Earn 2 Trade the gauntlet

[canoe]

You have to be careful before signing up with E2T if you're an international trader because the laws and regulations can get pretty complicated.

many countries have restrictions on foreign capital gains versus merely getting paid income by a foreign corporation. many of these restrictions exist in the name of preventing money laundering, capital flight risk, etc.

for example, in my country, earning foreign ordinary income is fine and subject to the normal income tax rates once brought back into my country. no country is going to have a major issue with this since we now live in a globalized economy. people work online for foreign corporations as remote employees or contractors all the time. it's the world we live in now.

investing/trading in foreign instruments leading to capital gains however, is subject to very tough regulations. investing in foreign property comes with tough reporting and limit requirements. capital gains via foreign stocks, etfs, fx, derivatives (options + futures) is actually illegal and subject to fines and possible jail time. the only way to legally realize capital gains through these financial instruments is to trade them through approved, domestic brokers only.

again, this only applies to my country but the point is you need to be very knowledgeable of your home country's laws and regulations b/c due to the way Helios' corporate structure is set up, foreign tax and financial authorities will view your profits from Helios as capital gains realized from foreign financial futures instruments, as opposed to merely foreign ordinary income. depending on your country, this could have severe legal consequences.

with TST, you submit a W8-BEN to TST, not the IRS. if you're a nonresident alien and you are not considered a "US person" as defined by the IRS, and the service you perform as an independent contractor is not "US source income" as defined by the IRS, then you don't need to file or pay any taxes to the IRS.

with Oneuptrader, b/c OUT is based in BVI, it is not a US company so you don't even submit a W8-BEN at all. and you don't file or pay any taxes to the IRS.

 

[Earn2Trade-Ryan]

The day we pay taxes on simulated profits is the day the revolution comes in the USA.

You are receiving these profits. You’re getting paid.

 

[Earn2Trade-Ryan]

It's really getting complicated, Ryan. So a trader will end up getting ordinary income (simulation profit) and capital gains (live profits) on the K1.

To be honest: I did some research on Helios' Schedule K1 reporting and its really not serving any purpose to international traders. Infact,
(1) all international traders will end up filing income tax returns in the USA as well as the home country (even if there is a tax treaty with the home country simply because K1 reporting demands 1040NR and K1 attachment). This itself will cost around $450 (based on my inquiry with one CPA)
(2) If there is ordinary income on K1, then international traders will end up paying taxes also in the USA along with return (and then they need to convince the home country tax department regarding tax treaty)
(3) If there are capital gains on K1, I am still investigating where the tax money should be paid (the USA or home country). I tried asking the same question to a CPA and the firm demanded a $250 consultation charge to just let me know the answer. I assume it is home country tax department where tax money should be paid for capital gains on K1 but not sure about this.

I don't know why Helios structured it this way. All other firms (SMB, LMI, OneUP, TopStep, Savius) make it very simple by appointing traders as 'self-employment' I don't think all these firms are breaking rules. They must have done their due diligence as well. I am sure Helios also must have done their due diligence as well. But wonder why it like this for Helios?

If it would have benn 'self-employment' then I would have taken Gauntlet long back.

If you have questions, ask the CFTC/NFA. We have. This has been discussed a few times on EliteTrader regarding potential regulatory requirements if you’re a contractor. You’re trading someone else’s money. There are laws around that.

 

[Earn2Trade-Ryan]

You have to be careful before signing up with E2T if you're an international trader because the laws and regulations can get pretty complicated.

many countries have restrictions on foreign capital gains versus merely getting paid income by a foreign corporation. many of these restrictions exist in the name of preventing money laundering, capital flight risk, etc.

for example, in my country, earning foreign ordinary income is fine and subject to the normal income tax rates once brought back into my country. no country is going to have a major issue with this since we now live in a globalized economy. people work online for foreign corporations as remote employees or contractors all the time. it's the world we live in now.

investing/trading in foreign instruments leading to capital gains however, is subject to very tough regulations. investing in foreign property comes with tough reporting and limit requirements. capital gains via foreign stocks, etfs, fx, derivatives (options + futures) is actually illegal and subject to fines and possible jail time. the only way to legally realize capital gains through these financial instruments is to trade them through approved, domestic brokers only.

again, this only applies to my country but the point is you need to be very knowledgeable of your home country's laws and regulations b/c due to the way Helios' corporate structure is set up, foreign tax and financial authorities will view your profits from Helios as capital gains realized from foreign financial futures instruments, as opposed to merely foreign ordinary income. depending on your country, this could have severe legal consequences.

with TST, you submit a W8-BEN to TST, not the IRS. if you're a nonresident alien and you are not considered a "US person" as defined by the IRS, and the service you perform as an independent contractor is not "US source income" as defined by the IRS, then you don't need to file or pay any taxes to the IRS.

with Oneuptrader, b/c OUT is based in BVI, it is not a US company so you don't even submit a W8-BEN at all. and you don't file or pay any taxes to the IRS.

You better be very careful with this. If you’re saying in your country trading futures is illegal but you’re getting around it by just being paid “ordinary income”, sounds like setting yourself up for trouble.

