The Best Trading Tax

Trading Taxation: Nobody likes to hear about taxes, especially in trading. Independent traders in Switzerland, Belgium, and Luxembourg won't have the same hassles as those residing in France. But we'll try to make this topic as pleasant as possible!

Taxation in Trading

In France, the Taxation related to trading differs depending on whether the activity is professional or occasional. For most independent traders, profits from stock purchases, CFD trading, or capital gains on real estate are taxed at a rate of 30%.

• 17,2% social levy

• 12,8% tax, you can choose your income tax schedule.

The tax environment may seem heavy in France, but it is the blow of life in this country. If you are a French resident, do not seek to avoid taxes. It's a waste of time and money. There are two inevitable things in life: death, and taxes. We can't help you with tax optimization in the offshore islands.

But we can help you better understand French, Swiss, Belgian taxation and the main OECD countries.

Day Trader: How Do Taxes Work?

Taxation, in other words taxes, is one of the most difficult things to understand. And the reason is simple: the rules governing taxes change all the time. So one of the first steps when you want to face the administrative machine is to be well informed, and to keep up to date.

But that's not all. By touching on the taxation of financial products, it is not only the French administration that you must understand. Because all financial products are international. And to really deeply understand the taxation of all financial products, bonds and different types of stocks, and even different types of dividends, you would need an encyclopedia.

This is why this article will be only one approach to taxation for the This will be sufficient for beginners to complete your tax return at the end of the year. If you have any questions, you can leave them in the comments at the end of the article!

The Single Taxation

When you open an account on a trading platform, you have access to different financial products. In theory, all these products are different, and they all have their own legal status. But in fact, you can consider that all your gains on a trading platform are of the same nature.

For the state, each trade is of the same nature. And the taxation that applies to this trading is as follows:

• All trading operations must be noted, gains and losses

• On the profits, 30% will be taken in tax.

• You can carry losses from one year forward for the next 10 years.

However, you need to know something: when you start, you often have many more losses than gains. However, you can carry these losses forward to the following year, and the year after that. In fact, you can carry forward trading losses for the next 10 years. This allows you to break even before having to pay taxes. It's avantageux!

The PEA, a Tax Niche

Stock traders will be interested in this particular taxation. That of the PEA is veryvantageuse for stock trading, in other words investing in the stock market. In addition to offering all European markets, the pea entitles you to lower taxes, you zero. So you want to know how it works?

A PEA is an action savings plan that can be offered by any French bank or bank with branches in France. In reality, it is not a savings plan comparable to bank books. It's more of a stock portfolio.

The particularities of the PEA are that you can only use it to buy and store European shares. In fact, the PEA allows the government to direct part of the savings of French people into industry and European companies. And it works ! Especially since with the PEA you benefit from a taxvantageworn.

With the PEA, you are not under the same tax regime as other trading accounts. On a trading platform you are taxed at 30%, according to the PFU. But the PEA is only taxed at 17,2%, ie the value of social contributions. It is the income tax rates that are disappearing.

For those who are not taxable, this does not change much, but for other French investors it is a great opportunity. And for the French government, it is a way of attracting capital to European companies. Everyone seems to be a winner in this formula!

The Great Trading Assets

Taxation is related to the nature of what you trade. But when you trade, you can come across a wide variety of different assets. We have selected the most common specimens to help you see more clearly in the Taxation of trading!

The Tax Regime of Shares

Shares are investments that give the right to two types of returns. On the one hand, you realize capital gains on the resale of your shares. On the other hand, you can earn dividends. In both cases, you are taxed at the scale of the PFL Single lump sum deduction, of 30%. This levy applies to profits from capital gains, and to dividends.

This way of simplifying the The taxation of trading originated with former Prime Minister Edouard Philippe. His government reformed trading taxes. From now on, many financial products are taxed using the same model as stocks, with a flat tax rate of 30%.

This 30% is made up of 17,2% for social contributions, and 12,8% for flat-rate deduction. Moreover, it is important to specify that you can choose to remain on the tax scale of your income tax.

