Offshore Trading: A Guide to Offshore Trading Account for Stocks & Forex
Trading refers to the buying/selling of stocks, commodities, currency and other financial instruments. Offshore company refers to an entity that is incorporated outside the country where its principal operations are. How are these two related? How can an offshore company be used by an investor to one’s advantage in trading? Here’s how...
The Link between Offshore Company and Trading
An offshore company is a versatile entity, and is employed for a variety of purposes and business domains, primarily for leveraging reduced tax and to maintain confidentiality. Moreover, it is arguably the simplest business structure to set up, taking up just a few days or even hours to incorporate remotely.
As such, an offshore company may function as a trading intermediary. This implies that if you want to start a trading account, you’d need a trading broker in that jurisdiction. Thus, if you trade in financial assets via a third party, it is advisable to manage your account in the name of an offshore company. This way, you are able to benefit from corporate ownership of the assets.
Trading via a company has its advantages, as against trading as an individual. Not surprisingly, about two-thirds of the online trading accounts worldwide are opened as a company rather than as an individual.
Advantages of Trading via an Offshore Company
One's trading account remains separate from one’s primary business
An offshore company brings with it limited liability and added confidentiality
Although an offshore company employed for trading mustn’t indulge in tax evasion, it can certainly be used to defer some tax that the trading activity would incur otherwise
Corporate taxes are, of course, friendlier than personal tax
Case in Point | How an Offshore Company Can Be Used for Trading
Here is an example of how one can employ an offshore company to trade in stocks and commodities via an offshore brokerage account:
Set up an offshore company in the jurisdiction of your choice
Then affiliate with a trading broker via the offshore company
You can then place buy and sell orders on behalf of the company
Here are the potential benefits of this scenario:
- If the offshore company is structured appropriately, its (i.e., your) trading profits are effectively derived in a minimal-tax environment
- Majority of these profits can be reinvested with practically zero corporate tax
- If you want the trading wages to remain anonymous, these may be withdrawn via an anonymous debit card
- You can act as a nominal consultant for the offshore company, whereby your wage could be transferred to your local bank account – allowing you to claim deductions in your domicile
All in all, if you are looking to trade in stocks, commodities or other instruments, an offshore trading account may offer you a host of benefits that you might not be able to avail as an individual investor. What’s more, it takes just a few days or hours to start your offshore company, that too online. Once your offshore company has been set up, you can kick-start your offshore brokerage account.
We at Business Setup Worldwide have a global presence and years of experience in helping people with setting up their offshore business – saving them undue time, expenses and hassle. If you are planning to start an offshore company for online trading, do reach out to us – we’d be happy to help.