stock market trader - incorporate or not

I daytrade futures and currencies and am getting to the stage where it will be my only source of income. I am looking for the most tax efficient way of allowing as much of the profits over and above my personal income requirements to be retained - the more trading capital i can retain the sooner i can retire!

I will get professional advice on this but would be interested in opinions here.

I understand that if trading/investing is the primary source of income for an individual then you can't just pay cgt - you must treat profits as income and pay income tax / prsi.

One approach is to incorporate in a low tax/no tax jurisdiction - but apparently revenue are clamping down on this kind of approach.

Alternatively, set up as a company in Ireland (with 12.5% corporate tax). This gives rise to some of it's own potential issues

- I understand investments are taxed at a higher rate in companies - would this also apply if investing/trading is the primary nature of the business

- What is best way to transfer trading capital into a company - loan it to the company or transfer it to the company as equity?

- If some of the profits are paid into a self administered pension can i manage that pension fund myself or do i have to invest it in specific instruments (i could get a better return by managing the investment myself).

Anyway, as i say, interested in any thoughts and opinions

A lot of tricky issues here.

If You go the irish company route can manage the pension fund yourself, and this is the only way it would make sense I think to put your investments through a company - You would want to be making some good profits to make it worthwhile (there are incredible tax saving opportunities through a limited company pension).

Your money is then tied up in the company and in a pension - depending on your age and where you want to be, this may or may not make sense to you.

The question is whether you would get hit twice by corporation tax and then your personal tax rates when you tried to extract money from the company.

Corporate tax is on profits. "Profits" for corporation tax purposes consist of income (business or trading income comprising active income, and investment income comprising passive income) and capital gains. Problems occur after you've built up a company and the company is holding property, investments and cash - and then go to extract this. You could be hit with a bigger tax bill then you expect.

Your right - The more trading capital you can retain - of course means you can retire sooner - but if most of it is trapped in a pension you may still have to wait a bit .

A tricky area, you're going to need to go to a tax specialist - I recommend Alan Moore, He's based in the Capel Building and will be able to direct you well. www.alanmoore.ie

Hi svuhmed,
just wondering , with the benefit of hindsight, if you (or anyone else) had any feedback on your original query ? I too am looking at futures trading using interactivebrokers as a primary source of income. Is it better to go the company route , or treat profits as personal income and pay income taxes / PRSI ?
Ta.