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

[gmbh]

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 bulls**t.

Would be really nice if somebody could provide some information.

 

[Martin Everson]

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 .

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]

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?
https://www.globalpropertyguide.com/Caribbean/capital-gains-tax

 

[CaptK]

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]

@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]

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 . 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]

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

https://www.lowtax.net/information/

 

[gmbh]

Better you pick a specific country where you are serious about living than me review the entire list . 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.
https://www.7thheavenproperties.com/2020/05/bahamas-residency/

 

[CyprusLaw]

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]

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]

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.

 

[gmbh]

Hello @gmbh,

You set up a company in Dubai by February, why are you looking for another country which does not charge taxes? Didn't Dubai set up work?

I want to leave the EU sooner or later and I do not want to move to Dubai. So this thread has nothing to do with the Dubai set up.

 

[mickey]

@gmbh
As your username indicates the German Limited (Gesellschaft mit beschränkter Haftung) I assume that youre able to speak German. You have to seperate the taxation as a private person and the taxation of an (offshore) company. The the offshore world IBC and LLC who generating the revenues abroad never pay taxes in the country of cooperation (lets ignore the substance requirements and proof of taxation in country of management for now to make it simple for the start). If these revenues are generated from stock trading or not does not play any role in the most cases.

The German guy Christoph Heuermann created some videos who explain the basics of taxation systems for private persons and companies very clearly. Here are the basics for private persons:

and

For companies:

And especially for trading:

These are the basics, which you have to know. Otherwise it's gonna get hard to follow any suggestions here.

P.S. If you want to move in the Caribbean, the primary rule should NOT be the taxes, it should be safety. Curacao is one of the safest places there, but it could be dangerous as well.

 

[FixieHartmann]

P.S. If you want to move in the Caribbean, the primary rule should NOT be the taxes, it should be safety. Curacao is one of the safest places there, but it could be dangerous as well.

It seems that you have some experience with safety in the Caribbean. Can you share what you think are the safest and most dangerous places?

 

[mickey]

The most ci,itical factor is the economical situation of the average person. Curacao is backed by the EU and is the No.1 in Oil Raffinering of Venezuelan oil plus some touristic and high class offshore company formation and banking, which statizes the whole social system. The most other caribbean states has mostly ounly touristic and some offshore formation stuff (which is heavily under fire that we all know). Thats the reason, why the caribbean could be even more dangerous than usual. The rule of thumb is, the more diversified the economy of an island is the more safer it is. It is important that everybody (dumb or intelligent) has something to do for a fair wage.

 

[FixieHartmann]

The most ci,itical factor is the economical situation of the average person. Curacao is backed by the EU and is the No.1 in Oil Raffinering of Venezuelan oil plus some touristic and high class offshore company formation and banking, which statizes the whole social system. The most other caribbean states has mostly ounly touristic and some offshore formation stuff (which is heavily under fire that we all know). Thats the reason, why the caribbean could be even more dangerous than usual. The rule of thumb is, the more diversified the economy of an island is the more safer it is. It is important that everybody (dumb or intelligent) has something to do for a fair wage.

Understood, that makes sense.

What I found interesting though is that for instance the Bahamas has 3x the murder rate of Dominican Republic even though the standard of living supposedly is a lot higher in the Bahamas.

Also Cayman has the same murder rate as Dominican Republic, while Cayman is quite rich while the Dom Rep is the second poorest country in the Caribbean after Haiti.

What do you think about that? And how does Barbados score in your opinion?

 

[mickey]

The expressiveness of murder rates is very limited especially on islands or tiny countries. Many islands (and Mexican Gulf states like Belize) have only 100K-1Mio. citizens. When 2 drug gangs have a decent conflict with some shoot-outs the they could easily produce 100 kills within a couple of days. On a small island like St. Vincent and the Grenadines only 40 kills in a year of 2016 pushed them into the top 10 of the most dangerous countries of the world. Same happened to the Virgin Islands (US) with 52 kills in 2012. Long story short, murder rates are a good indicator but not for small islands with a low number of inhabitants.

I don't think that people like us would be that much affected to murder, due we are not in the cocaine business. White people are much more affected to stealing and burglary. Your home can the armed up with high fences and barred windows. The streets need to be patrolled by police and private security firms. This works very well in Curacao for example, due every bar, night club, restaurant, casino and so on has 2 private security guards standing outside plus the police which is taking care of the streets. I would say that's save enough.