Protecting your Forex trade with offshore company

Protecting your Forex trade with offshore company

Why protect your Forex trading account behind the offshore company?

Offshore companies often share and use forex currency exchange (Forex), because there may be some tax advantages in the use of offshore companies to the owners of the broker’s exploitation accounts, another immediate benefit, is the total privacy of the beneficial owner.

This may seem insignificant to small or new traders, most veterans of the industry agree, that marketing large sums of money in their own name is not the best solution. This becomes more complicated, if the person who commercializes the money of other people does so through the means of solving administrative accounts (also known as PAMM in some cases). In such a case it is literally reckless to have accounts in your own name.

Perhaps the last thing the intermediary needs is a disgruntled customer, who knows all their personal data. Or consider the scenario where a fund manager presents a summary of his previous statements – he probably would not want his personal data to be shown in the proposal. Possibly some protection of privacy can be achieved by placing commercial accounts in the name of a local company. However, we always advocate the use of geographical and legal separation in the form of offshore companies, to significantly improve protection.

Opening your account in the name of the offshore company

A typical structure is the creation of an IBC or LLC company that does not require data from the owners of the company to present publicly, with a “nominal” director and shareholder as part of the corporate structure. Despite what you may have read elsewhere, you can open an institutional broker account yourself, it is not a complicated task. In most cases there is no need to outsource the task to the supplier of the offshore company.

Most Forex brokers are well used to offshore companies, opening accounts without doing fuss and certainly not a controversial practice. In fact, some US customers choose to use offshore companies to have to open accounts with foreign brokers that would not otherwise be received by US citizens directly, due to the strict regulations of the CTFC (Cmmodity Futures Trading Commission). This varies according to the agent and as usual, you should check on the latest regulations made in your country.

If you are a currency trader, that handles high volumes and is able to open USD 50,000 – 100,000 commercial accounts, we can introduce you to a first level liquidity provider based in London. They only open institutional accounts, but offshore companies (although owned by US citizens) can meet the requirement.

Speaking of forex brokers, be absolutely sure to perform the due diligence before opening your account. In general terms, you should only consider reputable brokers in well-regulated financial jurisdictions, such as the United Kingdom, the US, Singapore, etc. Unfortunately, the industry is still plagued by unreliable agents. Many of the runners to avoid are located in international destinations such as Cyprus, Panama, Belize, Mauritius, etc. Keep in mind that we are advising to avoid those places to open Forex broker accounts. On the contrary, many of these offshore jurisdictions are the perfect choice to open offshore companies that hold your forex account.

Tax implications

Remember that you should always look for good local tax advice as a first step. The opening of the offshore company with the sole purpose of evading taxes, can quickly lead to problems. The CFC rules (Controlled Foreign Corporation) vary from country to country and the benefits could be classified as taxable income derived locally. A small oversight in the structure of an offshore entity, could result in it being considered illegal later.

A competent tax advisor with experience in the international tax field ensures that the details are considered in advance. For example, Australia has a very strict tax regime, it is not possible to separate from your income and still retain some control or benefit. Offshore structures are not legally prohibited in Australia, but when an Australian resident has the ownership, control, indefinite or definite benefit of an offshore Forex trading company, it is generally considered to be Australian tax purposes and will be subject to Australian tax legislation.

Normally Brokers do not engage in the tax advice of their clients, nor do they specifically report the income of their respective clients to the tax office. Some runners, especially in the USA. They reported the interest earned (the one on their account statement or in some cases on the balance of their open accounts) directly to the tax office, but not the current income situation. Again, it is best for you to speak with a qualified tax advisor or a lawyer versed in offshore structures and CFC rules.

Can you afford to keep your trading account in your name?

Another benefit is that brokers usually treat institutional accounts with more attention and respect, in a way this means that personal accounts go to the next level, now they own a company. In a nutshell if you are a successful Forex trader and you grow considerably, then you should consider putting your accounts in the framework of an offshore company.

It could well be that in the future he decided to operate with other people’s money and having a private structure, he will have proven to have a prudent vision of the future.

We have a team of professionals in the area, willing to serve. Contacting us will be a very good option.

Leave a Reply

Your email address will not be published. Required fields are marked *