ETFs and their Taxation

ETFs, also called trackers: These are actually Mutual Funds. Thanks to them, you can invest in gold for example. Because ETFs follow the value of a reference asset. For example, a gold ETF will track the price of gold. So you can invest in gold without having to buy and sell gold around the world.

In fact, the tax authorities consider that an ETF is the grouping of the capital of several investors. And so, it's a kind of condominium investment. So it's the same as actions legally. Often the state does not bother to create an ad hoc legal framework. On the contrary, he prefers to be a little lazy.

So you pay 30% on all the profits you make with ETFs. You always have a possibility: some ETFs are eligible for the PEA. Thanks to this, you will only have 17,2% tax on your profits.

CFD: Contract with Different Taxation?

CFDs are Contracts for Difference. CFDs are the most widely used in trading. When you trade with a CFD, you open a position. As long as you don't close your position, you pay usage fees.

For CFDs, the taxation that applies is identical to that of the shares that you have on your securities account. It is therefore a tax of 30% of the profits made. With stock trading, losses can be carried forward for 10 years. And this is also the case with CFD trading.

Taxes are related to the fees you pay. When you use a trading platform and when you open positions, you pay different types of fees. And the fees can eat into any earnings you have left after the 30% tax. So do not hesitate to inquire about fees in trading!

Obligations and Taxation

PFU, Prelèvement Forfaitaire Unique, is the tax system for bonds. Like equities, bonds benefit from the reform of the Trading taxation. You are therefore subject to a 30% tax on the profits generated by your bonds.

Bonds do not work exactly like other financial products. The broker, or the intermediary who sells you the bond ticket, charges you 12,8% for income tax, and 17,2% for social security contributions. Like a VAT, you have nothing to declare or pay at the end of the year. But if you choose to be taxed on the income tax scale and you are below 12,8?

If you choose the IR scale and you are not taxable, then you have nothing to pay. However, if your broker automatically deducted 12%, he will return them to you. And it's kind of nice to see our trading platform paying us taxes isn't it? In addition, bonds allow you to invest your money with minimal risk. And it gives interest rates!

Forex Taxation

Forex is one of the favorite assets of traders. This is the Foreign Exchange, the market for foreign currencies. This is the market where the euro is exchanged against the dollar, the yen or the pound sterling. And this market determines the exchange rates between states! It is one of the fundamental markets of the modern economy. But why does this market attract traders from all over the world?

In France, the taxation of currencies is tidied up with the trading of other financial assets. Day traders who use forex also benefit from the unique taxation of the Macron law. So a 30% tax on their profits.

Forex has severalvantages on other financial markets. If you start trading, you will see that not only are there different asset classes, like stocks and bonds, but also different stock exchanges. There is a stock exchange in New York, one in Paris, one in London, another in Tokyo etc. However, stock exchanges are not night clubs, and these companies close at the same time as the Post Office. As each country has its own time zone, most marketplaces are closed on a rotating basis for 18 p.m., usually from 15 p.m. to 9 a.m. And you can add to that the closings on Sundays and public holidays. The traders are on the same union demands as the railway workers!

The First International Trading Market

Thanks to the internet, you can trade at any time of the day or night, in markets on the other side of the world. But closing trading every day bothers a lot of traders. So all the traders got into forex trading, because it's a market that never closes. In addition, forex has characteristics that make it a good asset for trading, such as its level of volatility or its liquidity.

Like the previous financial assets available for trading on your favorite broker, gains from forex are taxed at 30%, according to the PFU. However, you can opt for the IR tax scale if you are taxed at less than 12,8%.

In the past, all these products had their own rules and the Trading taxation used to be very complex. Many traders faced two obstacles when starting out in the profession: succeeding in trading, which isn't easy, and understanding the tax system. Today, thanks to the tax simplifications implemented by Édouard Philippe's government, filing taxes is no longer the main obstacle to becoming a profitable trader!

It is possible to make trading a regular activity. Since the rise of online brokers and platforms like TradingView and Metatrader 5, there is no longer a real technological barrier between the Wall Street trader and the independent trader. However, you must have extraordinary motivation to succeed in making a living from trading. It is an activity that requires a lot of energy, but also a lot of capital to be able to generate real profits.

