TAXATION Trading | Funded Account VS Own Account
Today, we will talk about something that is very, very scary. It is something that we all want to avoid but that inevitably haunts us. Today, we will talk about the Taxation Trading or paying taxes.
We will make a comparison between the taxation of futures scalping and the taxation of financed accounts. As it is something so similar, we will make an exaggerated comparison so that it is very clear to you. This comparison is only valid for Spain until a tax change occurs.
The best way is to do it with a managed account. The first thing you need to know is that a managed account or a funded account It is not your own account, it is not an account that is in your name, in fact, the account is not even real, it is an account that is in the name of a company (top step trader, One Up Trader, Gauntlet Mini™) and you dedicate yourself to doing your trading and they pay you for it.
The only thing you have to do once make a profit and go to withdraw your money is:
- Sign up as self-employed
- You have to make a quarterly income tax and VAT declaration. As they are foreign companies, the invoices are exempt from VAT and you have to pay taxes based on work performance. For example: up to €12,450.00, 19% is taxed, up to €20,200.00, 24%, and from there it goes up. up to 45% that can be paid.
How is the profit generated by day trading operating futures taxed?
The goal is to be efficient with our trading activity. You must value your cost effectiveness and the income for your economic activity among other factors.
As you can see, it is taxed at the tax rate of capital gains or losses based on savings. Up to €6,000 of profit we have to pay 19% tax. From €6,000 to €50,000 of profit we have to pay 21% and from €50,000 of profit 23%.
Is this too much or too little? It’s not much if we compare it with the work base based on how work performance is taxed, but personally, I think it’s a lot.
Trade with a funded account or with my own account?
Next I am going to explain two extremes to make you see in which cases you are most interested in trade on the stock market with a funded account or operate with your own account.
It is clear that the most efficient is to operate with a own account and win. Without a doubt, this is the most efficient. Now, if you still haven’t shown yourself that you’re profitable trading and you don’t have enough capital to dedicate yourself to trading For that money you earn to be interesting to be able to live from trading, it is clear that you are interested in a financed account.
How much is taxed for a financed account?
From taxes, if you don’t get more income from your work or you don’t get any kind of income, it benefits you much more funded account before operating with your own capital.
Why? Taxation would be based on work and you would pay only up to €12,450 19%. On the other hand, if you operate with your personal account trading would pay 19% up to €6,000 and from there 21%. Even up to €20,200 is more interesting. However, after this amount it is no longer profitable. If you reach this amount you have shown that you are profitable and you are ready to trade with your own money.
How much is taxed for futures scalping?
Now, if you want to use a financed account, you have a job, you earn money, is it interesting to use a financed account? Not really, it’s much better that you use your own account.
Imagine that you earn €60,000 a year, everything you earn with the financed account will be taxed at 45%, which is a real outrage. In fact, even if you manage to earn that minimum where the company does not charge you absolutely nothing and gives it entirely to you, which gives you that 100%, everything you earn you will have to pay 20% that you are going to give to the company once you withdraw your money and from what you earn you will have to pay 45%. It is totally inadvisable to use a funded account.
How to make the decision?
The first concept that you must value is if you are profitable or not profitable trading in the stock market.
If you are not profitable, the best option for you is a funded account. If you are profitable, an account of your own because the most expensive thing in life, more expensive than paying taxes, is losing your own money.
The reason most of the trader abandon this activity is because they lose capital and run out of money to be able to operate. And if you are profitable, of course the most efficient thing is to have your own account, you start operating from minute 1 and earn money.
The second point that you have to assess is about the taxes that you are going to have to pay. This will make our trading more efficient or less efficient.
If you are not profitable and you have no income, choose a financed account because it means that you do not even have money to operate, but be careful! if you have money too! That you earn a lot of money with your economic activity, if it is not profitable you will lose money.
If you are profitable and have no income, a financed account is the best option. If you have no income and lose your money:
- You will not have more money to be able to operate.
- If you run out of money or have no sources of income, operating with your own account is much more difficult emotionally. Having greater emotional control is going to be much more difficult.
- From the point of view of taxes, you are going to start paying taxes on those €12,450 of profit at 19% and if you pay it as a return on capital, it is up to €6,000 of profit.
If you are profitable and earn a lot of money with your economic activity, choose your own account because otherwise you will have to pay so many taxes that it will not be interesting.
Details to be considered
If you can use a funded account where you can increase your notation because you are going to trade more relaxed and it will allow you to earn more money with this trading, the funded account would be a good option. It will allow you more emotional control.
With a financed account you can leave the money in the account and you do not pay taxes on it, because the money that is in the financed account and it is not in your name, so you should not pay taxes on the profits generated in that account because that The money is not yours, so if you have to pay taxes, it is the money you withdraw from that account.
If after watching this video you still have questions, you can contact Patrimonial Taxationare experts in taxation of your income trading they already take all my taxes.
If you are still not profitable operating in trading, I offer you a training with different options, where in a short time but with common sense you will learn how to make money on the stock market. my course more basic trading is FREE and the most popular trading training is UNLIMITED PLUS with a money-back guarantee if your mentor does not show you to be profitable trading on the stock market.