The estate tax only applies to assets in the US (stocks of US companies, assets of a US LLC).
It may be limted due to a DTA, but this is not the case at least for India.
Our valued sponsor
Suitable structure/residency for active trader (Stocks, futures, options)
- Thread starter RAGAV
- Start date
It may be limted due to a DTA, but this is not the case at least for India.
Yes, but can't it be avoided by selling the stocks of US companies by spouse or family before it becomes common knowledge that the account holder died? Even the funds can be withdrawn from broker's account to local bank account after liquidating the assets.
Am I missing something? Will this approach not work to protect ourselves from estate tax?
We are talking about normal individuals with less than a million in assets, not famous rich people.
Thanks for pointing out the tax rate applicable over 375K AED in case of natural persons.
Personal investments also includes a definition that states that the activity cannot be considered as a commercial business. However commercial business includes speculation (in Federal Decree Law No.50 of 2022) done for the purpose of making a profit. So, it looks like any kind of short term trades or speculation will be excluded from personal investments.
Crest, as you are familiar in matters of corporate tax and licenses, are you absolutely sure that trading (short term and speculative in nature, ranging from few minutes to few days) does not require any license if conducted in personal name? Even if the profits/losses are large and it is the primary source of income and activity carried out by the natural person using his own funds?
Is there any ruling or decree by FTA or any other authority that no license is required for personal investments/trading?
Paraguay could also be an option if you are okay with trading in your name—banking remotely and cheaply (XAPO, Dukascopy, some use Georgia SOLO).
Local options: Cooperatives and, if you have some statements from brokers (proving you made some money there), traditional banks will also be okay. One benefit could be banks here are non-CRS compliant. By my information, only Itau is doing more "work" than necessary.
I use IBKR (they open your account under their US entity), and Schwab will also work (minimum deposit of 30K). Swissquote works.
CitiBank is here; they focus more on import/export, but maybe they will consider you a big player enough (by local standards) to help.
Local options: Cooperatives and, if you have some statements from brokers (proving you made some money there), traditional banks will also be okay. One benefit could be banks here are non-CRS compliant. By my information, only Itau is doing more "work" than necessary.
I use IBKR (they open your account under their US entity), and Schwab will also work (minimum deposit of 30K). Swissquote works.
CitiBank is here; they focus more on import/export, but maybe they will consider you a big player enough (by local standards) to help.
CHAT GPT says that here
Federal Decree-Law No. 50 of 2022, also known as the Commercial Transactions Law, has indeed introduced some important changes regarding the definition and scope of commercial activities in the UAE.
You are correct in noting that the law now explicitly includes speculation done for profit within the definition of commercial business.
## Commercial Business Definition
The new law expands the definition of commercial business to include:
1. **Speculation for Profit**: Activities conducted with the intention of making a profit through buying and selling or short-term trading are now considered commercial business[1].
2. **Virtual Commercial Business**: The law recognizes business carried out in the technological space or through modern means of technology as commercial activities[2].
## Implications for Personal Investments
This expanded definition has significant implications for what qualifies as personal investment versus commercial activity:
1. **Short-term Trading**: Frequent buying and selling of assets, such as stocks or cryptocurrencies, with the primary aim of profiting from short-term price fluctuations may now be classified as commercial business rather than personal investment[1][2].
2. **Distinction from Personal Investment**: Personal investment is defined as investment activity conducted by a natural person for their personal account that:
- Does not require a license
- Is not conducted through a license
- Is not considered a commercial business under Federal Decree-Law No. 50 of 2022[5]
## Tax Implications
The classification of an activity as commercial business rather than personal investment can have significant tax implications:
1. **Corporate Tax Applicability**: If an individual's speculative activities are classified as commercial business and generate a turnover exceeding AED 1 million within a calendar year, they may become subject to corporate tax[6].
2. **Personal Investment Exemption**: Income from personal investments is not subject to corporate tax, regardless of the amount[6][7].
## Considerations for Investors
Given these changes, individuals engaged in frequent trading or speculative activities should consider:
1. **Activity Assessment**: Evaluating whether their investment activities might be classified as commercial business under the new law.
2. **Record Keeping**: Maintaining clear records to distinguish between personal investments and potentially commercial activities.
3. **Licensing Requirements**: Determining if their activities now require a license or fall under commercial business regulations.
4. **Tax Implications**: Understanding the potential tax obligations if their activities are classified as commercial business.
It's important to note that the exact interpretation and application of these new provisions may evolve as regulatory bodies provide further guidance. Individuals engaged in significant trading or investment activities should consider seeking professional legal and tax advice to ensure compliance with the new regulations.