What Tax Rate for Trading Abroad?

If taxation in France has been simplified, made accessible and in a certain sense, almost humanized, what about our neighbors? We toured the various countries bordering France, to see if the grass is really greener on the neighboring side.

Trading in Belgium and Taxation

If you are a forex trader on your own account in Belgium, the taxation seems similar to that of France.

You have two solutions. Either you make trading your main activity, and as such the results are taxed by income tax. Once again, it is the benefits that are in question.

Either you are an individual. Again, two solutions:

• you manage a family patrimony, and you do not trade (no regular transactions, patrimony inherited or resulting from savings).

• you trade or speculate (a lot of buy/sell transactions, speculative investments)

In the first case, the Belgian government does not tax you. The profits and returns you may have on your savings and long-term investments are not taxable.

In the second case, on the other hand, your income is considered as “miscellaneous income”, and taxed at an arbitrary rate of 33%. This is the case, for example, of Forex trading, which is considered speculation only.

So it's a matter of perspective! You can think of stock buying as wealth management or as trading. The Belgian Federal tax office advises to get closer to a tax office. Internet users recommend that they contact Belgian brokers directly and ask them the questions that are bothering you.

Switzerland, Trading and Taxes

Switzerland is a paradise on Earth, you can escape to its mountains and its banks. Swiss taxation enjoys a reputation that is second to none. In addition to the financial scandals, many films have highlighted the great love that binds Switzerland and money. And trading is no exception for this small federal state.

In Switzerland, traders are not taxed on their transactions. And the only ones who pay taxes are the professionals. And Switzerland only taxes the profits of the latter.

Many traders decide to open a trading account in Switzerland for this reason. But if you are a tax resident in France, you must pay your taxes in France, regardless of the country where the traders were made!

Swiss regulation remains complicated like all regulations. And it is common to use the services of an expert to open an account in Switzerland and not pay taxes. If you make mistakes you risk paying penalties and fines.

Taxation of Trades in Canada

The taxation surrounding trading in Canada is not kind. What make us regret leaving France if you chose this destination to find a more trading friendly environment.

Regardless of where your earnings come from, whether from capital investment or day trading, you must pay 50% tax on the profits. This includes stock selling, or forex trading.

If you are a business, then this income is considered business income. And you are taxed on it according to your tax schedule, like income tax in France.

In this case you have the samevantage than in France: you can carry forward your losses. Small difference however: you do not carry forward your losses to the following years, but to the other commercial activities that you carry out. So you can pay all your business taxes with your trading losses. Not bad !

Trading and Germany.

Germany is a country that attracts a lot of traders, for all types of products. Forex, CFDs and Shares, and for good reason: Germany has long had a very lax policy in place in terms of tax levies on profits and capital gains.

The latter are taxed with the same scale as income tax, i.e. 15%

The Case of Luxembourg

Forex traders often inquire about Luxembourg taxation. This small state neighboring France is seen as a Tax Paradise by its European comrades. But when it comes to trading, this prejudice turns out to be misleading. Luxembourg does not allow expatriates to benefit from feesvantageux. And Luxembourg tax residents aren't particularly well treated either. Only hasvantage for the latter: they have the right not to pay taxes if their income comes from annuity or the investment of their savings.

As is the case for Belgium, moreover: goods that are in the investment domain are not taxed. For example, the shares your employer gives you, or the investments you inherit. So what makes the difference between these assets and trading? Once again :

• the frequency of buy/sell transactions

• the speculative aspect of an investment: a large sum of money invested with a high risk

• resell assets shortly after purchasing them.

• Forex trading is considered speculation

For residents of other avantages in the tax schedules. Because you are taxed on profits at the same rate as Luxembourg income tax. And this rate is 0 before 11 euros! It’s from 265 annually in France. And as long as you stay below 6600 euros per year, Luxembourg will be a destination tovantageused fiscally for you. Provided you are a tax resident there!

Malta, the island of the Mediterranean?

What is the state of Maltese taxation for Trading? It is present in the tax landscape of Malta. This state considers income from trading to be commercial income, and applies income tax. In addition to more scalesvantageux that in France, you benefit from tax exemptions under certain conditions.

