Offshore Company Formation should be a consideration for Forex Traders.
Offshore Company Formation is a bit of a touchy subject and how an investor in the Forex Market approaches it depends upon many factors: Citizenship, residency, domicile, and tolerance for legal procedures. Offshore companies and offshore bank accounts are not for criminals and they are not even necessarily for the well-heeled elite. Ordinary people can have offshore companies and offshore bank accounts without breaking the law, even when dealing with a tax regime like the United States. Given that all of you are not United States citizens, the worries of the I.R.S. and their grand imperialistic overreach known as FATCA (Foreign Account Tax Compliance Act, which was introduced to the U.S. House of Representatives by out of all individuals - former New York Congressman Charles Rangel. What a country!) does not apply and there are far less barriers to forming an offshore company and having an associated offshore bank account.
How to form an offshore company and obtain an offshore bank account is a different article altogether, actually they are several different articles. This is not the easiest subject to cover, but to quote Alanis Morissette, "You Oughta Know."
Now a disclaimer: Freevestor LLC and its ownership is not responsible for your legal and financial decisions. The following is not legal advice, please consider seeking the guidance of a licensed legal services provider in your jurisdiction and strongly consider your own specific situation when making decisions of this nature. Every individual has their own specific needs and this article is for pure generic, informational purposes only.
1. You Could Lower Your Tax Burden
Everyone wants to pay less in taxes and an offshore company can accomplish this. There are many ways to do it and different considerations. How far you are willing to go to reduce this burden is truly up to you. It may be as simple as taking residency in the country of the offshore company while not serving the people in the offshore country (AKA "The Permanent Vacation"). It can be complex as acquiring multiple citizenships, living nomadically and taking advantage of residency requirements while also engaging in offshore company formation in a low or no tax nation.
Your presence, non-presence, company's location, home country and nature of your business can all play a role in possibly reducing your tax burden. As a business entity, you can also enjoy lower tax rates than by paying personal income tax.
When it comes to taxes, make sure to do it LEGALLY. It's about tax avoidance, not tax evasion.
2. You're Less of a Target in Litigation
Some countries are more litigious than others. Wealthy citizens and corporate entities of all sizes are targets of non-stop lawsuits whether they be frivolous or merited. Often times, the purpose of litigation is to bully the target into settlement. In fact, 95% of pending lawsuits end with a pre-trial settlement. The biggest winners are the attorneys/barristers. For some businesses, this is a shakedown and having clearly deep pockets makes one a target.
Your success as a Forex Investor leaves you open to lawsuits from various parties and even makes you a candidate for these shakedowns, which are a legal form of extortion designed to bleed you of your hard-earned money. If the money is not clearly there, there's less motivation to try to take what is rightfully yours.
3. Geographic Flexibility
If you want to travel the world and have your profits in the Forex Market and other investments fund this lifestyle, it may be much easier by forming an offshore company. Domiciling in a tax-free country while not spending the requisite amount of time in your high tax home country with an offshore company in a low or no tax regime will save a lot of money and headaches. Plus, there's the benefit of all of the wonderful experiences around the world with what is likely a Tier A Passport, even Tier B Passport holders have some benefits too. It all depends upon your tax regime, so seek out legal counsel to find out what you can and cannot do exactly to meet legal requirements.
Less paperwork, less taxes. More profits, more enjoyment of life is the goal.
After all, we're not guaranteed tomorrow, so let's get the most out of today!
4. An Investment/Insurance Solution for Businesses
The option to form an offshore captive insurance company also exists, it is certainly appropriate for companies that self-insure. If you have a small to medium-sized company that has potential for growth, but the insurance rates are a bit high, Offshore Captive Insurance is certainly an option. This can help reduce tax burdens and you will be able to create a Captive Insurance Investment Portfolio.
5. Separating Business and Personal
Offshore company formation can help you treat Forex Investing like it is a job and let the earnings not intermingle with your personal income. It creates a layer of privacy between yourself and the broker. If you want to manage other people's money through a PAMM or sell an Expert Advisor, it's always best to do it with legal protection. You could still manage other's money and have a portfolio of your own through Freevestor, of course. You can incorporate your strategies as a part of a Freevestor portfolio.