Which tax regime for proprietary trading?

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Own-account trading consists in speculating on the financial markets on your own behalf and not on behalf of others. To carry out such an activity on a regular basis implies respecting some legal constraints. In particular, it is essential to have the status of a company which is subject to specific taxation.

What status for own-account trading?

To trade on own account, you must have a company status. As long as the trader works for himself as a sole trader, whether it is an EI or an EIRL is very suitable. The company has the legal status of a “natural person”. Also known as a “partnership in its own name”, this structure does not have any assets allocated, the latter being generally assimilated to that of the founder. To protect his own property, the company’s creator should therefore rely on an EIRL (limited liability company). In the end, proprietary trading is practiced as an unregulated liberal profession. The trader is then a self-employed, self-employed worker.

What kind of taxation?

Taxation differs depending on whether trading is carried out on an occasional or regular basis. For the occasional trader, it is not necessary to incorporate a company. Nevertheless, capital gains taxes will have to be paid at a rate of about 24%.

In the case where trading is carried out on a regular basis, a company (EI or EIRL) must be created. This rule applies to any investor who trades full-time, in which case he or she is engaged in a regular activity. He then becomes a “professional trader” and is subject to income tax at a progressive rate. In addition to having a professional status, it is mandatory to declare NCBs or Non-Commercial Profits.

trader tax

Three types of taxes must then be paid: income tax at a rate of between 15 and 30%; tax on dividends on shares (after deduction of 34%); and tax on social security contributions at between 10% and 15%. In total, total taxation on capital gains is between 25% and 45%. It should be noted that it is possible to adopt a real plan. In this case, it is possible to subtract the costs that are related to the activity such as renting a room or using a computer (and an Internet connection)..

Good to know

In the event that a trader invests on behalf of others, then manages the money of a third party, he no longer acts on his own account and must obtain authorisation from a regulator, in this case the AMF or Autorité des Marchés Financiers. The same applies if he plans to give advice to other traders. In the latter case, it must have the status of “Financial Investment Advisor”, which is subject to specific regulations, always by the AMF.

To be sure that you are trading properly, in accordance with the law and tax laws in force, it is strongly recommended to seek advice from the local tax inspector, as this type of consultation is free of charge. This professional can even offer advice in written form, which can be used as appropriate, if necessary.