Malta has built its taxation on exceptions. The basic rule is tough, but you have different ways to get around it.

• companies in the EURO zone can set up without paying taxes

• some residents may not pay taxes

• and many other special cases

The best way to know thevantages of Malta, and to see if the country presents anyvantages for own account traders, contact a lawyer specializing in taxation and trading in Malta!

Andorra, Paradise for French Traders?

The taxation of trading in Andorra is interesting. It is a small state wedged in the Pyrenees, between Spain and France. It is the nation of the Basques, mountain peoples. And the country does honor to its inhabitants: lost in the mountains, you will have to drive 3 hours to reach the nearest airport.

As often, small independent countries survive thanks to trade, by applying lower taxes. Andorra attracts many cross-border commuters to buy cigarettes, gasoline, and even to trade. You can benefit in this country from a VAT of 4,5%, and a tax rate on stock market capital gains of 10%. But that only concerns dividends and leveraged products!

Because profits made on companies in which you own less than 25% of the capital are not taxed. This means that unless you are a business owner, you are not taxed. So capital gains on Facebook shares are tax-exempt for everyone except Mark Zuckerberg!

In addition, Andorran financial products provide access to more affordable taxes.vantageuses only simple margin trading offered in all countries around the world.

You have two solutions:

• become tax resident, simply by spending more than 183 consecutive days in the municipality of Andorra. This is passive residence. 
• make a business creation request, and create a company or a micro-enterprise. The residency is said to be active, but this status takes longer to obtain.

To trade as an individual, passive residence is enough! Once there, manyvantages are available to you, such as an ideal living environment for the family, the price of many very attractive products, and also the proximity to Barcelona and Toulouse.

Dubai, the Eldorado?

Non-existent taxation, zero-rated CFD trading, and buried human rights.

To summarize the situation in Dubai, it is indeed a tax haven. You pay no tax on your trading activity. That's it forvantage main office in Dubai.

Now, if the country has simply abolished the taxation surrounding trading in its state, it is for good reasons: it is difficult to bring foreigners, especially French and Europeans, to this place. In addition to the hostile climatic conditions, and the questionable air quality, you will have to deal with armed and global conflicts which could ignite the region at any time. Also, you cannot own 100% of a company in Dubai. Not even 50%. The limit is set at 49% held by a foreign national and at least 51% by a native.

Finally, it will also be necessary to turn a blind eye to the inequalities between men and women, to the treatment of certain workers which is close to slavery. If taxes are your only consideration, then you'll be like a fish to water in Dubai.

Spain: Taxation of Proprietary Traders

Profits from trading are declared as capital gains under Spanish law. Thus, they are taxed at the same rate as income from savings, which is as follows:

• 19% for the first tranche, which includes income ranging from 0 to 6 euros.

• Then you are taxed at 21% for the portion ranging from 6 to 001 euros.

• Finally, beyond 50 euros, you will have to pay taxes of 000% on your profits.

It is therefore lower tax rates than what you will have in France. In addition, you can carry your losses over to future years, but only over 4 years, compared to 10 in France.

Estonia, the Digital Paradise

Who would think of going to the end of Europe to combine taxation and trading?

Estonia is a country on the edge of Europe, opposite the great and threatening Russia. For the record, Russia has carried out numerous computer attacks against Estonia and the other Baltic countries. The response of the attacked was to strengthen their defenses and their IT security, so much so that IT has become Estonia's strength.

Today this country is known for its attractive framework for the development of all IT activities, which includes cryptography and trading. In addition to offering innovations in these areas, the Baltic state seeks to attract brains and capital with preferential taxation.

Profits are taxed at 20%, butvantageThe most interesting concerns the ease of opening a business, which lasts on average 10 days, the absence of corruption and banking secrecy, which make it a healthy state. Finally, if you invest the profits of your business, you are not taxed on it.

Consult the French tax service to find out if Estonian taxation is compatible with French law.

London

Trading is one of the City's specialties, but the tax framework will undoubtedly change radically after Brexit.

