hi all! i'm quite confused with all the taxes. if i have a trading account with a US broker, my bank account is in europe, what are the taxes that i have to pay? i know the broker have to declare your earnings to the US tax department, which you can claim back afterwards as you don't live in US. but i understood that you will have to pay some taxes as well in your country of residence. what if your bank account is not in your country of residence, let's say in switzerland ? do you still pay taxes ? any approximate numbers on the amount of taxes ? just want to understand well. there is nowhere where all those tax things are well explained. i'm not against paying taxes, but i assume by default that taxes will tend to be high/very high in western europe. thanks for your kind reply !
every country has a different tax treaty agreement with the IRS Go to www.irs.gov and type in the country name where you have the passport from not where you reside or where your bank is The most important thing is your citizenship not your residence when you log in to www.irs.gov, in the search box type in the name of the country and then type in "tax treaty" It all varies depending on your citizenship.
and type of profits(if there is any).. http://www.investopedia.com/ask/answers/06/nonusresidenttax.asp#axzz1Yb6IAn9q
Capital gains by non-resident aliens are not taxable by IRS. sign a W8 form so they dont withhold your profits, your broker have that for you. and where your second question is concerned, that is tax evasion. You are trading from your home country and will be deemed to have generated income from there, having a foreign account does not absolve you of this obligation, they WILL get YOU. specially for lousy shit swiss and liechtenstein accounts that have no secrecy now with all the leaks and stuff thats going on. You want to do it, try going to Asia, where breakage of bank secrecy laws by employees is grounds for the death penalty. I am not advocating tax fraud btw, its simply for educational purposes Do whatever you want
ok, i see. so, basically, the broker will get in touch with the the IRS or the tax department in my country to declare my earnings for them to know how much of tax i'll have to pay in my country.
oh, i knew that swiss were cooperating now on all this tax evasion stuff, but i didn't know it was that bad. what i still don't understand is that the broker (let's say IB), from what i read on IB website, reports to IRS in US your income. then, as you are not living in US, you have the right to claim those taxes back. but, either IRS or the broker (not sure which one), at some point of time, reports your income to the tax dpt of your country of residence as well. so, even if the bank account that you use to transfer in and out money from your trades is in HK or wherever, the tax dpt will still know. and even worse they will suspect you are doing tax evasion because you hold an offshore bank account, so they will start investigating on your case. so it would be maybe better in this case to just open a bank account in your country of residence. well, that whole process is still not too clear to me, as it must be for most of us i assume...