…Zero point zero
I am writing for some assistance. I have read many posts about how much tax forex traders pay in different countries. I reside in Canada. My profits for 2012 shows 131k. That profit is based on my “equity,” not my account balance. Unfortunately, I never really made the money (131k) as there was never any real “paper gains.”
Let me go back a bit. I lived in a different country in Asia until early 2011. I never claimed my forex income in that country (never had any gains to claim, either, only losses perhaps). Once I got to Canada and filed in 2012 for the 2011 tax year, I was showing some major forex losses. My accountant told me that I could choose from one of two options. One of those options was to choose to become a “speculator.” With that option, I couldn’t later change my status and I also believe that I was unable to write off any previous losses. However, all trading that I do would be taxed as “capital gains” and not “employment income.” In Canada, capital gains tax regulations means that one is taxed on 50% of their profits. So, for example, if I were to incur 100k in profit during a tax year, I would only be taxed on 50% of it. The other 50% would be tax-free. Obviously, with the expectation of doing more trading into the future and with my accountant’s suggestion, I chose the “speculator” option.
Now, showing 131k in equity gains (and not a dime to really show for it), I am very confused and my accountant is in the same boat. He talked to some of the biggest accounting firms in our city and can’t find anyone with enough knowledge / experience to assist. Their only suggestion is to send it to Toronto, where there apparently are accountants who have experience with forex and could assist (for about 2k!).
I am completely dumbfounded and don’t have a clue what to do. My accountant doesn’t want to touch it, either.
I guess the main issues here are: (1) is my income solely based on my equity? and (2) are there any ways an accountant could assist with this?
If this post struck a cord and you can help, please respond at your earliest convenience. Tax filing deadline is fast approaching.
THANKS
I know this thread has not been active for a while, but I thought I’d help those who have paid their taxes previously. I am an accountant by trade and have been in dispute with HMRC for over 7 months now interpreting dozens of case law which argues whether forex trading is taxable. What people say on this forum about HMRC having the tendency to tax those who make lots of gain and deny losses for others is fairly correct.
However, I think this can change now. I have letters in my hand showing HMRC admitting their position that the activity of forex trading, whether you make a gain/loss, is considered gambling and in particular informed gambling. Thus, gambling in the UK as most of you know is not taxable as many case law have shown. But this is not an open and shut case where you can just say its gambling. It is highly technical and interpretation of about 7 different cases to present that argument.
So if any members here have previously erred on the side of caution and paid taxes on their forex trading in an individual capacity (as opposed to through a company structure) and had another occupation whilst doing it, you MAY be able to claim your tax back. This is for both those who paid it as revenue or those who paid it under capital gains.
If you want more details, feel free to send me an email or post on here. Just FYI. I am not working as a tax accountant, do not work for an accounting firm and most importantly not charging you a fee or anything like that. What I can do is to be transparent and tell you whether you should seek professional advice given your set of circumstances so you don’t pay for your accountant to do research. This is just me wanting the HMRC to be fair and not have different tax treatments for the same circumstances just because they can tax people.
soo complicatedd… i’m just gunna have to keep trading till i start making more and if they DO start taxing, i could just hop onto the first ferry to isle of man… 0% stamp duty/capital gains tax 
atleast they are straight forward about it.
Wow I need to move to the UK. I’m not sure about the tax code here in the US because it’s extremely complicated. I think 60% is taxed as capital gains(15%) and the 40% is taxed as income(depends on bracket). I dont quite understand it though. Any US citizens here that have paid taxes on forex gains?
Any profit gained from Spread betting is not taxable since SB is considered as gambling in UK and is exempt from taxes.
But as for Forex accounts it is still not clear if the tax is considered as IT or CGT? As I myself do not reside in the UK I do not know the answer to this for sure. Can any person in the know confirm this please?
spoke to a tax advisor about it, he said a spread betting account is essentially gambling (in their definition ofcourse) which is tax free, so you are NOT entitled to declare any income (or losses) you make through it on your tax return. however, unlike with a normal forex account, you cannot make tax deductions if you make any losses. ie if you start with a £10k account and lose it all within a year, you’re £10k down with a spread betting account, whereas with a normal forex account, you can use that £10k as a deduction, so the next £10k you make, regardless of whether its through your day job, or other investments, will be tax-free.
its a funny loophole because if government start taxing gambling again, they will have to start giving deduction to gambling losses. lets be honest, more money is lost through gambling every year than money made through spread betting forex, so they’ll be making losses because of all the gambling deductions.
it depends on many things including your trading style. if you day trade, they will class you as a forex trader, so you’ll get taxed IT. whereas if you swing trade or any long term strategies, they’ll class you as a forex investor, and you’ll get taxed CGT. its a bit more complicated than that so you should speak to a tax advisor to confirm.
In Belgium is trading only tax free when you have a job beside. I have a job as a waiter at top events and I choose my hours myself. I think I work max 60h a month so trading for me is tax free.