London, capital of the United Kingdom, is at the center of a very complicated country in terms of trading taxation. The word that would best designate the law of this island is undoubtedly “foggy”. Like the mist that surrounds the Thames. And it's really a thick fog. In the United Kingdom, there are three types of taxes: depending on your status, pro or independent trader, you will be subject to one or the other of the taxes. And depending on your type of trading, the frequency of your orders, and your gains/losses, you will still be judged different. So to sum up,

• the trading tools you use

• the currencies you trade with

• the intensity with which you are trading

• if you are investing, not trading

here are the points on which you will be judged to know how much tax you will pay. And to find out which category you belong to, you must consult a state agency, Her Majesty's Revenue and customs (HMRC), which is the English tax administration.

However, everything we know about Britain, especially in terms of taxation, taxes, duties, borders, everything is about to change, for better or for worse. So today, on the eve of Brexit, it's probably a bit early to analyze the United Kingdom as a destination for trading. On the contrary, Brexit brought many traders from the City of London to La Défense in Paris.

The Morocco

Taxation for trading has not particularly increased in Morocco.

Morocco seems to have a bad reputation with countries that fight against tax evasion and evasion. For example, OECD countries have kept Morocco on their list of tax havens, despite the Kingdom's efforts to fight tax evaders. But trading has already disappeared from the Moroccan horizon.

Trading is very regulated for the Moroccan population, which has only recently been able to take money out of the country. Some expatriates could practice a trading activity, especially in Forex. But this situation ended in 2016 when new laws were passed, to show Westerners their credentials.

Moreover, trading in the most common forms can be considered contrary to the rites of the Muslim religion. Like, for example, leverage. This is one of the reasons that may explain the weak development of this activity in Morocco.

Is the Netherlands a tax haven?

Does the Netherlands have a tax system?vantageused for trading? Dutch law isvantageuse for businesses, and many brokers open their European headquarters in the Netherlands. However, the factors that can attract international companies are not the same as those that can motivate an independent trader.

And yet In the Netherlands, capital gains on movable and immovable property are not taxed. Only thedividend tax is taxed at source at 15%. This is the only rate you will find in the Netherlands.

So yes, the Netherlands seems to be a very nice destination for trading. And also to live! So why not…

Taxation Avantageused in Portugal

What is the taxation of Portugal for trading? This country is discreet, at the end of Spain. But like Ireland, like Estonia and like Malta, finance is a means of finding a place in the European economic game. Each of these countries attracts capital and brains, entire companies and also traders.

Portugal has a policy in place to attract brilliant people from all over the world. These are called non-regular residents. It is a tax status which allows you to givevantages to people with high added value, such as designers or traders.

25% income tax rate, compared to 48% at most for other types of residents! and your dividends will be subject to a rate close to 28%. But these havevantageThey are not the only ones. To attract people with potential to their country, the Portuguese include tax giveaways on inheritance, gifts and other taxes.

Israel, A Fiscal Reserve in the Middle East

Taxation is therevantageuse, and not just for trading.

Until recently, Israeli taxation wasvantageUse for an expatriate: the Hebrew State does not tax income from abroad. But this situation changed in 2017 and you will no longer be able to benefit from thisvantage tax for trading.

However, Israeli tax rates are particularly low. Dividends and capital gains, whether from stocks, trading or real estate, are taxed at 20%. This is a particularly high ratevantageux, especially if we consider that the country is a powerful and stable country. However, the warlike desires surrounding Israel could frighten more than one independent trader.

Individuals: Beware of Online Trading in Europe

Online, taxation applies to trading based on your tax residences, not the broker's residence.

When you trade online, you can quickly become a customer of a foreign company without even realizing it. So be careful if you want to avoid certain tax problems. For example, if you want to be comfortable with the French tax authorities, French brokers are required to provide an IFU, acronym for unique tax form, which traces your trading transactions in the event of a tax audit and for your declaration. annual tax. If the broker you are trading with is not in France, there is no obligation to provide you with this IFU, or even your transaction history. That's why you have to keep your trades up to date in a register in some cases!

It is therefore particularly important to know the country of origin of your trading platform. If you know that your broker is domiciled in France or in a European country, it also tells you about the legitimacy of the establishment. Beware of obscure platforms that come from the end of the world, in a totally opaque tax haven such as offshore islands, the British or American Virgin Islands.

