Suitable structure/residency for active trader (Stocks, futures, options)

[RAGAV]

Until last month, yes. Now not anymore as the UAE has introduced a 9% corporate tax.
Well, actually, maybe trading would count as a qualifying activity, then it might still work.
But if you want to live in Thailand, I would go with something like a US LLC. Cheaper and simpler.

You can remit the money to Thailand tax free, but you have to wait for a year after earning it.

If you spend less than 6 months per year in Thailand, you won't be tax resident in Thailand. You'll want to check the Australian rules (or wherever you are living now) to make sure that won't cause a problem there.
Some countries require you to take up tax residency somewhere else, before they "let you go".

Have questions regarding my specific situation. I am from India and I am looking to immigrate and setup a structure that minimizes my tax liability as much as possible.

My primary activity would be trading stocks, futures and options in US and European financial markets (mostly US). I am fine with trading in a personal/business account. Which residency and structure is most suitable? My activity would most likely be treated as active business income (due to large number of transactions) by most countries. Not sure whether territorial tax system would exclude my foreign sourced earnings.

I have sufficient savings to support myself for few years. But no active source of income that qualifies as proof for digital nomad visa.

I also need a residency that does not involve any employment or lump sum investment.

Based on my research, UAE is one of the easiest residencies to obtain through either a freezone LLC or freelancer visa. I am concerned about UAE banks though. Can I open a bank account in any other reputed country that I can use to transfer funds/receive funds from brokers like Interactive Brokers while residing in UAE? Are there other tax friendly countries that are more suitable to my activity/[Residency requirement]?

 

[daniels27]

Do you have any education you could use to get a talent visa?

 

[RAGAV]

Do you have any education you could use to get a talent visa?

Yes, I am an engineering graduate (Bachelor's degree in Chemical Engineering) working full time as a Software Professional in India.

 

[RAGAV]

Hi All,

I am from India and my primary activity is going to be trading stocks, futures and options in US and European financial markets.

I am looking to immigrate and setup a structure that minimizes my tax liability as much as possible.

I am open to trading in a personal/business account. Which residency and structure is most suitable? My activity would most likely be treated as active business income (due to large number of transactions) by most countries. Not sure whether territorial tax system would exclude my foreign sourced earnings.

I have sufficient savings to support myself for few years. But no active source of income that qualifies as proof for digital nomad visa.

I also need a residency that does not involve any employment or lump sum investment.

Based on my research, UAE is one of the easiest residencies to obtain through either a freezone LLC or freelancer visa. I am concerned about UAE banks though. Can I open a bank account in any other reputed country that I can use to transfer funds/receive funds from brokers like Interactive Brokers while residing in UAE? Are there other tax friendly countries that are more suitable to my activity/[Residency requirement]?

I have a Bachelor's degree, if it is relevant.

 

[SCHLOSSFINANZ]

Portugal or Malta are your best options

 

[Martin Everson]

@daniels27 OP posts from other thread merged here.

 

[JustAnotherNomad]

Can I open a bank account in any other reputed country that I can use to transfer funds/receive funds from brokers like Interactive Brokers while residing in UAE?

Yes, no problem at all as long as you can pass the KYC checks (utility bill etc.).

There was a discussion here somewhere about whether professional trading could be considered a business activity and if it could be subject to corporate tax in the UAE.
Maybe you can find it with the search function.
Personally, I wouldn't worry too much about this at the moment. It will probably be the best option, and you'd be close to India.

 

[Don]

It could be worth to set it up under an US LLC, but you would need to take trips to US to open a bank account. US brokers have certain advantages.

It will probably be the best option, and you'd be close to India

And don't forget Indians make up the majority of the population in the UAE.

UAE indeed has easy options for residence.

 

[RAGAV]

Yes, no problem at all as long as you can pass the KYC checks (utility bill etc.).

There was a discussion here somewhere about whether professional trading could be considered a business activity and if it could be subject to corporate tax in the UAE.
Maybe you can find it with the search function.
Personally, I wouldn't worry too much about this at the moment. It will probably be the best option, and you'd be close to India.

Thanks for the response.

Professional trading is a business activity in India. So, I have made peace with it being treated as business activity everywhere else. I am comfortable with 9% tax rates in UAE on my business income. I also read that first 1 million AED is not taxable for natural persons(individuals). So, there is some buffer available to retain most of my profits at least for the first few years.

How can I pass KYC checks (utility bill, bank statements, license etc..) when I am residing in UAE with family? Can you suggest few countries which are safe for banking and easier to access without being a resident?

 

[PhantomOf ThePits]

Thanks for the response.

Professional trading is a business activity in India. So, I have made peace with it being treated as business activity everywhere else. I am comfortable with 9% tax rates in UAE on my business income. I also read that first 1 million AED is not taxable for natural persons(individuals). So, there is some buffer available to retain most of my profits at least for the first few years.

How can I pass KYC checks (utility bill, bank statements, license etc..) when I am residing in UAE with family? Can you suggest few countries which are safe for banking and easier to access without being a resident?

Ibkr.com
Sygnum.com
Swissquote.com
Saxobank.ae
Aminagroup.com
Bankfrick.com
For example as uaeA Resident

 

[RAGAV]

It could be worth to set it up under an US LLC, but you would need to take trips to US to open a bank account. US brokers have certain advantages.


And don't forget Indians make up the majority of the population in the UAE.

UAE indeed has easy options for residence.

Thanks for your response.

What would be the tax implications if I set it up under US LLC and reside in UAE for the entire year?

