Hi guys, I'm considering to open an account with a major Futures brokerage house in the U.S. I live in Europe had don't have any like to the U.S.A. Do you know if I would have to pay any taxes in the U.S.A. if I am trading (from europe) with a U.S. broker? thanks ..
Look up information on IRS form W-8 BEN that can be filed with the US broker that you choose ( if you are trading as an individual).
W8-BEN is indeed the form to claim Tax Treaty benefits of a reduced rate of holding but you still have to know what those "benefits" are for your own particular country. You did not specify what *country* you are a resident of and this is critical since countries, not continents, enter into tax treaties. In general, there is no U.S. withholding tax on capital gains (ie. purchases and sales of securities), but there may be (varying by country) on dividends and interest. However you may receive an offsetting credit in your own countries tax system. See the tables by country at http://www.irs.gov/publications/p515/ar02.html#en_US_2012_publink1000225127 To make it easy on yourself, open with a broker such as Interactive Brokers that has European offices and will therefore be familiar with taxation in both the U.S. and your own country, and be able to provide documents appropriate for filing in most European countries as well. Or open with a European broker. Of course these both deal with trading by Europeans in U.S. securities on a massive scale.
''Tax treaties. Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.'' What does it mean,''gambling income''?
By 'true gambling' you mean speculation?am i correct? So the stock trading activity is a subject for taxation in US for the foreigners,is that true?
Gambling as in roulette, poker, horse racing, etc. NOT including stock "speculation". I already said above that only dividends and interest are subject to U.S. tax depending on the country. Trading by foreigners is not taxed as such. People from all over the world buy and sell U.S. stocks and futures without paying tax on their gains.
Trading in futures will not give rise to U.S. tax either unless interest or dividends are paid (for example, on T Bills).
Thanks for the link. I knew trading gains are not subject to US taxes, but did not know about the dividend offset.