How To Get Around The New ESMA Forex Trading Rules – GO OFFSHORE!

On the 1st June 2018 the European Securities and Markets Authority (ESMA) announced radical changes to the ability of EU Forex Traders to access leveraged trading. The new changes which came into effect on 30 July 2018 include a cap on the amount of leverage that can be offered to retail traders, negative balance protection and a 50% margin close-out rule.


If you are a European forex trader the net effect of these changes is that you now have a greatly reduced ability to make profit from forex trading.


But there is a solution.


The Solution is to set up an Offshore Company and have that Company open a Brokerage account a/with a non-European Broker. This will afford you access to the best possible trading terms, particularly in terms of leverage (and can potentially deliver a tax planning opportunity, see below)


To summarise how it would work is:


  • You set up a zero tax International Business Company (“IBC”)
  • The IBC opens an account with a non EU Broker
  • You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
  • Ideally the IBC should be seen to be managed/controlled/owned from Offshore (which can be achieved via the deployment of an Offshore based Nominee Director and Nominee Shareholder etc)
  • For all intents and purposes the IBC’s trading profits are generated in a nil tax environment ie tax free/offshore (ie provided the IBC is structured/administered 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 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 you could also use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine (though technically, unless it’s a loan drawdown, such a receipt would be assessable income for tax purposes)
  • The majority of trading profits could be reinvested Offshore potentially tax free.  This will enable you to build your Capital base much faster thanks to the power of compounding


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