Tax on forex trading with ACM?!

[User]

I was enquiring opening an account with ACM, www.ac-markets.com.

They say that 'there are no taxes on Capital gain in Switzerland on FX operations'.

Would this save me from paying tax on forex profits?!

Please could anybody elaborate on this issue. All help would be much appreciated...

 

[JonnyT]

If you are located in the UK then there certainly is UK Tax potentially payable!

 

[Roberto]

It's not necessarily quite as simple as that, Jonny.

If you leave the profits offshore and never bring them back into the UK, they may not necessarily be taxable at all.

In the UK we don't have the US-style law of taxing people on all their worldwide income. So it depends whether you need to bring any profits back here. If you are using them e.g. for overseas property purchase, or just to spend on holidays, as some people do, they may not be taxable at all. All IMHO, check with an accountant.

 

[JonnyT]

Then you would also need a foriegn back account?

JonnyT

 

[farzin]

You are both right! and very wrong too!

Jonhy and Reberto are right to some extent. :idea: But the tax issue is a bit more complicated than that. Regarding the UK tax regim I must say it depends on your domicile. If you are an ordinary UK resident or citizen with strong relationship in the UK (for example you have been living in the UK for last 17 years etc...) you are most probably a UK domicile :cheesy: . Then you must declare all your income from around the world regardless from where you made that money and it would be a criminal offence and tax evasion if you don't. Scary huh.. .. but if you are not in domicile category then as long as you do not bring the money in the UK, then you should not be liable to pay tax on that earning. But the problem starts when the tax man knocks on your door and asks you if you traded in the UK and made that money while living in the UK . Then it might be again another story. The tax man might ask you to pay the tax since the business was conducted in the UK. So as you can see the tax issue on your foreign income can be very tricky. My suggestion is that you should consult with a tax advisor before doing anything as it can be a life time headache for you. I wish you a happy and successful trading.

Cheers

 

[roguetrader]

I suspect it is all very complicated, this will be my first year back in UK so no doubt I will find out in due course.But just to confuse things a little more, I was told by an accountant that if your trading takes place through a broker based overseas, on overseas markets, you must still declare your earnings but will not be liable for tax until you bring said earnings into the UK.

Think all these views enforce the need to take professional advice on the matter.

 

[User]

Thanks for the replies guys...

Think all these views enforce the need to take professional advice on the matter.

I think I'll take some advise from a 'professional' just like roguetrader is suggesting!

 

[roguetrader]

Thanks for the replies guys...



I think I'll take some advise from a 'professional' just like roguetrader is suggesting!

I would imagine you should be able to get free advice from your local inland revenue office, and if they put it in writing you could keep it and use it against them at some point in the future if it is wrong.

 

[Roberto]

Then you would also need a foriegn back account?

Definitely.

Regarding the UK tax regim I must say it depends on your domicile.

Indeed. And being domiciled abroad is not the same as being resident abroad. But my contention is that IMHO there are some circumstances in which people who are both resident and domiciled in the UK can pay no tax on some trading profits if the trading is conducted and the profits kept offshore.

The tax man might ask you to pay the tax since the business was conducted in the UK.

We are discussing business which is _not_ to be conducted in the UK, but in Switzerland, I believe?

In any case, the point on which everyone posting is (predictably and wisely) agreed is that an accountant should be consulted!

 

[User]

In any case, the point on which everyone posting is (predictably and wisely) agreed is that an accountant should be consulted!

Yes definately!

 

[farzin]

Business Conducted abroad!

Well. Having an offshore broker like ACM etc and doing your traded through them...( in eyes of tax man) is not same as conducting your trade from abroad . What the tax man wants to know is who made the decision to buy or sell and from where. If you have used a managed service where ACM or anyone else decided for you and you are not UK domicile then yes no problem, you can keep your money out of the UK for yourself . But if you use their online platform and give sell or buy instructions yourself from the UK then you are liable for tax and must declare it . Roberto says there are occasions you can be domicile and resident in the UK and pay no tax on some of your income abroad. :?: I will be delighted to know what those occasions are and how it works because not only me but also our accountant and auditors (who happened to be one of the first 3 international auditors in the World ) do not know about it . Of course if you do not disclose your income on your tax return you might get away with it without tax man knowing it but then there is another issue of morality of what you are doing which I don't think is a subject of our discussion. So Roberto please enlighten and educate us.

Thanks

 

[chump]

no,I havn't heard of that either Roberto unless you are alluding to the separate use of a trust or Ltd Co vehicle set up for the purpose of trading with the view that you will change domicile before you drawdown gains from the vehicle in which case this is not specifically the individual legal entity trading .

 

[farzin]

Offshore company not always the answer!

unless you are alluding to the separate use of a trust or Ltd Co vehicle set up for the purpose of trading........

Sorry chump.. you seem to be wrong too. Even if you set up an offshore company and the company trades, if you are in the UK and trade for that company's account, now the problem is even worse since the domicile issue is not an issue any more and the tax man definitely wants you to pay tax on the company's profit as the decision maker is sitting in the UK. This part I am sure of 110%

Regards

 

[chump]

No, in this I am not wrong ,but you have misunderstood the issue I was making of "separate legal identity" and "execution". What you are saying re the point of execution and the "legal identity" of the person making the decision is correct,but it is not actually what I was saying.

 

[Roberto]

Roberto says there are occasions you can be domicile and resident in the UK and pay no tax on some of your income abroad.

So I have been told in the past by a chartered accountant, but I'm afraid I don't recall the exact circumstances (which turned out not to be applicable to me anyway!). I specifically remember him explaining that this is a great contrast between the US and UK systems, because the US (unlike the UK) always taxes it citizens on their worldwide income. I have certainly also read many times of this distinction and I think it's reasonably well-known and widely acknowledged.

I can't comment much further except to say that it certainly seems logical and correct to me, if the business isn't transacted in this country and the profits are not brought into this country, but that's mere personal opinion from a non-accountant and not worth much, I appreciate.

Of course if you do not disclose your income on your tax return you might get away with it without tax man knowing

No; I was certainly not referring to anything like that!

At one point I was thinking of a similar arrangement to one or two of the plans mentioned above, which is why I went into it in some detail, but I actually decided to switch all my trading over to spread-betting and avoid the tax that way instead. So the other alternatives are no longer relevant to me.

Sorry not to be able to be more helpful, or even more specific.

 

[chump]

Hi Roberto,
You got some bad advice there...you are liable here (UK) on the basis of worldwide income..just take a good look at your next self assessment tax return page 2...not a grey area this one...and as to your 'logical' take on "if the business isn't transacted in this country and the profits are not brought into this country"...I'm afraid that is not how it works...who is making the commercial decision and where is he resident and how is he related "legally" to any realised gain/loss will be the crux of what determines liability.

 

[Roberto]

You got some bad advice there...

I see ... well, lucky for me I didn't try it out that way, perhaps, then. Thanks for the information, Chump.

 

[PilgrimPL]

What in case that I'm a Swiss Resident. I live there over 180 day/year. I trade forex profesionally. Do I have to pay taxes from Capital Gains?

Any one trading from Switzerland?