Me and my partner are from Spain, we daytrade stocks (around 3 million shares per month). The problem is that we see that in our prop firm the agreements that we signed were for being "independent contractors". I have to talk with a fiscal advisor yet but apparently (if I'm not wrong) that would be bad because I'd like to pay taxes declaring my trading activity as an investor, not as a worker providing a service to a third party, which seems probably what I have to do due to that agreement and it is way more expensive. Is there any prop firm that would have another kind of agreements so you can have directy that position of being just an investor? I'll try searching just a regular broker too, but it would be nice if I can do that with a firm. Thank you in advance.
I'm not a lawyer and you should consult one. However, last I checked the SEC is very strict with their definition of a proprietary trader (one that trades for a company) rather than an investor. I would be hard pressed to believe you could find any prop firm that could legally mark you as an investor - at least in the states. My SWAG is that since you're not trading for yourself, and also not trading for long term capital appreciation, you're a commercial trader and not an investor. Otherwise you'd see guys in the S&P trading thousands of lots a day and claiming the same status and market makers could claim to be investors as well. However I could also see hedge funds being legitimately called "investment firms" and so again consult a lawyer and not the internet.
Why don't you ask your prop firm for the agreement paperwork? Surely they advised you of the obligations, no?
Yes, I am going to consult lawyers specialized on this subject to see what I have to do this week. As you are presenting me this I can imagine that as I was expecting that idea I had of being legally an investor working in a prop firm seems hard, I'll see what choices I'll have trading with just a broker by our own. I'm a tax resident in Spain, but I trade with DTTW. I've asked to my firm, let's see what they say. Thank you all for your answers.
This is a basic core question that anyone who has been in this business for more than 5 minutes trading profitability will run into sooner or later. There is really no simple bog standard solution to it. You really need to consult a tax specialist for this. If you really are two of you, who do not need any more leverage than just a basic portfolio trading account, then the possibilities will really begin to emerge. In short, the solution almost always revolves around a legally recognized fund structure with all the costs and benefits associated with it. There is no free lunch when dealing with tax issues. Good luck.