Capital Gain Tax

[Jloox]

Hi all,

I am not trading yet and before going further I would like to consider Capital Gain Tax (which may be more important than focusing on low fees brokers finally).

To present my situation quickly: I am a Hong Kong resident with French citizenship so I pay my Income Taxes in Hong Kong only (hopefully!).

I reviewed some brokers and may consider opening an account with US based Interactive Brokers but I am afraid that I will have to pay Capital Gains Tax to the US (even if there is no Capital Gains Tax in Hong Kong) as it seems there is no Tax Treaty between the two countries (http://www.irs.gov/businesses/international/article/0,,id=96739,00.html).

From IB website, Non-US persons have to fill a Valid Form W-8 (http://www.interactivebrokers.com.hk/en/p.php?f=tax&ib_entity=hk). Is there any Hong Kong resident on Trade2Win who filled this form already? Did you qualify for a reduced rate of withholding when opening an account?

Many Thanks

 

[Jloox]

I found an interesting article on http://www.isla-offshore.com/going-offshore/cgt-exemption-for-foreign-trader/

The example taken is very similar to mine (except that it is a company in jurisdictions like Dominica, Belize, Seychelles or another tax haven jurisdiction having no double taxation agreement with the U.S., like Hong Kong in my case).

To summarize, I would pay taxes only on income from interests and dividends (flat rate of 30%) but nothing on income from Forex for example (which is the underlying I want to focus on).

This is a good news but I would feel safer if anyone could confirm...

 

[Jack o'Clubs]

To be honest, that's the sort of thing it would be worth a few quid seeing a professional tax specialist about rather than asking for advice on a forum.

 

[A Dashing Blade]

To be honest, that's the sort of thing it would be worth a few quid seeing a professional tax specialist about rather than asking for advice on a forum.

Agree, there's nothing more expensive than bad financial advice.

 

[soldintime]

I never paid capital gains on US shares from a US broker. That is why you fill out the W-8 form. I am a UK trader.

 

[marlintrdg]

I never paid capital gains on US shares from a US broker. That is why you fill out the W-8 form. I am a UK trader.

Does your US broker hold back 40% of your profits until the next tax year and do you have to submit a 1099-B form along with your W-8 until your broker gets around to it?

 

[N Rothschild]

no

 

[marlintrdg]

no

That must be nice.

 

[Jloox]

Thank you all for your answers.

I found other useful links for Non-Resident Aliens (for those interested by the subject):

http://www.investopedia.com/ask/answers/06/nonusresidenttax.asp
http://invest-faq.com/cbc/tax-non-us-nat.html

As suggested by Jack o'Clubs and A Dashing Blade, it may worth looking for a Tax Advisor finally.

That said, I will not be married with my broker and I will be free to change my broker overnight if I see any change in Tax Regulations (although I may not avoid IRS for that fiscal year).