[karim0028]

Has anyone in the US/Europe thought about setting up a foreign entity and trading through that or trading fully offshore (ie. outside your own domicile) through that for tax reasons?

I'm curious if the folks trading larger accounts have ever contemplated it and if you did, did you go ahead and do it? If not, why did you decide against it?

[DugDug]

In the UK as in other places the focus is more along the lines of where the business decisions are actually made and who controls the entity.
If you live in the UK and make all the decisions here, and trade via an offshore vehicle then the tax authorities can deem that the profits should be brought on shore and hence taxed.
Ways around this are to use collective schemes, trusts etc; however the premise remains the same.... and the tax authorities are likely to deem the money is to be taxed here, so by not declaring you are evading tax.... not a good result. All of this will cost money as well.
It all depends on your assessment of risk, future tax penalties and fines.... appropriate for a trading forum.
This will depend entirely on the individual and basically tax is something only qualified accountants and lawyers should (but not necessarily helpfully ) be advising you on.
Personally I just pay my taxes and focus on making the money - I am happy to sign a big cheque to the tax authorities every year.... it means I have made money.

[karim0028]

Well, so allow me to clarify...... Its not really just about taxes... I'm looking at some big pic fundamentals... Looking at the US, i am convinced that taxes wil go up (govt is broke), over the long term dollar will go down and i would like to be able to trade in a more viable currency like CHF or something similar that is not being inflated away (at least as fast as the dollar, make no mistake, all govt favors inflation)... With the debts being accumulated at the govt level, there is no more palatable solution that i can ascertain than inflating the debt away....

But, there is is no way that i can see to protect my business (ie. trading capital), aside from going overseas (as any diligent business owner would do to protect their business and lively hood)... I am already noticing that inflation is picking up, it may not be apparent in things getting more "expensive" but i do see packages getting smaller while prices remain the same (defacto expensive)..... Another form of invisible inflation.....

Has anyone thought about it that way?

[DugDug]

so if you are looking to hedge your cash against inflation then by going overseas is a different trade. You will then have currency risk, and you then assume the other country has no inflation either and the value of its currency will rise relative to the US.
Lets say inflation runs to 10%, you will still only make money if the USD falls against the currency you are in. As when you bring the money back if the currency has not moved the monetary amount is the same. I think plenty of countries will have problems.
In order to protect he purchasing power of your cash - while there are often many products offering to do this. The best way I have seen is to buy real assets in your local currency (not futures contracts as the premium can kill you) and ideally borrow today at low rates and let inflation eat away your debt - just like the government
Things like gold, land (not necessarily houses), diamonds, art, stocks with businesses that can easily raise prices and maintain its profits. TIPs (google them)
Now then you have the risk of the asset falling in real terms, transaction costs etc;
To protect against inflation is a long term proposition generally.
As per any trade their is a risk/cost of protection.

[cw30000]

Originally Posted by karim0028 »

Well, so allow me to clarify...... Its not really just about taxes... I'm looking at some big pic fundamentals... Looking at the US, i am convinced that taxes wil go up (govt is broke), over the long term dollar will go down and i would like to be able to trade in a more viable currency like CHF or something similar that is not being inflated away (at least as fast as the dollar, make no mistake, all govt favors inflation)... With the debts being accumulated at the govt level, there is no more palatable solution that i can ascertain than inflating the debt away....

But, there is is no way that i can see to protect my business (ie. trading capital), aside from going overseas (as any diligent business owner would do to protect their business and lively hood)... I am already noticing that inflation is picking up, it may not be apparent in things getting more "expensive" but i do see packages getting smaller while prices remain the same (defacto expensive)..... Another form of invisible inflation.....

Has anyone thought about it that way?

Regardless where you go, the end result is the same. The world is running on fiat currency and guarantee there will be inflation. The problems with US is we have too much debt, bad policy, rewarding bad behaviors, etc etc. If you are profitable, I would advise you to leave this country and denounce your citizenship. Go to country like Singapore where there is no tax for trading. You don't even need to learn another language, they speak English there.

[hunter1]

Short answer is yes. Many advantages if you know where and how to set up offshore. You must be willing to spend from $5000 to $10000 to set things up properly in the correct jurisdictions. Taxes are least of the advantages. Complete protection from lawsuits and government confiscations for example. Possibility of a non U.S. passport

[sevensa]

Originally Posted by hunter1 »

Short answer is yes. Many advantages if you know where and how to set up offshore. You must be willing to spend from $5000 to $10000 to set things up properly in the correct jurisdictions. Taxes are least of the advantages. Complete protection from lawsuits and government confiscations for example. Possibility of a non U.S. passport

Unless you are planning to do something illegal, why is this an advantage?

[karim0028]

Originally Posted by sevensa »

Unless you are planning to do something illegal, why is this an advantage?

Sevensa, you assume that everyone who wants protection is doing something illegal.... Lawsuits can happen at any time and for any stupid reason, if your assets are out of reach lawsuits can be settled quickly and for little cost.... If they are domestic, contingency fee lawyers see $$$$'s and wont settle...

Hunter1, do you have any tips on jurisdictions, entities, offshore brokers, etc...?