When you choose to go into tax exile

What there is to know :
French taxation may discourage you from trading. But know that most of themvantagetax s of these countries are avantages that you can have if you are residents of these countries. However, on average you must reside for more than 183 consecutive days in a year to benefit from this status. If you want to become a tax resident in one of these countries, you therefore renounce your French tax residence. These two things are important, and you should keep them in mind when you choose to go into tax exile.

France has a heavy tax system. It is a fact. But in France you benefit from avantages that you won't get anywhere else. For example, the standard of living, healthcare, the police, the crime rate... We tend to believe that France is hell on earth. But it is one of the best countries in the world.

If you leave, you will have the choice between a really low tax rate, in Dubai for example. But are you going to give up French landscapes and the French quality of life to settle in Dubai? There you don't know anyone, you don't have the habits and customs, you're not used to the climate...

European tax havens

Then we have the European countries. Portugal, Switzerland, which are close to France but with a tax systemvantageworn. But here again, you will have to give up your loved ones, your habits and sometimes your language. If taxation is truly what concerns you most, then these are undoubtedly destinations where you will thrive. But otherwise, you might regret leaving.

And don't think of fooling the taxman, by pretending to live abroad to take advantage of the tax climate and the Parisian climate at the same time. The control tools available to the French tax authorities are powerful, and collaboration between the various European services has become effective.

Why Make a Declaration? What Are the Risks of Fraud?

In France, the tax administration is not kidding. If you wanted to fool the taxman, if you deliberately filled out a bad declaration, here is what awaits you:

0,20% monthly interest on the amount of unpaid tax. And this rate is calculated from the beginning, not from the moment the taxman claims it. To this, you can add between 40 and 80% increase.

For example,

If Mr. Fraud hid a trading gain of 100 euros from the tax authorities.

• He had to pay 30% tax on this gain. He therefore owes 30 euros.

• The control takes place one year later. It is therefore 12 months of flow.

• The tax authorities demand an 80% increase.

When the tax authorities establish the fine, it is therefore

• 30 + 000*0.002*12 + 30*000

• Which gives us

• 57 euros to pay.

Tax penalties are proportionate to the offenses you commit, as shown in the following chart.

The Tax Return: How to Do It

To declare your income from trading, two lines must be completed. These are the lines

• 3VG

• 3VH

• You can also declare your losses, which are deductible from your gains over 10 years.

The tax declaration is much simpler with French brokers. French brokers, or French banks that offer stock trading or portfolios, are required to provide you with an IFU. It is a single tax document, the Single Tax Form. It is issued to allow you to properly declare your income without making any mistakes. It is a manual for the tax declaration, which your bank also sends to you annually.

This is one of the reasons why the choice of a broker originating from the country in which one resides is important. Indeed, when you choose a broker in the country where you are a tax resident, you are sure that the broker will be the closest to local law. This way, you will avoid any administrative problems that could lead to severe fines.

If you stay in France, then the choice of a French broker is very important. If you don't have an IFU, and the broker doesn't send you your trading history, then you're almost sure to make rough tax returns for your trading operations. So beware of the tax adjustment!

Step by step

To declare your gains or losses to the French tax authorities, you must start by having the history of transactions. There are three scenarios. Either you yourself noted each transaction in a register or an excel document. In this case, you have the most comfortable place, and you have probably gold and already calculated the profitability. By adding up each win, and subtracting each loss, you get your winnings.

Second scenario, you obtained the history via your broker. If he's French, that won't be a problem. But if he is abroad, nothing obliges him to keep an up-to-date register of your transactions, nor to communicate it to you. In some cases, the trading platform offers you an excel file for 40 euros. And sometimes they just don't have it

If you are faced with this last scenario, then you will have to deal with a vacuum. Several choices are available to you, either you try to complete the transactions from memory, knowing how much you had and what you won. Otherwise you can simply declare your profits and hope not to come across an audit. But we advise you not to do that: the wisest thing would be to contact the taxes directly and ask them, to show your good faith.

