Why Take a Licence for your Securities Trading Business?
A Securities Dealer Licence is a licence that allows a person to trade in securities either as a Principal (on its own account) or as an agent (on behalf of its clients). This licence is beneficial for you if you trade in securities on behalf of your clients and you wish to attract more clients. The licence will give your firm more credibility in the eyes of your wholesale broker and your clients and offer tax benefits.
A lot of trading stock / securities is performed by unregistered company or freelancers. As an individual or sole proprietor, un-licenced or individual traders cannot take advantage of the tax advantages and asset protection strategies which are otherwise available to licenced companies.
Since income from trading is considered as passive income, the tax charged is same as any normal tax paying individual. All business expenses like education, a trading platform, software, internet access, computers etc., are excluded from deductions.
The only advantage to being considered a passive trader is that the income derived from trading is not subject to additional self-employment taxes. To be tax effective, active traders look to qualify for licences. The qualified trader is allowed to file for rebates and hence deduct business running costs as mentioned earlier.
A Legal Trading Business
Qualification processes may often be tedious and hence a trader can opt for incorporating a legal trading business and thus avail these tax benefits. The only way to receive the same tax treatment as a qualified trader is to create a separate corporate entity to trade through. By creating a limited liability company or a limited partnership, you can receive the similar tax treatment as a qualified trader.
For successful traders, most advisers would suggest business structures that have multiple entities to maximize the tax and protection benefits. Such planned structures can help save up to 30% of revenue; simple example would be to have a contracted management fee to take advantage of the multiple tax strategies available. This type of business structure also provides excellent asset protection because it separates the business from the individual.
An easy very cost effective way to obtain these licences and be tax optimal is to look at suitable jurisdictions like Seychelles, Dubai or Belize.
Why Seychelles?
- Quick turnaround time to get licence
- Modern and flexible securities law
- Well regulated jurisdiction
- Minimum capital requirement is USD 50,000
- Reasonable licence fees
- Low tax rate (business tax rate is 1.5%)
We at Abacus Seychelles can help you get the Seychelles Securities advisor licence. Our Service advantages include:
- Formation of the entity for Securities Dealer
- Assistance in completing all application documents and filing the application
- Renewal of Securities Dealer and Securities Dealer Representative Licence
- Provision of registered office
- Assistance with opening bank account
- Preparation of financial statements and facilitating annual audit of financial statements
- Provision of compliance (including statutory filing with the regulator) and AML services to the licensee
- Provision of virtual office services
- Facilitation of holding of Board of Directors Meetings and general meeting
- Maintenance of registers and other records of the licensee
