Looking for Solutions to Reduce Taxation on Stock Investments (Europe based)

[Bourne]

Hi everyone,

I’m looking for advice on how to optimize my tax situation for stock investments. Being based in Europe, the taxation on dividend earnings is just incredible, to the point where it feels impossible to effectively reconfigure my portfolio annually when accounting for these taxes. It eats up all potential profits, making the process frustrating and counterproductive.

I assume one possible approach could involve opening an account with a broker that offers offshore accounts linked to a nominee structure or even an individual account registered with some level of anonymity or "fakes." However, I’ve noticed that many brokers these days have stringent verification processes, including selfie requests and other heavy checks.

Do you know of any brokers that allow access to a wide range of assets while maintaining privacy and anonymity? I’d appreciate any recommendations or insights from those who’ve managed to navigate similar challenges.

Thanks in advance for your help!

 

[daniels27]

You may want to let us know where the dividend paying companies are located. Moving all offshore may be a bad choice. For example Switzerland has a whopping 35% withholding tax on dividends. If you are resident, you will pay slightly less.

Also, which country are you based in? Many countries now have CFC rules to avoid tax benefits of such set ups.

But you could move to Monaco and only invest in funds and companies in countries without withholding taxes on dividends.

 

[Bourne]

You may want to let us know where the dividend paying companies are located. Moving all offshore may be a bad choice. For example Switzerland has a whopping 35% withholding tax on dividends.

It can be worldwide, primarily in EU, Asia and the US, as I focus on value investing. I can’t afford to wait indefinitely, as the financial health of companies evolves and new opportunities constantly arise. If I have to pay taxes each time I have positive return, it significantly reduces my compounding effects and destroy this strategy.

 

[daniels27]

Then move to Monaco.

 

[CyprusLawyer101]

If it makes sense, in terms of size of your portfolio, you should be able to set up a company and/or trust abroad and invest and recieve dividend and capital gain income so that both remain untaxed at the hands of the company. A good portion of the cost should go into creating enough substance to satisfy management and control risk.

 

[daniels27]

If it makes sense, in terms of size of your portfolio, you should be able to set up a company and/or trust abroad and invest and recieve dividend and capital gain income so that both remain untaxed at the hands of the company. A good portion of the cost should go into creating enough substance to satisfy management and control risk.

How about the CFC rules? How about WHT?

 

[CyprusLawyer101]

How about the CFC rules? How about WHT?

What about them?
If they can be structured through? Well generally yes as it also depends on tax residency country and country of investments. This is not something that I haven't done before.

 

[daniels27]

What about them?
If they can be structured through? Well generally yes as it also depends on tax residency country and country of investments. It is something that I have done before.

@Bourne could you maybe share your country of residence as I asked some posts ago?

 

[CyprusLawyer101]

Who is bounce?

 

[daniels27]

Who is bounce?

A honourable member of autocorrect society.

 

[CyprusLawyer101]

A honourable member of autocorrect society.

Sounds legit

 

[Cloudbanck]

Then move to Monaco.

And if you cant move to Monaco, move to Ireland. As non-dom there, the taxation on stocks is unusual. Funds and ETFs based in OECD countries are taxed with a whopping 41% CGT (called exit tax) that is applied after 8 years even if one doesn't sell. Yes, horrible.
But then individual stocks not held at an Irish broker are taxed at 0% CGT and 0% on dividends as long as one doesn't bring gains and dividends to Ireland. (US WHT still applies on dividends from US stocks, but it's only 15% for irish residents, as opposed to 30% for most other countries)

So if one just invests in individual stocks, and doesn't touch funds/ETFs Ireland is pretty great.

Non dom in Malta or Cyprus are probably pretty good to for stock investing, but I dont know the details there.
And Belgium, Czechia, Slovakia have zero capital gains tax for long term holdings (maybe Germany too). Not zero on dividends though.
Switzerland has zero capital gains tax unless it is considered professional activity.
And Bulgaria has zero capital gains tax for stocks on EU/EEA exchanges.

 

[ElBotellon]

With Ireland non-dom you cannot use the double tax treaty in place (often the treaty excludes the unremitted part). I believe in EU Cyprus (given also the amount of DTAs in place) for expats sounds the best place.

 

[cuno]

Cyprus and Ireland sounds OK - Monaco may indeed be the best country to relocate to if you can afford it! At the end of the day it comes down to how big your portfolio is, do you have millions, okay it can justify the costs to relocate, if you talk few thousands just pay your taxes and be happy.

 

[Revoltec]

Ireland got no Statuate of limitations for tax assessment and there is no definition for the non-dom status, which means it is up for interpretation in the individual case. Good luck & have fun!