The Best Time To Do It

Nobody likes to take their Saturday afternoon to see the tax office. As no one wants to take their Friday afternoon to go to the dentist. Yet you have no choice. Don't wait until the last deadline of December to go to the tax center to ask your questions. You may have to wait even longer, and you will regret not having hurried.

Taxes are due at the end of the calendar year, i.e. December 31 of each year. And on this date you can already count penalties that you will pay. So don't wait until November to ask yourself questions about your tax system or your tax bracket. Go there whenever you have a question. They're here for that.

Over time you get used to

No one can know the tax return by heart because it changes during the year. Aside from administrative law buffs and tax inspectors, few people keep up to date with tax changes, until they receive the IFU.

But once you have completed your first tax return, everything will seem easier. It's like filling in a much more complicated registration form. The problem often is to find the supporting documents, to find the receipts and the proofs of purchases, to calculate the taxes which you owe etc.

And always be vigilant, because if you pay too much it is not the taxman who will come knocking on your door to give you back your money. Conversely, if you make a mistake on your declaration, you will have to pay interest, and you risk an increase if the tax authorities consider that you have acted in bad faith.

Stay Informed

Trading taxation is as important as industry news on Tesla or statements from the ECB.

So even if you don't have an intense love for tax law, look at the taxation that affects your sector to a minimum. If your trading business is growing and you can grow a business that is a core business, then you should hire an accountant as soon as possible. With an accountant, you will no longer have any problem to ask yourself and you will be able to go about your business freely. But obviously, the budget that this represents will make you realize that this kind of investment is reserved for the wealthy.

The cost of a balance sheet for one year varies between 1000 and 10 euros. So it's up to you!

5 Tips for Declaring Taxes Easily

Here is a summary to help French residents. If this is your case, and you trade in order to have an additional source of income, then these 5 tips are for you. And you should take them, write them down on a little piece of paper, and hang them on the wall next to your computer. These tips will allow you to avoid all the problems you may have had with taxes, with taxation and trading. Let's go !

1. Keep a Transaction History

Trading transactions are commonplace. It is with many transactions that a trader manages to generate gains. On these transactions some are even losers. When you pay fees, you pay taxes in a way. Tell yourself that you pay these taxes on losses.

With French taxation, you pay tax on earnings only. Finally, on profits. You must therefore know perfectly well the gains and losses you have. And not just keep your winnings. This is the trap that many traders fall into: as it is the profits that are taxed, you are forced to keep the history of all transactions to be able to prove that you have not hidden money somewhere. So in the event of a tax audit, if you do not have a register and the broker is not resident in France, you will have no chance of recreating the transaction history perfectly.

If you are dealing with the tax authorities for the first time and this problem arises, it may not be serious. If you've committed small amounts, and you're being honest and cooperative, then you can hope to get away with a call to order. But if the financial and tax authorities think you're hiding something, then beware. Especially if you are known to the tax services, or if you have other irregularities in your declaration. The tax administration does not joke with trading, or with anything else. They're not really funny.

2. Declare your Accounts for Taxes

"Tax Declaration" is not what you think of when you start trading. And yet!

When you create a new account on a new broker or a new online trading platform domiciled abroad, you must make a declaration to the tax authorities. For this, you must fill out a form, number 3916. You can also fill out a declaration on free paper. In any case, you must keep the tax authorities informed of certain information relating to this online trading platform, namely

• the name of the account owner

• the country of residence

• the country of the broker

• the date the account was opened

• the account number

• in brief all the information to identify with certainty the account and link it to your tax person.

You are required to declare these accounts. If you do not do this you will be severely taxed in the event of a tax audit. For French brokers, no worries: the country in question automatically reports the account to the French tax authorities. Another onevantage for having chosen a broker resident in France! And this is also an additional reason to find out precisely about the country of origin of your trading platform.

3. Do not do Tax Optimization with a Small Budget

Tax optimization can be the dream of some people who see their meager, hard-won profits being requisitioned by the French state. And it's not uncommon to see amateur traders, who live on the RSA or unemployed and who enjoy the fruits of the French state since birth, it's not uncommon to see people like that feeling anarcho- capitalist from their first euros earned in trading.

