Registering a derivatives trading company in Dubai for tax benefits

[Kubera]

This seems like a pretty complicated subject and eventually, I do plan to pay a KPMG-like tax advisory to get to the bottom of it. However, I thought let's see if anyone here has any experience with something similar, just to get a general idea.

I trade futures online (contracts on different things like commodities etc.) on a couple of exchanges and from next year I'd like to operate it under an LLC rather than as an individual trader. Mostly for any possible tax benefits, but also to separate myself legally from the money made from trading.

A quick search pointed to Dubai free zones, and that seems good as the tax rate is 0%.

So that part is ok, but as I wouldn't be a tax resident of Dubai(I'd be a tax resident of Croatia which has CFC rules), I'm not sure how the taxation would work and if there are any loopholes to use. Also, not sure does it even make sense to incorporate over there if those rules would cancel any possible tax benefits.

To make it a bit more complicated, I wouldn't be actually doing any business in Croatia(as in selling products or services within the country), as those transactions are made online, on the US exchanges.

Did anyone deal with a similar situation? As said, I know it's probably best to pay a local tax advisor to sort it out, but if anyone has any useful info, I'm listening.

@GlobalWealth , saw a couple of your posts, any thoughts on this?

 

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[GlobalWealth]

This seems like a pretty complicated subject and eventually, I do plan to pay a KPMG-like tax advisory to get to the bottom of it. However, I thought let's see if anyone here has any experience with something similar, just to get a general idea.

I trade futures online (contracts on different things like commodities etc.) on a couple of exchanges and from next year I'd like to operate it under an LLC rather than as an individual trader. Mostly for any possible tax benefits, but also to separate myself legally from the money made from trading.

A quick search pointed to Dubai free zones, and that seems good as the tax rate is 0%.

So that part is ok, but as I wouldn't be a tax resident of Dubai(I'd be a tax resident of Croatia which has CFC rules), I'm not sure how the taxation would work and if there are any loopholes to use. Also, not sure does it even make sense to incorporate over there if those rules would cancel any possible tax benefits.

To make it a bit more complicated, I wouldn't be actually doing any business in Croatia(as in selling products or services within the country), as those transactions are made online, on the US exchanges.

Did anyone deal with a similar situation? As said, I know it's probably best to pay a local tax advisor to sort it out, but if anyone has any useful info, I'm listening.

@GlobalWealth , saw a couple of your posts, any thoughts on this?

If you are a tax resident of Croatia you are a taxable on worldwide income.

Under Croatia CFC rules, if you own or control 50%+ of a non-Croatian company then the profits of that company are attributed to you, even if you don't receive any profit distributions. Thus you would be taxable even if you didn't take the money.

I have a several Croatian tax consulting clients and there could be some options, but it is pretty complex and there are WAY to many variables that could be discussed on a public forum.

 

[Caminsky]

If you are a tax resident of Croatia you are a taxable on worldwide income.

Under Croatia CFC rules, if you own or control 50%+ of a non-Croatian company then the profits of that company are attributed to you, even if you don't receive any profit distributions. Thus you would be taxable even if you didn't take the money.

I have a several Croatian tax consulting clients and there could be some options, but it is pretty complex and there are WAY to many variables that could be discussed on a public forum.

I know jack squat about Croatian taxes, but this lines up with what I have seen from other countries (as well as OECD model rules).

 

[Kubera]

So direct ownership in a company would be an issue, no matter where registered.

A possible solution might be to register another offshore (holding) company.

I haven't looked into it properly, but the logic is that offshore company A which does the actual trading is wholly owned by offshore company B which is a holding company(which doesn't make any profits, hence nothing to tax). Anything else(like real estate etc.) owned by A could be put under B(holding) for asset protection. I could be an employee of A, and pay some income tax, which would be fine with me.

 

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[GlobalWealth]

So direct ownership in a company would be an issue, no matter where registered.

A possible solution might be to register another offshore (holding) company.

I haven't looked into it properly, but the logic is that offshore company A which does the actual trading is wholly owned by offshore company B which is a holding company(which doesn't make any profits, hence nothing to tax). Anything else(like real estate etc.) owned by A could be put under B(holding) for asset protection. I could be an employee of A, and pay some income tax, which would be fine with me.

There are too many variables to discuss on a public forum. This is not a problem you will solve on a forum. You need professional guidance.