Paying tax on Forex

[b4mbish0]

Hello world!

Well, currently i'm struggling with a problem which i need to solve ASAP

Preface:
1. I have two citizenships. Romanian and Moldovian and i live in Denmark.
2. I do Forex trading with a 10k+ eur profit montly


I want to pay the tax but in Denmark the tax are ridiculously high. Can someone help me to setup a way to pay a lot less taxes?

I want to pay tax bc i wan't to spend my money openly and i'm planning to open a business in Europe with this money in the near future.


I would honestly appreciate some help/consultation on this topic.

 

[Sols]

I want to pay the tax but in Denmark the tax are ridiculously high. Can someone help me to setup a way to pay a lot less taxes?

Move to a jurisdiction with lower or no tax on this type of income. Especially take a look at Malta and Cyprus, since you're an EU citizen.

 

[b4mbish0]

Move to a jurisdiction with lower or no tax on this type of income. Especially take a look at Malta and Cyprus, since you're an EU citizen.

Sadly I can't.

As I said im Ok with paying tax as long as they're not ridiculously high

 

[Gediminas]

Sadly I can't.

As I said im Ok with paying tax as long as they're not ridiculously high

You would still have to change your tax residency if you don't want to pay income tax in Denmark. In your case, it would be staying at least half a year in the new tax residency. As @Sols wrote, Cyprus would be a good solution.

 

[b4mbish0]

I would like to mark off Cyprus from this topic as this is totally not an option for me.

I'd rather focus on Moldova/Romania. And if anyone can broadly help me i'd appreciate it.

 

[Gediminas]

I'd rather focus on Moldova/Romania.

May I ask you why?

 

[b4mbish0]

May I ask you why?

My personal preference and duties

And due to duties I can't move from Denmark in the next 3 years

 

[Martin Everson]

Can someone help me to setup a way to pay a lot less taxes?

Yes

.....earn a lot less money

The headline 55% tax rate you will pay before deductions is so high it makes me dizzy saying it . You have limited legal options so just pay the taxes if you can't move.

 

[Sols]

As I said im Ok with paying tax as long as they're not ridiculously high

Sit down with a Danish tax adviser and see if there are things you can do locally to lower your taxes. So many people overlook this option.

If you can't move, there's nothing else you can do with your budget. I wouldn't risk upsetting the Danish tax authorities. They will not rest until you have paid every cent you owe.

If we were talking amounts 10x or 100x higher, it might be worth setting up a trust or foundation where the trustee or foundation does the investing and either find a way to pay you a type of income that's taxed less or simply sits on the funds until you one day leave Denmark. But the costs to set something like that up and maintain it are probably going to exceed your Danish tax bill.

 

[Joe Blasco]

Hello world!

Well, currently i'm struggling with a problem which i need to solve ASAP

Preface:
1. I have two citizenships. Romanian and Moldovian and i live in Denmark.
2. I do Forex trading with a 10k+ eur profit montly


I want to pay the tax but in Denmark the tax are ridiculously high. Can someone help me to setup a way to pay a lot less taxes?

I want to pay tax bc i wan't to spend my money openly and i'm planning to open a business in Europe with this money in the near future.


I would honestly appreciate some help/consultation on this topic.

it all begins with what passport/adress you r trading in Forex, because you are client in some platform/trading firm etc and you gave your ID and declared some adress. What you need is a. get some type of residency preferably with your Moldovan passport if you can get the supporting documetation, in some country that does not tax you for your foreign earned income b. start trading in some other firm with your moldovan passport and new residency adress c. cut all monetary paper trail you may have in Denmark in your name (bank accounts, credit cards, house bills etc) d. have some offshore bank accounts and debit cards so you can spend your money d. use your romanian and moldovan passport when you enter EU in rows every three months as you are eligible with your moldovan passport

 

[MarkusM]

Sit down with a Danish tax adviser and see if there are things you can do locally to lower your taxes. So many people overlook this option.