First, be aware that trading does not create any value. There is no benefit for the industry or for humanity. When you trade, you make money that another trader, less good than you, lost. The same money you will lose at some point or another. And you could compare this to a lottery or casino. It is therefore normal that you pay taxes. You have to know how to be a little generous and royal. Otherwise what's the point of having money?

In addition, tax optimization is not for small sums. If you don't have more than a million euros, you will lose money with the tax evasion schemes you see in the movies. These are models of tax evasion based on economies of scale. This type of arrangement becomes profitable after a certain threshold, but below a certain amount it is not worth it.

However you can find interesting solutions with the PEA

4. Go for Less Taxed Solutions Like the PEA

The PEA is not tax evasion, but it is completely legal and positive optimization for the economy. The PEA is exempt from the 12,8% tax which represents taxes on income in trading. With that, the PEA is taxed at only 17,2%. The reason for this state pardon is that the PEA is limited to European stocks.

With this tax “optimization”, you have the possibility of reducing your investment costs to levels that certain tax havens that we have seen previously do not offer.

17,2% on earnings in equities, knowing that equities are very volatile products, which are likely to be the speculative engine of your portfolio. It's very interesting for setting up investment and trading strategies, and why not a financing plan.

5. Consider Taxation

The financing plan must be made at the very beginning of your life as an investor. It is a map, a guide by which you know where you are starting from, where you are and where you are going.

In other words, it's a plan that tells you how much money you had when you started investing, how much money you have, and how much money you'll have when you finish. And the term, the objective are obviously elements that you decide.

When we start investing, we place ourselves on relatively short periods, such as 1 or even 5 years. With trading, we always place ourselves in very short periods, a few hours. But these trades can fit into funding plans that you spread out over decades.

For example, in a case where you have put 90% of your investments in very secure and unprofitable positions. At that point, you have 10% of your capital left to speculate aggressively. With the remaining 90%, you can borrow and request leverage effects that will be provided by your savings.

Gross/Net Financing Plan

So if part of your money is placed for the next 20 years, you can have trades happening daily.

The financing plan must take into account the gains that you will make, that you will seek to obtain. And it must take into account your profitability. It is therefore the gains but also the losses: your financing plan must assess the potential losses of trading, but also the costs of use, transaction and taxes.

The choice of tax residence, and the choice of tax optimization are therefore decisions that you must make before you start trading, when you make your financing plan. This shows you how important and basic these are in trading as a freelancer.

The final word

If you are new to trading, this article will have told you how to understand the tax return. As a newcomer, you are in luck: the taxation of trading has been considerably reduced recently. Not only are you less taxed, but it's much simpler. 30% for all profits, that's for sure!

Now that you know how to complete your tax return and know how much of your profits will have to go to the tax authorities, you can make your financing plan. Last step before starting to trade!

What Taxation for Offshore Companies?

The taxation of trading in offshore areas is simple: there is no taxation. You benefit from 0% taxation if you set up a business in an offshore zone.

What is the difference in taxation with the Macron law?

The Macron law to simplify the taxation of forex trading and other types of trading. All profits from investment and speculation are taxed on their profits at the PFU rate, 30%. 17,2% for social contributions, 12,8% for income tax.

What Taxation for Students?

Students have no special status. The only thing that can make a difference is their age. If you are under 18, you cannot open a trading account. And if you don't have any income, you're going to have a hard time opening a trading account. Because these platforms check your identity and creditworthiness when you create an account.

What is the Best Specialized Forum?

For all questions on taxation and trading in general, Andlil is a reference. For two reasons: the community is great, and the speakers who answer you are always very well informed and very interesting.

What is the Tax Regime for Online Trading?

The tax regime for online trading is the same as the tax regime for traditional trading. If you are a tax resident in France, you must declare your trading gains made via Revolut. Even if these gains are made online. There is no tax regime for online trading. This is the same taxation as for normal trading.

Who are the Best Brokers on the Market?

Our trading community particularly appreciates the following brokers: Vantage (for its welcome bonus and leverage), Axi (for its customer service) and eToro (for its simplicity).

If you have any questions, feel free to leave them in the comments!