How to Do Currency Speculation Using an Offshore Company

Currency speculation (ie buying up large quantities of a particular currency in the expectation/hope of it being revalued in the near future) is an activity which lends itself well to “Offshore” Corporate Structuring. 


To summarize how it works is:


  • You set up a zero tax Offshore Company eg an International Business Company (“IBC”). The Company would be owned by a Private Foundation (ie to get around CFC laws and bank account reporting)
  • The IBC enters into a contract with you to buy the Currency (eg Dinars/Dong or etc) at their present value
  • The sale will need to be seen to be at fair market value (you can’t just sell the Dinars/Dong or etc to the IBC for one Dollar/Euro!). And the contract of sale will need to be seen to be on normal or reasonable commercial terms. That said the sale contract could be an instalment or vendor finance contract ie where a deposit is paid and ownership is transferred but the seller retains a mortgage until such time as all the instalments have been paid
  • Depending on where you live you may be able to “gift” the money to an Offshore entity. It might be difficult to explain why you’re gifting a sum of money to an IBC hence the smarter thing to do might be to set up (and transfer ownership of the property to) a PIF ie Private Interest Foundation (eg a Charitable Purpose Foundation). This one might survive the “sniff test”. Why? Because all day every day well intentioned wealthy persons gift money or assets to Charitable causes
  • Once the currency is revalued your IBC exchanges the speculative currency (eg Dinars/Dong etc) for hard currency (eg USD) and banks the profit free of tax
  • For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
  • That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
  • If you don’t want the authorities to know how much money you are earning by way of wages you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Automatic Teller Machine
  • The majority of trading profits could be reinvested Offshore potentially tax free.


As always local laws can have an impact. So be sure to seek local legal/tax/financial advice before committing to set up such a structure/business.


Comments are closed.