups for asset protections and i started to worry about car accident disputes or divorce (even though this last one option is very remote).

 

[GPT]

At the moment, as living in UAE i don't have any tax problem. No one is after me and i don't do/plan to do in the future weird things that can bring me problems.
Probably i got too much influenced from people selling these kind of company setups for asset protections and i started to worry about car accident disputes or divorce (even though this last one option is very remote).

Then I would not worry too much.

Just live your life, and don’t attract the unwanted attention. No bragging in bars etc because loose lips sink ships.