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Swiss v US brokerages

  • #1
  • First Post: Jul 5, 2007 7:12am Jul 5, 2007 7:12am
Hey guys,

long time lurker, first time poster. Really love the site, and I have learned a lot.

I am curious as to the advantages of opening a Swiss Forex account as opposed to a US one. I notice that the process for opening a Swiss account is a bit more difficult. Are there tax reasons to work with a Swiss broker? Other reasons that are important?

Appreciate it,
David
  • #2
  • Jul 5, 2007 11:58am Jul 5, 2007 11:58am
Recommend US broker personally. Not just the open-account procedure factor, but also the regulation authority.

At least in China, US broker gained more popularity than Swiss broker.

regards.
Trading is a business
  • #3
  • Jul 5, 2007 12:54pm Jul 5, 2007 12:54pm
Quoting BenZona
Hey guys,

long time lurker, first time poster. Really love the site, and I have learned a lot.

I am curious as to the advantages of opening a Swiss Forex account as opposed to a US one. I notice that the process for opening a Swiss account is a bit more difficult. Are there tax reasons to work with a Swiss broker? Other reasons that are important?

Appreciate it,
David
Some Swiss brokers have US offices so that they have a US presence... Oanda is one such broker. As for tax purposes, it doesn't matter where the account is, the broker is not required to report your income to the IRS (the same is true with futures brokers)... it is assumed that the trader/tax payer will do this on his own. The only brokers that are required to report income to the IRS are gains made from stocks, equity options and interest bearing instruments (bonds, money markets, etc.).

However, this doesn't mean that you never pay taxes on your FX/futures income. If someone in the IRS notices that you've suddenly got a lot of money, they're going to get suspicious and start an audit.

Futures income is taxed on capital gains, but in a special provision that considers 40% long term/60% short term capital gains. FX income can be taxed the same way, or as income through foreign investments, where it is taxed as ordinary income. Though some FX traders switch between one type of taxation or the other to pay less taxes, the IRS doesn't like that and would want you to fill out a form declaring which type of taxation you choose.
  • #4
  • Jul 5, 2007 1:13pm Jul 5, 2007 1:13pm
Quoting bluebuddha
Some Swiss brokers have US offices so that they have a US presence... Oanda is one such broker. As for tax purposes, it doesn't matter where the account is, the broker is not required to report your income to the IRS (the same is true with futures brokers)... it is assumed that the trader/tax payer will do this on his own. The only brokers that are required to report income to the IRS are gains made from stocks, equity options and interest bearing instruments (bonds, money markets, etc.).

However, this doesn't mean that you never pay taxes on your FX/futures income. If someone in the IRS notices that you've suddenly got a lot of money, they're going to get suspicious and start an audit.

Futures income is taxed on capital gains, but in a special provision that considers 40% long term/60% short term capital gains. FX income can be taxed the same way, or as income through foreign investments, where it is taxed as ordinary income. Though some FX traders switch between one type of taxation or the other to pay less taxes, the IRS doesn't like that and would want you to fill out a form declaring which type of taxation you choose.
In the US they report to the IRS
Patience + Humility + Study = Success
  • #5
  • Last Post: Jul 5, 2007 1:33pm Jul 5, 2007 1:33pm
Quoting DutchTrader
In the US they report to the IRS
Nope... really, it's not required for the broker to report this information. As to whether the broker will volunteer that information to the IRS is another matter. Capital gains from stocks and futures are reported on 1099B form, and interest from bonds, etc. are reported on 1099INT form.

Income from equity options, future options, single stock futures and FOREX transactions are not reported on the 1099B. Again... it is assumed that it is the trader's, not the broker's, responsibility to report this type of income. Here's a sample of forms that Interactive Brokers sends out to the IRS and its customers.
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