If I didn’t have had a job I’d pay 33% taxes to the government. Which I don’t want!
do you have links to actual law articles for that ? as i see it it could be money made on foreign investments which comes down to taxable 15 to 25% and not 33% like you say, the part where you can make millions and not pay a cent if you have a job sounds a bit strange, are you sure, did you verify, can you point me to someone who knows the law on this i havent found ONE consistent line relating to forex actually so far.
Also, what is considered profit ? is it all the plus i have at december 31 ? or is it what i withdraw and choose not to re-invest since money that stays in there can be locked in a trade and prone to loss and is not really money you actually [I]have[/I] in your hands to spend ?
Some solid info on the matter would be most appreciated, but frankly i think theres no law in the whole book mentioning it. That money made on foreign investments is the closest i could find since theres a box for that on the tax form itself.
What you say, that you dont have to pay taxes on money you make on the side IN BELGIUM ? sounds frankly unbelievable, if i have an independent job on the side of my main job i dont pay taxes on that up to a certain sum, anything i make above that is taxable, im sure its not as simple as you say, and once again : if you have any solid info with articles from the law included they would be most appreciated
the only loophole i can see where you dont have to pay a cent is the same as uk, if its considered gambling then all gains would be absolutely tax-free, but if its not considered anywhere ?
please, if you have anything, sorry for repeating myself, do share
edit : im just thinking of something else, IF what you say is correct then an easy loophole presents itself once oyu make enough you file for euh … btw-nummer ? say you start a business selling empty beer bottles at a loss or at zero profit, all you need to do is pay your quarterly , euh , social … dunno whats it called in english (you take that from your trading profits) and [B]everything[/B] you make on top of that would be totally taxfree since your ‘main’ income would be your zero profit independent small business?
hell, lets go wild and say you might even get a deduction in your quarterlies if you sell your bottles at a loss in your ‘main occupation’, who knows
sounds like a dream in that case
Hi Leon, I am also from the UK and have moved to trading binary options, i was looking into this issue and have found a great source of information with this article about taxation in the UK at whatsbinaryoptions.com, i might send you the link once i have 5 posts on this forum.
Currently a resident of Kuwait and the tax rate is 0%. Don’t hate me :60:
Is there anybody that know the rules in Denmark?
I reside in Canada as well and I declare my Forex gain the same way I do on the stock market meaning that 50% of my positive win-loss difference would be taxable as per my tax bracket. I don’t know if you should stay with your accountant but in doubt the best thing to do is go straight to the source… Call Canada Revenue Agency!! Get all your answers and make sure you write down a resume of your conversation, date and agent’s name to protect you.
same for Belgium, please, anyone who has actual factual information WITH links to actual law text because im starting to think its a grey zone which can be good or bad but in case of legal dispute always turns in favour of the state unless you got the money to go public for a long trial and work public opinion i suppose … something solid, decent and with source of info … please not someone telling me he can do whatever he wants as long as he has a job since that will not be happening in belgium
I don’t know what the rules are in Netherlands. Profiforex told me that I am responsible for paying my taxes and that they do not forward any information to my country. I have not been paying any taxes, but I don’t know if the government or responsible bodies will deduct tax from my account in the future. Is anyone from Netherlands here?
In the Netherlands you have to pay property tax. Till +/- 17000 Euro is taxfree. Above 17000 Euro you pay only 1,2%.
im gonna correct myself partly on that :
someone working for a bank who does forexs as well told me and i quote mail one :
'XXXX’Bank België verleent toegang tot de markten van de Forex en CFD’s voor rekeningen vanaf 10.000 euro’s.
· Wel kunt U op de forex handelen zonder onderhevig te zijn aan swappunten. Dit is enkel mogelijk als U via de CFD’s op de Forex handelt.
· Transacties op de Forex zijn actueel niet belast in België. De winsten die u boekt, zijn dan ook netto.
"
mail 2 :
Wat betreft de beurstaks dat u actueel heb op financiële transactiekosten is enkel toepasbaar op gereglementeerde markten zoals de aandelen of futures. Aangezien de Forex of CFD’s OTC-producten zijn, heeft U daarop geen belasting.
since it applies to people in belgium i didnt bother translating it, if you like theres google who can do that for you.
So apparently, beste Joeri, there are no taxes on profits made on forex until the new government which only just exists finds out theres more to be grubbed, so maybe by 2016 , or maybe not since if they change it a lot of our dear politicians will fall into places where they need to pay taxes where their money is invested. But for now it seems we are safe so sorry, its just weird to have something in belgium which isnt made unappealing by the governments
I am from the US and need help with taxes. For my first year, i did not make any money. But should i declare it as tax deductible or file any documents? This second year i have made some money, but still not recuperated my losses from the first year. Are the profits subject to tax?
Leon, Forex and spread betting are not the same thing
Forex is taxable in uk, its up to you to notify the inland revenue because if they find out you have not you will be hit hard