よくある質問(FAQ)

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Q. Is this site managed by a securities company?

A. No, this site is not managed by a securities company. The administrator of this site manages this site individually. In addition, this site is a portal site for understanding the specifications, properties, and usage of securities companies or brokers.

Q. Can the bonuses offered by brokers be paid in cash?

A. Bonuses are funds to increase the margin required to trade. Generally, there are two types of accounts that we investors hold: balance accounts and credit accounts.

A balance account is an account where we can freely deposit or withdraw our cash.
On the other hand,  credit accounts are  accounts for brokers to deposit bonuses into clients’ credit accounts or withdraw bonuses from clients’ credit accounts. Credit accounts are segregated from clients’ balance account.

The funds available for the transaction are the total amount of the balance account and the credit account.

Each broker has the various different condition, but some brokers offer promotions that the bonuses deposited in our credit accounts are deposited to our balance accounts when we trade instruments above a certain level.

Q. How to Pay Taxes on Gains Made from Forex Trading?

A. There are plenty of people searching for how Forex traders are paying their taxes. Here it is worth noting that just like with any type of business or employment, one of the most important considerations when it comes to Forex trading is taxation. With this type of trading activity, the market participants do not have to pay any income or payroll taxes. Instead, traders should pay the so-called capital gains tax.

Here it is worth noting that this type of tax is assessed on the positive difference between the sale price of any given asset and its original price. The actual tax rate on Forex gains varies from country to country. Some nations have more favorable tax laws for traders than others.

For example, in the United States, Forex traders have two options for reporting and paying taxes on trading. They can file these types of earnings under section 988 and section 1256. Now, each of them has its own advantages and drawbacks, with an effective tax rate ranging from 15% to 37%.

In the United Kingdom, if the traders trade Forex on spread betting accounts, they do not have to pay any capital gains taxes. The only downside here is that they can not gain any tax benefits for their losses either. There are also several countries with no capital gains tax, making them an appealing place of residency for Forex traders.

Forex Taxes Explained

Traders have to pay tax on capital gains trading Forex when they sell a given security at a higher price than the original cost of purchase. It goes without saying that traders do not have to pay any tax for those trades, where they have earned no payouts. The exact methodology and rate of capital gains tax depends on the specific country. Here is the maximum capital gains tax rate for individuals in some countries:

・United States – 37%
・China – 20%
・Germany – 25%
・Greece – 15%
・Japan – 20.315%
・Russia – 13%
・United Kingdom – 20%
・Switzerland – 0%
・Sweden – 30%
・Spain – 23%

There are several things to keep in mind. Firstly, many countries, including Russia, do not have a separate tax rate for capital gains earnings. Instead, those gains are taxed at the same rate as the personal income tax.

The second important thing to mention here is the fact that those rates, which are shown above represent the maximum capital gains tax rates. In many countries, the effective tax rate on those types of earnings can be much lower, depending on the total annual income of an individual, as well as on other circumstances.

Forex Capital Gains Tax Treatment

Do you have to pay taxes on Forex in the US that are higher than in other countries?

The capital gains tax rates for Forex traders might seem quite high in the US. However, actually there are countries that have higher tax rates than the United States.

For example, in Denmark, the capital gains tax ranges from 27% to 42%, depending on the total annual income of the individual. In Sweden, the capital gains tax is 30%, while since 2012, in Ireland the tax rate for those types of earnings is 33%.

Why do some countries have no capital gains tax?

There are some countries in the world, including New Zealand, Georgia, and Ukraine, who do not have any capital gains tax for trading stocks, commodities or currency pairs. One of the most obvious reasons for this policy is to make these countries more attractive for international traders and investors.

The fact of the matter is that there are a significant number of individuals who earn most of their income by investing or trading. Consequently, some of them might consider moving to countries, where there is no capital gains tax and save a massive amount of money in the long term.

What is Form 8866 in the US tax code and how can traders utilize it?

This can be quite a rare case, but if a trader loses $2 million or more in a single year or $4 million for any combinations of two years, then the market participant can qualify to file a Form 8866, in order to get some additional tax relief due to large amounts of those losses.

At an individual level, such cases are quite rare indeed. In the majority of cases, this form is filled by the large corporations who do Forex or Stock trading as a major part of their business activities.

Why is the spread betting exempted from the capital gains tax in the United Kingdom?

The spread betting is essentially the only product which is exempted from both capital gains and stamp duty tax within the framework of Forex trading tax UK, as well as in Ireland. The reason behind this is that spread betting in the UK tax code is essentially treated the same as betting or horse racing, sports, and other similar activities.

The fact of the matter is that traders can maintain their tax-free status as long as they have other sources of income, which will be enough for their living expenses. If, on the other hand, the spread betting is the only source of income for traders, then there is a risk that he or she might be designated as a ‘professional gambler’ by the UK tax authorities. In this case, the trader will be taxed at the same rate as self-employed individuals.

How does the capital gains tax work with other types of investments?

The tax authorities with the majority of countries make no clear distinction between the payouts earned from Forex trading or stock trading. So, do you have to pay taxes on Forex? Yes, but in most cases, the methodology and tax rates for these two categories tend to be the same.

However, this is not the case with real estate investing. Many countries have separate capital gains tax rates for real estate and for other assets. It is also worth noting that in the United States, as well as some other countries, when selling the home, investors can defer their capital gains tax payment by buying other property from the proceeds of this transaction.

Finally, in many countries, there is no capital gains tax for the sale of a home of one’s primary residence after 2 or some other specified numbers of years have passed since the original purchase.

Q. Do you post the blog on this site manually?

Yes, I update manually. As soon as I get the latest news or the latest promotions about brokers that we think visitors to this site need, I manually update contents as articles.

I also explain how to use brokers because this is necessary for guests who visit this site.

I try to keep updating as much as possible.