Question:

US Capital Gains Taxation of Belize offshore(US non-resident) company trading forex through US broker?

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Hello.I have offshore company(IBC) registered in Belize. My company isn't liable to any taxation in Belize on any international profits( generated outside of Belize, which includes US). I will use this company to open trading account with US-registered broker. I'll be trading primarily forex, but also currency futures and ETFs. This will be my only US activity. I'm predominantly a day-trader, so short-term capital gains. My company WILL NOT have permanent establishment in US(so, income not effectively connected). It will not be a US resident. I'm a citizen of Lithuania and a resident of Poland.Will I be liable to any capital gains taxation in US? My broker will only withhold taxes on dividends and interest(no tax treaty between US and Belize), not on cap. gains. If so, would I need to obtain a TIN or file any tax forms notifying IRS of my cap. gains? W-8BEN ,1040NR? Or both? Will there be any backup withholding on my capital gains? What can I do to avoid it? Thanks.

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  1. In general, non-residents of the United States are not liable for capital gains taxes from U.S. sources.  This rule does not apply if you or a company you have has a permanent establishment in the U.S.

    Because your broker has no U.S. PE, you should not be liable for capital gains taxes.  Because you have no PE, you would also not need a TIN.  If you have to file a W-8BEN or 1040NR, this would be because of the other income--dividends and interest--and not because of capital gains.

    BUT--notwithstanding all of the above, if you own TOO MUCH of the stock of a U.S. company (5% or more), you could become liable for capital gains taxes if the US company is a "US Real Property Holding Company."  If you own less than 5% of the stock of any US company, you have nothing to worry about.


  2. I was recently looking for an answer to similar question like yours. Even if it is somewhat vague, I came across this:

    http://www.webraydian.com/content/view/3...

    I am planning to buy shares through a BVI company. Can you share with me the US registered broker as I only managed to find online brokers that offer their services to individual but not to companies. Also, are you able to trade online? Thanks

  3. Agree with the above answer and, according to IRS, you do not have to file a U.S. tax return (Form 1040NR) because your U.S. tax liability is satisfied by the withholding of tax.

    You are to file W-8BEN and give it to the withholding agent (not to the IRS) before you are paid, i.e. your US-registered broker is to request it from you. If you don't provide it they may have to apply backup withholding rate.

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