The foreign exchange market, or Forex, is the leading globally in terms of the daily trading volume. Particularly with the help of the internet, individual traders now get secure entrance to the foreign exchange market through global banks or brokers. The enormous growth in the worldwide foreign currency exchange markets has fascinated the interest of traders and investors alike. With an excess of currencies available and trade volumes running into the trillions of dollars, forex markets offer a suitable way to take benefit of inherent leverage and instability and to make handsome returns. Many traders have started opening offshore forex accounts in foreign jurisdictions because of favourable tax treatments in these sites and to overcome overly preventive regulations in their own country.
In this article, we are going to discuss why an offshore company can be of advantage for Foreign exchange trading.
There are two significant reasons experienced traders often use offshore businesses to protect their share of foreign exchange (Forex) trading accounts. They know it is not a good idea to be trading large sums of money in their name. This strategy provides experienced traders with bot tax advantages and enhanced privacy.
How to Use an Offshore Company for Forex Trading?
Forex trading is activities which lend themselves well to offshore corporate structuring. Here’s a brief on how an offshore forex trading can work out for you.
- For example – let’s say you set up a no-tax International Business Company (IBC)
- The IBC opens an account with the broker
- You are selected as the IBC’s authorised trader which means you place the buy and sell orders on behalf of the company
- The OBC’s trading profits are generated in a no-tax environment
- If you need some living/spending money, the IBC pays you a wage or consulting fees or a commission
- That living/spending money can be paid to your local bank account which means it would be quantifiable income wherever you are ordinarily resident for tax purposes though you should also be able to the entitlement of a sizeable amount of allowable deductions e.g. for a home office, car, travel, equipment, insurances, stationery etc. to reduce the amount of your “taxable” income at home
- If you don’t want the authorities to quickly see how much money you are earning by way of earnings you could use an anonymous ATM or Debit/VISA card to withdraw your fees from an Auto Tele Machine
- The bulk of trading profits could be reinvested Offshore potentially tax-free
Top Countries to Open an Offshore Company for Forex Trading
It is a good idea first to know which offshore countries are better for Forex Trading as popular offshore jurisdictions are more favourable than others for several reasons. Here are the top 5 tax havens that make a right spot for your Forex Trading offshore company.
- The British Virgin Islands – This country is an excellent choice for those who also want to provide Forex trading services and others. The process is quite complicated and requires a long list of documents to be submitted.
- Cayman Islands – Cayman Island is considered as one of the best offshore jurisdictions to start a company in, including for Forex trading. This is because of the high level of privacy it provided to its international clients. It also serves as an excellent opportunity to save money on taxes legally.
- Panama – This offshore country is another jurisdiction that many tax and business specialists would avoid. Again, this is due to the wrong name the country received after being involved in several money-laundering scandals.
- Seychelles – Many of the traders who previously set up their businesses in the above three destinations are now looking to move to Seychelles. It is believed that the location will continue its growth in attracting international investors keen to start an offshore company.
- Singapore – Singapore is currently at the top of the best jurisdiction to register an offshore company for Forex trading. It has an excellent reputation, allowing international investors and brokers to reach Asian markets inexpensively without a language barrier.
Why Start a Forex Trading in an Offshore Country?
Here are a few reasons why.
- Business taxes are friendlier than personal taxes
- Build and enhance your brand image
- Separate your account and business account
- Flexibility and convenience
Choosing the perfect jurisdiction for your trading purpose needs you to do your due diligence. You want to enjoy the benefits of an offshore firm can provide you legally, and in pursuing it, you often need assistance from those who know rules and guidelines concerning offshore business operations. Having experience with traders, at Business Setup Worldwide we can advise you on the best suitable jurisdiction. Contact us today and we can help you with it.