Broker questions for dual resident non-US citizen

Broker Discussion
1

Hey guys,

I’m new so I also use this as opportunity to say hi :slight_smile:

My situation is the following. I am Austrian citizen. I am resident in 2 countries, one is my home country Austria and one is the United States of forex regulation.

(I want to say, that I do not intend to commit fraud or evade taxes. I do not want to get fined, I do not want to go to jail or anything else. I just want to know what is possible with the fact that I hold citizenship and residency in a European country.)

I now want to open an account with a broker that offers c-trader and nice leverage etc. So I’m eyeing a broker in the UK as well as in Australia.
I have all the proper paperwork for proof of residency in Austria. (bank statement, residency certificate, own a house etc.)

I checked with the broker, as long as residency is approved etc. there is no problem with using ctrader from the united states. Because I had the experience when I first tried to open an account with an US ip address they would not approve me, even tho all the paper work was submitted.

I am totally aware that I have to talk to a tax specialist for this, but does anybody here have similar experience? Can I use US-based funds and go ahead an just tax it in the US? Or do I HAVE to go through Austrian bank accounts/taxes and then tax again in the US?
Is there any risk for my funds? I mean after all I am proper resident in a country that should not be accompanied by any problems. I just happen to also hold the US residency and spend some time here.

2

Hello kr – Welcome to this forum.

Here’s how I see your position as a “dual-residency” trader with ties to Austria and the U.S.

1. Trading offshore while residing in the U.S.

There are no laws in the U.S. forbidding or restricting offshore forex trading by U.S. residents or citizens. So, even if the IRS (or any other U.S. agency) considers you to be a “resident” during the half-year, or so, that you live here, it has no bearing on your right to trade with a forex broker elsewhere in the world. You can trade with any broker that will take you on as a client.

2. Qualifying as a non-U.S.-resident, for purposes of opening a trading account in Europe or Australia.

Being able to open a forex account with a broker outside the U.S. may depend entirely on your ability to convince the broker of your choice that you are a permanent resident of Austria, and only a temporary resident of the U.S.

Some brokers outside the U.S. are very leery of anyone with ties to the U.S., because the CFTC (the U.S. regulator of futures and forex) assumes the authority to prosecute offshore brokers who host U.S. residents.

So, your position must be: “I am in the U.S. for part of the year, but I am not a U.S. resident.”

3. U.S. taxes.

You haven’t explained enough about your tax situation for anyone on this forum to have an opinion regarding the tax questions you raised. Besides, we are not tax professionals.

That being said, I’ll throw out a couple of ideas, with the caveat that free advice is worth pretty much what it costs.

You might want to compare tax laws and tax rates in Austria and the U.S., and then make your deposits and withdrawals to and from your European forex broker from whichever country offers the best tax terms.

If you have no U.S. tax obligation at present, you shouldn’t (in my opinion) risk creating one by sending U.S. funds to an offshore broker. In that situation, you should (in my opinion) trade with Austrian funds.

But, I’m just thinking out loud here. As you mentioned in your post, you should consult a tax specialist.

1 Like
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Hey Clint, thanks for the welcome and thanks for your answer.

  1. was already pretty helpful, because I wasn’t sure if there is a law or not, and as I plan on tax everything properly that is definitely good to hear. I kind of figured, because it was already possible to sign up with unregulated offshore brokers, but I consider the risk to do that way to high.
    I basically really just want to enjoy the benefits of higher leverage and cTrader.

  2. Is basically ticked off, as I am already approved, after I attempted to sign up a second time from Austria. They wouldn’t approve me when I signed up with an US-ip address, so you are right, they are very leery of anyone with ties to the US.

  3. Tax situation is following
    Austria taxation on forex would be 27.5%

US taxation would be with the 60-40
60% taxed with 15%
40% taxed with 37% (my current tax bracket)
this leads to a mixed and effective tax rate of 23.8%

therefore even tho i’m in the highest tax bracket, tax situation in the US would be better. Not a big surprise considering that Austria quadruple taxes you on everything they can, so 27.5% might even be on the lower end of it.

Anyway, just to be on the save side of things I will definitely still consult a tax specialist, so i’m not running into any trouble.

I do appreciate your answer, that was definitely helping me with the points that I was expecting to get answered online!