As far as I know it's close to impossible to open a personal account with a foreign fx broker if you're a US citizen/resident. What is the case if you form an LLC in Nevis or an LTC (similar to LLC) in New Zealand and you would open an account for this company? You're the 100% owner and the director of the company and you'd pay for a foreign business address so the company would be not a US entity. This doesn't lead to any tax reduction since you still have to pay your taxes just like if you'd use a domestic LLC. I'm thinking about this only to be able to open an account with a decent ECN broker. [ Btw the first challenge would be the business bank account for this company as a US owner... but now let's focus on the fx trading account ] Please list any non US broker which let's you open a business account with your foreign company.
I think there is no way to open it in legal way. However one of my US fellow trades on account opened on offshore broker for his non-US friend. It works fine for him as he doesn't pay taxes from profit.
That's totally illegal my friend He should have told the brokerage company that he is not the beneficial owner of the account. That is tax evasion and ... Anyway it's a clever idea, lol
Perfectly legal from a US/CFTC-perspective, but you'll likely have trouble finding a reputable/regulated non-US broker that will open the account, simply b/c their compliance department will be overly cautious and want to avoid any US-linked account. Also, avoid the NZ incorporation, you'll need a resident director which will add cost, and getting LTC status isn't guaranteed. Less cost & headache going with any IBC. Lastly, if you incorporate anywhere offshore, as a US citizen you'll have to file the annual IRC-5471 (a massively complex return), as well as the FBAR and other filings.
Thanks for the info although I knew these. There is no other way if you're a US person because this is your last hope. IBCs are quick, cheap and easy to form but banks are not willing to open an account for them so a New Zealand LTC is a better choice even with the added costs. Other not so offshore (and bad) looking alternatives would be a UK LLP, a Gibraltar Ltd, Jersey Ltd, Isle of Man LLC or a Singapore Ltd. These are more expensive than any IBC but at least you can open a bank account with them. I've contacted the major ECNs in Europe, Australia and New Zealand and all of them told me to write them an email because they're not sure while Pepperstone told me that they can accept a non US entity even if it has a US owner and director.
True, though be prepared for uncertainty & headache when it comes to opening that non-US bank account, regardless of which jurisdiction you chose. It's not easy these days unfortunately.. Best of luck with it, and please let us know how it works out for you.
Just because you have a second passport it won't make you non-American... if you'd use your second passport to open an account then you'd need another address and "life" in another country and you should lie on your account opening form because 99% of the brokers and banks requires you to tell them if you're an American citizen or resident. It's a great idea if you want to renounce your US citizenship though.
Yes, I know, it's not easy at all. Only one broker so far (Pepperstone). You know, I'm just trying to find a solution for all of us. So many traders are complaining about this crazy situation.
I've been there done that. There is no simple solution that works these days. I used to use LCG back before the US regulation. Not anymore, any broker that would take you on you most likely won't trust to hold your money at this point. It doesn't matter what path you go, part of the account setup process always contains some form of kyc process that will require information on beneficial owners of a company no matter where its formed. As trader KGB said you'll also have to file some complicated taxes for ownership in an offshore company. I have a interest in a few and it costs me quite a bit for compliance etc. Last thing you want to do is get hit with an fbar penalty, they are steep. There are simply too many hoops to jump through, it's quite frustrating if you ask me. The regulations the US put in place simply make it too expensive and unfavorable for offshore brokers to meet the requirements , 20mil deposit on top of the cost in meeting all requirements then they can be fined up to 2 mil for any slip up. On top of that the decreased leverage for us clients drops their revenue in nearly half it simply isn't worth the risk for them. The only real way to do it with a legit broker is if you meet ecp status. See attached doc.