Protecting your Forex trading with an offshore company.
Offshore companies are very often used for share or foreign exchange (Forex) trading.
While there may be some tax advantages in using offshore companies as owners of broker trading accounts, another instant benefit is total privacy of the beneficiary owner.
While this may sound insignificant to smaller or new, aspiring traders, majority of industry veterans will agree that trading large sums of money in your own name is not the best solution.
This is further amplified if the person trades other people’s money via the means of managed account solution (also known as PAMM in
some cases). In such case it is literally reckless to have accounts in one’s own name.
The last thing a money manager needs is a disgruntled client who knows all his personal details!
Or consider the scenario when a prospecting money manager showcases his past performance statements – surely he would not want to have his personal details showing all over the prospectus. Arguably some limited privacy protection can be achieved by putting trading accounts in the name of a local jurisdiction company.
However, we always advocate using geographical and juridical separation in the form of offshore companies for significantly improved protection.
Opening your account in the name of offshore company:
A typical structure is to set up an IBC or LLC company in a country that does not require details of owners of the company to be publicly filed, with a corporate “nominee” director and shareholder as part of the structure. Despite of what you may have read elsewhere, you can open an institutional broker account on your own – it is not a complicated undertaking.
In most cases there is no need to outsource the task to offshore company provider. Most Forex brokers are well accustomed to offshore companies and open accounts without making any fuss and it certainly is not a controversial practice. In fact, some U.S. clients choose to use offshore companies to open accounts with non-U.S. brokers who would otherwise not welcome U.S. citizens directly due to the strict CTFC regulation.
This varies from broker to broker and as usual, you should check with the latest regulatory situation in your country.
If you are a larger volume Forex trader capable of opening USD $50-$100,000 trading account, we can make the introduction to a top tier liquidity provider based in London. This is just one of the many benefits we offer to our Members (see all the benefits here).
They only open institutional accounts, but offshore company (even if owned by U.S. citizen) can fulfill the requirement.
Speaking of Forex brokers, make absolutely sure you perform rigid due diligence before you open your account.
Generally speaking, only reputable brokers from well regulated financial jurisdictions such as UK, U.S., Singapore, etc. should be considered. The industry is unfortunately still plagued with unreliable, untrustworthy players.
Many of the brokers to avoid are based in offshore locations such as Cyprus, Panama, Belize, Mauritius, etc.
Please note that we are advising to avoid those locations to open a Forex broker account.
On the contrary, many of these offshore jurisdictions are perfect choice to open an offshore company holding your Forex account.
Tax implications:
Remember that you should always seek good local tax advice as a first step. Opening offshore company with the sole goal of eliminating your tax can quickly land you in trouble.
CFC rules vary from country to country and your trading profits could be classified as locally arising taxable income. A tiny oversight in the structure of an offshore entity could result in it being deemed illegal at a later stage.
A competent and experienced tax adviser in the international tax field will ensure that those details are considered before you start operating. For example, Australia has a very strict tax regime. It is not possible to legally separate yourself from your income and still retain any control or benefit.
Foreign structures are not prohibited under Australia law, but when an Australian resident has ownership, control, indefinite or definite benefit of an offshore Forex trading company, generally speaking it will be deemed Australian for taxation purposes and will be subject to Australian tax law.
Brokers do not typically get involved in advising their clients on taxation issues, nor do they specifically report their client’s income to respective tax office. Some brokers, especially in the U.S. report interest earned (on your account balance or in some cases on balance of your open positions) directly to the tax office, but not the actual profit or loss from trading.
Again, you are better off talking to a qualified tax accountant or lawyer versed in offshore structures and CFC rules.
Can you afford to keep your trading account in your personal name?
Another benefit is that brokers typically treat institutional accounts with more attention and respect. In a way, it means that the trader “graduated” from personal, retail account to the next level – now he owns a trading company.
Bottom line, if you are going to trade Forex or are already a successful Forex trader and you deal in increasingly large size, you really ought to consider putting your accounts under the umbrella of offshore companies.