If you can't move, there's nothing else you can do with your budget. I wouldn't risk upsetting the Danish tax authorities. They will not rest until you have paid every cent you owe.

If we were talking amounts 10x or 100x higher, it might be worth setting up a trust or foundation where the trustee or foundation does the investing and either find a way to pay you a type of income that's taxed less or simply sits on the funds until you one day leave Denmark. But the costs to set something like that up and maintain it are probably going to exceed your Danish tax bill.

Why using trust or foundation? Why not simply open a company, either offshore or in Europe and accumulate his earning there, and after, when he is ready to leave Denmark, he can get dividents from that company profit?
What is wrong with this?

 

[Sols]

Why using trust or foundation? Why not simply open a company, either offshore or in Europe and accumulate his earning there, and after, when he is ready to leave Denmark, he can get dividents from that company profit?
What is wrong with this?

Because the company will be tax resident in Denmark and liable to pay tax there under Danish law.

 

[MarkusM]

Only because the shareholder of that offshore/ onshore company is from Denmark, that will make the company to be tax resident in Denmark?

 

[speedster]

Only because the shareholder of that offshore/ onshore company is from Denmark, that will make the company to be tax resident in Denmark?

Correct

 

[Sols]

Only because the shareholder of that offshore/ onshore company is from Denmark, that will make the company to be tax resident in Denmark?

In most jurisdictions, corporate residence is determined by where the company's effective control and management is based.

Being shareholder is one way this is determined. Being director can be another. If you add in nominees, you would remain the UBO and therefore control and management is still with you.

 

[MarkusM]

I see! But what happen if your foreign company make active profit ( not pasive income like investments, capital gain, etc) in the jurisdiction where it is incorporated, and then it pays the corporation tax to the relevant tax authorities in that country? Will need to pay tax again in the country of its shareholders?
If it have economic substance in that country, it will still be taxed in the shareholder country?

 

[speedster]

I see! But what happen if your foreign company make active profit ( not pasive income like investments, capital gain, etc) in the jurisdiction where it is incorporated, and then it pays the corporation tax to the relevant tax authorities in that country? Will need to pay tax again in the country of its shareholders?
If it have economic substance in that country, it will still be taxed in the shareholder country?

If there is sufficient economic substance it will most likely be exempt in the shareholders home country. This will depend on the CFC rules of said country as well as a DTA between the two countries.

In OPs case setting up economic substance will most likely cost more than the taxes saved.

 

[Sols]

I see! But what happen if your foreign company make active profit ( not pasive income like investments, capital gain, etc) in the jurisdiction where it is incorporated, and then it pays the corporation tax to the relevant tax authorities in that country? Will need to pay tax again in the country of its shareholders?

As mention, depends on if there is a Double Taxation Avoidance Agreement between the jurisdictions or how friendly your home jurisdiction is. But in many cases, you would only pay the difference at home. So if you owe 10% in the offshore jurisdiction and 25% at home, you'd only pay 15% at home.

But lacking a DTAA or other tax credits system, you would pay 10% and 25%.

If it have economic substance in that country, it will still be taxed in the shareholder country?

It really depends on the exact minutiae of your situation. You may end up having to pay tax in both or only one, depending on DTAA and applicable laws.

 

[b4mbish0]

So it's not possible for me to trade on Dukascopy under a Moldovian passport, withdraw the money on a company in Moldova and live in Denmark with a Romanian passport without the Danish authorities telling me nothing?

 

[Sols]

Unless you hold one of a handful of citizenships (such as US), you are not taxed based on your citizenship. You are taxed on (and automatically reported based on) where you live.

The Swiss authorities will notify the Danish authorities about your activities, regardless of what passport you show them.

The only way around this is to leave Denmark or lie to Dukascopy about where you live. Lying to a bank is not a good idea. If they find out you've been lying, they will either freeze your account or let you keep the account but then you'll be reported anyway and might have a back tax situation.