With the extreme market volatility we are seeing right now, thanks to the Covid 19 inspired economic downturn, the chance exists to make a, potentially once in a lifetime, small fortune Trading Shares on the International Stock Exchanges/Stock Markets.
You’ll be pleased to know that Share Trading is an activity which lends itself well to an Offshore Corporate Structuring (Tax Minimization) Plan.
To summarise how it would work is:
- You set up a zero tax International Business Company (“IBC”)
- The Company is set up with a (nil tax jurisdiction based) “Nominee” director and with an Offshore “Office” (ie in a nil tax jurisdiction/the country of incorporation)
- The IBC opens an account with a Share Broker
- You are appointed as the IBC’s authorised trader or Trading Manager (ie the Director delegates to you the power to place/responsibility for placing the buy and sell orders on behalf of the company)
- All legal contracts/agreements (eg Brokerage Contracts) are signed, and all board meetings take place Offshore ie in a/the nil tax jurisdiction wherein the Company and or the Nominee Director is based.
- Ideally you would provide the Director with some kind of monthly Trading (ie buys and sell records) report.
- The Director ratifies/confirms all trades placed by you at the end of each Trading month
- (with this admin system in place) For source of income purposes the IBCs trading profits are seen to be generated by calls made ultimately by the Nominee Director ie in a nil tax environment, tax free/offshore
- When you need some living/spending money the IBC could pay you a wage, or consulting fees or a commission eg a percentage of trading profits generated (or could provide you with a tax free loan ie to assist with asset/investment purchases, see below)
- That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are ordinarily resident for tax purposes 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 potentially you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine (though technically – unless it’s documented as a draw down on an overdraft/loan from the Company – that would be classified as income for tax purposes ie reportable)
- You could also potentially draw down money from the Company tax free by way of loan or have the Offshore Company (or a subsidiary thereof) buy your investments (ie to avoid you having to receive money directly from the Company – which would likely have tax consequences).
- The majority of trading profits would be banked and or reinvested Offshore potentially tax free.
Note:- to ensure that your name isn’t recorded in the Company registers as “beneficial owner” (and to get around CFC rules, should you live in a country which has them) ideally you would also set up a Private Foundation to act as shareholder of the Company.
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