It may very well be that in the future you decide to trade other people’s money and having private structure in place will prove to be a prudent forward thinking on your part.
Hello
please send me full details about your top tier liquidity provider based in London.
kind regards,
mohamed maraoui
Hello
We are a registered offshorecompany in Hong Kong and require to open an USD account. Could you guide us on how to proceed?
regds
Sheela
Thank you Sheela for your comment on our blog. I will send to you our suggestion on how to proceed via email. Thanks again!
regular brokerage – how about Boom and European Investors?
Thanks
Australian with japanese resudence would like to open offshore company to trade with american forex company based in New York !
Please send me information !
As you wish! We will send the requested information right away. Thank you for leaving us a comment.
I have recently incorporated an IBC in St Vincent. I intend to use this company as a brokerage company dealing with Online FX Trading.
I need your advise in the opening of offshore banking accounts for the purpose of accepting clients deposit.
Please advise.
Thank you
Regards
Thank you so much for your comment! I will send you information right away on how to get in touch with our experts to get reliable help. Thank you again for taking the time to talk to us and have a wonderful weekend!
Hello,
Interesting article.
How much would it cost setting up an offshore management company
and getting it licensed as a fund manager offshore?
Would I have to travel to an offshore destination to set it up and then reside there to run it? I would open a closed end – fund in BVI.
I trade forex with a Swiss broker (Dukascopy), would my clients be able to send deposits directly to a Swiss bank or do their deposits have to go through an offshore bank? I live in EU.
Many thanks
Karel
Thank you so much for your comment Karel. I will send you an email right away with some options on how you can get in touch with our experts to get reliable answers to your questions. Have a great weekend!
I plan on opening a offshore company for trading forex. Can you please send me more information regarding opening a offshore company
Thank you,
parthiv
Not a problem Parthiv! Thank you so much for taking the time to leave us a comment. I will send you some information right away.
Hi Aubrey kindly send details of hk offshore company willing to trade forex
Hi Sam! Thank you so much for leaving us a comment. I will send you an email with some options on how you can get in touch with our experts. They are best qualified to give you reliable advice.
Have a great weekend!
Hello, looking for expert advice regarding setting up offshore forex llc
Well you have come to the right place. I will send you email right away with options on how you can proceed to get expert advice. I am so sorry for the delay in getting back to you, I have been offline from answering comments while battling some illnesses.
Have a wonderful weekend!
Hi I would like more information on this topic – Please drop me an email
Not a problem! I will email you right away.
Hey There,
I would like to know how can I open an corporate account using an offshore company?. Which is the best jurisdiction to incorporate a company? How can I open an account without show my real name and my private informations? Some brokers need this information before open an corporate account. And maybe like american can not show this information. Can you tell me more about the process of using offshore companies to trade forex?
Hi William!
Thank you so much for your comment. A lot of good questions! What I can do for you is send you an email with some options on how you can get in touch with our experts on the subject to get you reliable answers. Thank you again for your comment and I hope you have a great rest of your week!
I have same questions as Willian above. How to open an offshore company, best jurisdiction, how to keep personal info private and the procedure to open a Corporate Forex Brokerage account. Also the cost involved in setting up everything. Thanks
Very nice to meet you Vinay. I will send you an email with some options on how you can proceed to get reliable answers. Thank you so much for your comment!
HI,
I plan on opening an offshore company for trading forex and at the same time a offshore banking account ,how to proceed, what documents are requested, which country to choose? Knowing that I live in EU.
Thank you.
Thank you so much for your comment! I will send you an email right away with more information on how you can proceed to find reliable answers.
Can you please send me detail as well?
I plan on opening a offshore company for trading forex. Can you please send me more information regarding opening a offshore company and cost involved. What are the best jurisdictions to open in for U.S citizen? Thank You!
I definitely can! I will send you an email right away with some information and options on how you can get in touch with our experts. Thank you so much for your comment and your interest in the Q Wealth Report!
I live in EU , can you tell me the difference between opening offshore company for trading forex and offshore banking personal account for trading forex ? And the best places for it ?