I am planning to use US brokers such as Interactive Brokers, TastyTrade. What advantages can I expect if I set up a LLC and trade using LLC account?

As you mentioned, Indians are present in UAE in large numbers which is beneficial when moving there with a family.

 

[PhantomOf ThePits]

I don't know what would be reason to setup US LLC to trade while being tax resident in the UAE (but hey I'm not a tax advisor and maybe I'm missing something).

Best would be to speak to an Indian tax advisor in the UAE as there may be special rules for Indian passport holders/former Indian tax residents to think about.

 

[RAGAV]

I don't know what would be reason to setup US LLC to trade while being tax resident in the UAE (but hey I'm not a tax advisor and maybe I'm missing something).

Best would be to speak to an Indian tax advisor in the UAE as there may be special rules for Indian passport holders/former Indian tax residents to think about.

Indians who are no longer tax residents in India won't be liable to pay any tax on income (in any form) generated outside India to Indian Tax Department. Only rental income, interest income, dividends etc. received from within Indian sources are taxable for non-resident.

 

[JustAnotherNomad]

Professional trading is a business activity in India. So, I have made peace with it being treated as business activity everywhere else.

I doubt the UAE will tax it.

I am comfortable with 9% tax rates in UAE on my business income. I also read that first 1 million AED is not taxable for natural persons(individuals). So, there is some buffer available to retain most of my profits at least for the first few years.

No, it's the first 400k, I think.

How can I pass KYC checks (utility bill, bank statements, license etc..) when I am residing in UAE with family? Can you suggest few countries which are safe for banking and easier to access without being a resident?

If you really live there, you will easily pass the checks. Just send them your electricity bill, for example.

 

[JustAnotherNomad]

What would be the tax implications if I set it up under US LLC and reside in UAE for the entire year?

Several negative aspects and probably no positives. Why would you want to do it that way? You can simply sign up for an IBKR account under your own name.

 

[Crest]

Thanks for the response.

Professional trading is a business activity in India. So, I have made peace with it being treated as business activity everywhere else. I am comfortable with 9% tax rates in UAE on my business income. I also read that first 1 million AED is not taxable for natural persons(individuals). So, there is some buffer available to retain most of my profits at least for the first few years.

How can I pass KYC checks (utility bill, bank statements, license etc..) when I am residing in UAE with family? Can you suggest few countries which are safe for banking and easier to access without being a resident?

Hi,

I just wanted to clarify a few things - having completed and passed the PwC Corporate Tax Diploma in UAE.

1) Your comment about the first 1m not being taxable is not correct. The AED 1m turnover threshold is only a threshold meaning once you have recieved more than 1m AED turnover then you have to register for CT and will become subject to CT the same as everyone else, That means 0% for your first AED 375'000, and 9% the rest of your NET PROFIT.

2) Trading on a personal name would be classed as 'Personal Investments' which is an exempt income for natural persons. The definition of Personal Investments is 'whether the investments trading require a license to be done' which is your case its not, as you can trade without a license under your personal name - therefore no tax payable.

Hope that helps.

 

[RAGAV]

Several negative aspects and probably no positives. Why would you want to do it that way? You can simply sign up for an IBKR account under your own name.

I have no idea about setting up LLC and using it. Another user in this thread suggested that there are a few advantages with US brokers that way. So, I wanted to find more details related to the structuring.

 

[JustAnotherNomad]

No need, just trade under your own name. If you absolutely want to use a company, don't use a US LLC, it would cause issues with estate tax and wouldn't lower the withholding tax.
You can use e.g. a Cyprus company, but I don't think it's needed, unless you get a lot of dividends or want to reduce the risk of US estate tax.

 

[Don]

Thanks for your response.

What would be the tax implications if I set it up under US LLC and reside in UAE for the entire year?

I recommend consulting a professional if you choose anything else than trading on your personal name, which might be the simplest and most cost efficient way.
There are more brokerage options now in UAE - a few months ago IBKR opened in DIFC:
https://finance.yahoo.com/news/interactive-brokers-opens-office-difc-120000850.html

I am planning to use US brokers such as Interactive Brokers, TastyTrade. What advantages can I expect if I set up a LLC and trade using LLC account?

Best legal protection, US banking, having more options when it comes to brokerages, avoid estate tax.

No need, just trade under your own name. If you absolutely want to use a company, don't use a US LLC, it would cause issues with estate tax and wouldn't lower the withholding tax.
You can use e.g. a Cyprus company, but I don't think it's needed, unless you get a lot of dividends or want to reduce the risk of US estate tax.

As an individual estate tax from your US accounts is applicable for anything over 60k.

LLC can be structured as a multi member LLC where majority is owned by a foreign corp (in this case there is no estate tax)

 

[RAGAV]

I recommend consulting a professional if you choose anything else than trading on your personal name, which might be the simplest and most cost efficient way.
There are more brokerage options now in UAE - a few months ago IBKR opened in DIFC:
https://finance.yahoo.com/news/interactive-brokers-opens-office-difc-120000850.html


Best legal protection, US banking, having more options when it comes to brokerages, avoid estate tax.


As an individual estate tax from your US accounts is applicable for anything over 60k.

LLC can be structured as a multi member LLC where majority is owned by a foreign corp (in this case there is no estate tax)

I am an Indian citizen. I read that estate tax is applicable to US citizens or residents.

If I become a UAE resident, is it applicable to me? In case of death of owner of IBKR brokerage account , can't the funds in the brokerage account transferred to owner's bank account, by spouse (or children) without tax liability?