US prop trading solutions for remote European traders

Discussion in 'Prop Firms' started by ovisan, May 16, 2012.

  1. syrre

    syrre

    http://www.irs.gov/pub/irs-pdf/iw8ben.pdf
     
    #11     May 16, 2012
  2. You can only use a W8-BEN to escape US taxes if you are a retail trader. I repeat if you are a prop member and are paid on a K-1, you will be taxed on effectively connected income as you are deemed part of a partnership situated and with income ARISING from the United States, in fact the W8-BEN form itself says so.
     
    #12     May 19, 2012
  3. The best way for foreign traders IMO is simply a retail account, I think thats also the reason why many foreign traders trade futures instead as they have access to leverage without all the rubbish.

    The biggest problem is the prop firms are formed as US partnerships, which is why if you become part of it, you are regarded as a domestic entity for taxation purposes.

    If you are a foreign retail trader, income does not arise from a US entity, income does not accrue to a US entity but to you, therefore you are entitled to keep all your profits.

    Even on a K-1, I dont believe the broker will withhold from you and its your onus to file with the IRS. Of course If you dont file, I suppose the IRS could instruct the brokerage to withold, freeze your account,etc...not too sure about that.
     
    #13     May 19, 2012
  4. syrre

    syrre

    Not from London setup, but I guess thats not what OP is looking for..
     
    #14     May 19, 2012
  5. I've consulted with a tax attorney about this, and it's considered gray area. The reasons being:

    - the foreign person is not receiving distributions/profits at the brokerage level as a class a partner, they only are receiving distributions as class b partners based on their personal profits/losses trading equities for their account.

    - they are not receiving a salary, and are being charged a commission, which effectively makes them a customer account with a relationship more similar to a brokerage, which is exempt.

    - any profit split that they give to the firm, they do not receive back in the firm distributions (similar to point 1), since company profits are not distributed to class b members.

    essentially, as "partners" they carry financial risk in the firm, but have no upside gain for that risk. so, while the company may be engaged in an effectively connected business, the foreign partner through his class b holdings is not... they are simply trading stocks which is not effectively connected. if the foreign partner were an actual class a partner participating in firm profits, then it WOULD be connected with a business in the US.

    the attorney was pretty adamant that a good case could be made if challenged and was working on a letter for a large offshore group. take that for what it's worth, and seek your own counsel, but it seemed pretty doable.

    the other option to be safe, would be to setup a corp in a treaty country with low tax, lease the trading strategies/technologies to an onshore entity that would be the class b member, and have the onshore entity pay a royalty to the foreign entity. profit.
     
    #15     May 24, 2012
  6. ivan75

    ivan75

    Not sure if you have it in Sweden, but I teamed up with a trading group here in Moscow that trades with International Brokers (www.ibworldwide.com) as a broker. They accept independent traders too and offer leverage up to 10:1. Been with them for almost a year now and so far they've been very professional and great support. Even if they're offshore your capital is protected since they clear through LEK Securities in UK, and the clearing account is protected by the clearing firm and SIPC insured. IM me if you have any questions and I'm happy to tell you about my experience trading with them.
     
    #16     Jan 12, 2013
  7. i'm looking for place us traders can trade european stocks
     
    #17     Jan 12, 2013
  8. Nevis Trading. They are also a sponsor here. http://www.nevistrading.com


     
    #18     Jan 13, 2013