When you want to start trading, your first question isn’t always "How do I make a profit?" Sometimes it’s "Am I allowed to do this without setting up a business?"
It’s a fair question if you want to stay within the rules.
And it isn’t unique to trading. People starting other businesses have similar doubts.
So, can you trade without a company?
Yes, but it depends on your situation.
Two kinds of trading
Legally, you need to distinguish between:
- Trading for your own account, with your own money, for yourself
- Trading for other people, managing their money
The rules are very different.
Trading for your own account
If you only trade for yourself, you don’t need to set up a business as long as you aren’t considered a professional trader.
When do you fall into that category?
If your profits become substantial and regular, or exceed your usual income, the French tax authorities may consider your activity professional.
But it isn’t just about the amount.
Even without earning thousands of euros, trading advanced financial products daily on professional platforms could lead to you being treated as a professional.
Until then, you simply report your gains once a year in the securities capital gains section of your tax return.
You don’t need to report each trade. Just calculate your overall capital gain: gains minus losses.
- If it’s positive, declare it
- If it’s negative, there’s nothing to do
So, as long as your trading remains occasional, you don’t need to create a business.
If it becomes your main activity, you’ll need an appropriate structure.
Is tax deducted automatically?
Your broker or trading platform doesn’t deduct tax from your gains.
It’s your responsibility to declare and pay what you owe.
Brokers still have legal obligations and must send certain information to tax authorities.
That’s why they ask for identity documents through KYC checks.
If you were thinking of staying under the tax authorities’ radar, bad idea.
If you’re audited and haven’t declared your gains, you could face a fine on top of the tax you already owe.
Incidentally, more than half of tax audits start with someone reporting someone else.
The moral: keep your tax return in order and trustworthy people around you.
I cover this in my full article on trading taxation, including how to report gains, relevant thresholds and tax rates.
When do you need a company?
If trading becomes your main activity, there’s no choice: you need a company.
Setting one up costs around €700. Then allow €500 a month for accounting, a business bank account, software and so on.
That’s €6,000 to €7,000 a year just to keep the structure running.
You’d better be profitable before taking that step.
What about abroad?
You can set up a trading company abroad, but only if you’re no longer a French tax resident.
If you want to trade through a foreign company, you need to leave France and settle elsewhere.
What about micro-entrepreneur status?
If you’re considering setting up a trading business, here are a few things to know.
If you trade your own money, France’s micro-entrepreneur status isn’t an option.
That regime is for commercial, craft or professional service activities, not trading for your own account.
And with the government’s new measures, it’s becoming less attractive even for other activities.
Trading for other people
If you want to trade for other people, that’s a different matter.
It’s known as managing money for third parties, and it’s heavily regulated:
- You need official certifications, such as the AMF certification
- You need a specific legal structure and authorisations
- You have strict obligations to meet
In that case, the best option is to consult a specialist lawyer who can advise you based on your circumstances.