I can’t, but our experts surely can! I will send you an email with information on how you can get in touch with them to receive reliable advice and information.
I do apologize for the delay in replying to your comment! I hope you have a great weekend!
Hello. I am trying to figure how to open an account with dukascopy to use visual jforex. Can you send some information please on how a U.S. citizen can utilize a 3rd party vendor?
Please accept my apologies for not getting back to you sooner! I will send you an email right away with information on how to get in touch with our panel of experts. Thank you for your patience and for your interest in the Q Wealth Report!
Hello,
Could you please connect me with your expert on how to open up a Forex account under a off shore corporation as well or email me information?
Thanks!
That is something I can certainly do! I will send you an email with some options. Please do not hesitate to contact me directly by replying to the email I will send you. Thank you so much for your comment and for your interest in the Q Wealth Report!
I intend on opening a offshore company for my forex trading company int eh coming months. (Was looking at Belize, with a EU bank) Can you please send me more information regarding necessary tax info along with essential how-to/know how when it comes to filing taxes properly as a US citizen? Thanks
Thank you so much Patrick for your comment and your interest in the Q Wealth Report. That is definitely something out experts can guide you on. Please let me send you an email with more information on how you can get in touch with them so as to get reliable help in your endeavor. Have a great rest of your weekend!
Hi,
I would like to know the procedure, costs and regulations regarding opening a LLP or LP in Singapore or Mauritius for forex trading. I would greatly appreciate your assistance on this. Thanks!
I am so sorry for the delay in getting back to you. I will send you an email with more information right away and options on how to proceed. Thank you for your comment and for your patience!
Please send me information. I am a US citizen trying to obtain information on how to open either an offshore company or create an account with Dukascopy.
I plan on opening a offshore company & offshore bank account for trading forex…I am considering Estonia..,??? Can you please send me more information regarding opening a offshore company & offshore bank account best suited for Indian resident.
Thank you,
Maruthi
Let me start off by apologizing for the delay in getting back to you. That being said, this is definitely something that we can help you with. I will send you an email shortly with more information on how to proceed to get reliable answers and guidance.
Thank you so much for your comment!
I have recently incorporated an IBC in St Vincent. I intend to use this company as a brokerage company dealing with Online FX Trading.
I need your advise in the opening of offshore banking accounts for the purpose of accepting clients deposit mostly from Europe Czech Republic.
Please advise.
Thank you
Regards
Thank you so much for your comment and for your interest in the Q Wealth Report. This is definitely an area that we can help you in. I will send you an email with more information right away on how you can get in contact with our experts. Thank you again for taking the time to leave us a comment and we look forward to working with you on this project!
Hi,
Highly informative, but there is still one issue here, I prefer ECN brokers and even if you setup an account with ECN broker they do need a personal identification document of the directors for example a passport or govt id, and that is a risk for a trader. For example India restricts its citizens to trade through foreign brokers hence.
I am a US citizen and would like to trade in forex with a UK broker. I believe, to do that I need to create an offshore company with a nominee director and then create an institutional account for that company with the forex broker. What is the most appropriate country/countries to create such offshore company and what would the process be? Who can provide the service of being a nominee director? Who would have the handle on the company bank account? what are the costs of such a setup and annual costs if any?
Hi. I am planning to trade with a regulated broker that does not accept USA so I am opening an account under my mom from the Philippines which is accepted. I would like to know the tax laws for binary option traders in the Philippines and what kind of account should be used to prevent problems with transactions from her bank account to Webmoney in the USA.
I have recently incorporated a corporation in Panama. I intend to use this company as a brokerage company dealing with Online FX Trading as well as long term ETF investing.
Can you please send me any info that would be helpful, I would appreciate it thank you!!!
Thank you so much for your comment and for your interest in the Q Wealth Report! I will send you an email right away with more information!
Great article. Now I am analyzing whether it is necessary to go into the trading industry, is it too late to start this in 2020. And also what is the best solution for my company. Thanks for your work!
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