Citations:
[1] Federal Decree-Law No. 50 Of 2022 Issuing The Commercial ... https://www.creationbc.com/corporat...2022-issuing-the-commercial-transactions-law/
[2] New UAE Laws Part 3: The Effect of the New Commercial ... https://www.tamimi.com/news/new-uae...ial-transactions-law-on-financial-activities/
[3] [PDF] Federal Decree-Law No. 50/2022 - Commercial Code https://www.moec.gov.ae/documents/2...9-b407-6e73-9acb-3b01522e94e6?t=1673496808487
[4] [PDF] Cabinet Decision No. 49 of 2023 https://tax.gov.ae/DataFolder/Files... Decision No. 49 of 2023 - for publishing.pdf
[5] Examining UAE Tax Regulations: Personal Investment and Real ... https://www.linkedin.com/pulse/exam...personal-investment-real-hemant-mundhra-w7ilf
[6] [PDF] Taxation of Natural Persons under the Corporate Tax Law https://tax.gov.ae/Datafolder/Files/Guides/CT/Taxation of natural persons - 25 11 2023.pdf
[7] Federal Decree Law on Commercial Companies https://uaelegislation.gov.ae/en/legislations/1542
[8] [PDF] Federal Decree by Law No. (50) of 2023 Concerning the ... https://uaelegislation.gov.ae/en/legislations/2181/download
[9] Federal Decree-Law No. 50/2022 - Lexis® Middle East https://www.lexismiddleeast.com/law/UnitedArabEmirates/DecreeLaw_50_2022
US estate tax applies to all US assets. If you own it under your own name, that mostly means US stocks like Tesla and USD balances. If you own e.g. Japanese stocks, then those wouldn't fall under US estate tax.
But if you own them through a US LLC, then everything owned by the US LLC will fall under US estate tax, including your Japanese stocks.
If the US LLC was owned by a foreign corporation (e.g. Hong Kong or BVI or Cyprus company etc.), then US estate tax wouldn't apply since the owner of the US LLC did not die (as the foreign company did not die, only people can die).
But then again, you could also own US stocks directly through an offshore company and avoid the US estate tax, why bother with the US LLC in between?
And if you use e.g. a Cyprus company, you may even be able to lower the withholding tax on US-source dividends (as a UAE tax resident it will otherwise be 30% since there is no tax treaty).
Edit: But probably this won't work because the tax treaty probably will have Limitation on Benefits clauses that won't allow this.
But if you own them through a US LLC, then everything owned by the US LLC will fall under US estate tax, including your Japanese stocks.
If the US LLC was owned by a foreign corporation (e.g. Hong Kong or BVI or Cyprus company etc.), then US estate tax wouldn't apply since the owner of the US LLC did not die (as the foreign company did not die, only people can die).
But then again, you could also own US stocks directly through an offshore company and avoid the US estate tax, why bother with the US LLC in between?
And if you use e.g. a Cyprus company, you may even be able to lower the withholding tax on US-source dividends (as a UAE tax resident it will otherwise be 30% since there is no tax treaty).
Edit: But probably this won't work because the tax treaty probably will have Limitation on Benefits clauses that won't allow this.
My trading will involve lot of transactions and turnover in contracts on a daily basis, especially in futures and options. Not sure how speculation, leverage and heavy use of derivatives is treated in UAE and middle east region.
you can't trust chatgpt with all this, you need to check with doing your own research. It can show you where you have to look but most often it is very wrong what it spit out even it looks legit and correct!
Had a look at Paraguay immigration requirements. It is very welcoming with less capital requirements.
Have a feeling Spanish language is needed to lead a comfortable life.
Not familiar with non-CRS compliant banks. Would there be challenges in transferring funds from non-CRS compliant banks to banks that are CRS compliant in other countries?
Speaking of capital, there are no requirements.
Some people live here with zero Spanish, but their lives are limited. If you want to live here full-time, you need to learn.
There won't be specific challenges related to this. Dealing with banks nowadays is challenging everywhere, but your business is straightforward, so it should be fine.
Have you been to LATAM before?
Understand. Well, if you will be interested in this option, hit me up and we can talk.
LATAM has its benefits, but also obvious downsides, especially compared to to places like Dubai.
It boils down to what kind of lifestyle you want to have.
Latest Threads
-
It is now legal to confiscate your assets in the west - movie- Started by Don
- Replies: 0
-
Estonia taxing undistributed profits in 2026 where people will go to now?
- Started by Nw1
- Replies: 7
-
Cash to Crypto OTC in Switzerland or Luxembourg
- Started by Jorakornev
- Replies: 8
-
-