 

[canoe]

You better be very careful with this. If you’re saying in your country trading futures is illegal but you’re getting around it by just being paid “ordinary income”, sounds like setting yourself up for trouble.

actually that's not what i'm saying.

trading futures is legal in my country but if you want to trade foreign futures directly via a personal individual account, you can only do it through prescribed channels assuming you live more than 183 days here. if you live less than 183 days in my country, then you can directly trade foreign futures via any individual brokerage account, domestic or foreign. there are a variety of other ways to directly trade foreign futures in my country such as through a funding company passed as ordinary income or setting up a llc in a low corporate tax country -> trading futures -> being taxed in that country -> and then being taxed again once i bring the money back to my own country. corporate taxes are very low in my country so it's something many people take advantage of b/c it's worth it even with double taxation. you can already see there're so many things to keep track of.

i should emphasize to everyone reading this, what i'm saying only pertains to my country after having consulted with mutiple lawyers. i bring up multiple scenarios to show how complicated this can get, even moreso when you're earning capital gains as a limited partner of a US firm versus receiving ordinary income as a nonresident alien independent contractor.

although you should consult a laywer whether you're going the limited parter route or the independent contractor route, it's been my experience that at least for nonresident aliens, taxation and reporting requirements are simpler as an independent contractor, from both the US and domestic side.

 

[Earn2Trade-Ryan]

actually that's not what i'm saying.

trading futures is legal in my country but if you want to trade foreign futures directly via a personal individual account, you can only do it through prescribed channels assuming you live more than 183 days here. if you live less than 183 days in my country, then you can directly trade foreign futures via any individual brokerage account, domestic or foreign. there are a variety of other ways to directly trade foreign futures in my country such as through a funding company passed as ordinary income or setting up a llc in a low corporate tax country -> trading futures -> being taxed in that country -> and then being taxed again once i bring the money back to my own country. corporate taxes are very low in my country so it's something many people take advantage of b/c it's worth it even with double taxation. you can already see there're so many things to keep track of.

i should emphasize to everyone reading this, what i'm saying only pertains to my country after having consulted with mutiple lawyers. i bring up multiple scenarios to show how complicated this can get, even moreso when you're earning capital gains as a limited partner of a US firm versus receiving ordinary income as a nonresident alien independent contractor.

although you should consult a laywer whether you're going the limited parter route or the independent contractor route, it's been my experience that at least for nonresident aliens, taxation and reporting requirements are simpler as an independent contractor, from both the US and domestic side.

What you're saying basically also means that you cannot have any ownership in a good majority of US companies, since a large percentage generate capital gains/losses. Not allowing your countries residents to have foreign ownership in a US company would be a pretty strict thing to do. I'd be curious what country you're in and do a bit of my own research on this for you.

 

[canoe]

What you're saying basically also means that you cannot have any ownership in a good majority of US companies, since a large percentage generate capital gains/losses. Not allowing your countries residents to have foreign ownership in a US company would be a pretty strict thing to do. I'd be curious what country you're in and do a bit of my own research on this for you.

as a mom and pop retail investor/trader, you can still have ownership but it can only be done through government-approved domestic channels (too lazy to go into this + not really relevant to ppl here anyway) which incur a lot of prohibitive costs. think of it not as capital gains = illegal, but capital gains not via government-approved method = illegal.

it's why i mentioned many residents here who are serious investors/traders set up a foreign llc in a zero to low-corporate tax country and willingly go through double taxation b/c it's still cheaper in the long-run, at least for now while corporate tax rates are very low.

the only entities allowed to directly invest in US (or foreign) companies are so-called "financial investing firms" that have applied for and been approved by the financial enforcement agency in this country. this seal of approval is mostly reserved for only the major domestic and foreign investment banks (think GS, JPM, BOA in the US) so it's definitely not accessible to small-timers.

the whole situation reeks of corruption b/c it smells like a scheme to artifically prop up domestic brokers and banks at the cost of retail investors/traders, from our perspective at least. what's also funny is these regulations also apply to foreign citizens who stay here for more than 183 days/year. not going to out the country but if you research countries with tight capital control requirements, shouldn't be hard to decipher.

 

[Earn2Trade-Ryan]

as a mom and pop retail investor/trader, you can still have ownership but it can only be done through government-approved domestic channels (too lazy to go into this + not really relevant to ppl here anyway) which incur a lot of prohibitive costs. think of it not as capital gains = illegal, but capital gains not via government-approved method = illegal.

it's why i mentioned many residents here who are serious investors/traders set up a foreign llc in a zero to low-corporate tax country and willingly go through double taxation b/c it's still cheaper in the long-run, at least for now while corporate tax rates are very low.

the only entities allowed to directly invest in US (or foreign) companies are so-called "financial investing firms" that have applied for and been approved by the financial enforcement agency in this country. this seal of approval is mostly reserved for only the major domestic and foreign investment banks (think GS, JPM, BOA in the US) so it's definitely not accessible to small-timers.

the whole situation reeks of corruption b/c it smells like a scheme to artifically prop up domestic brokers and banks at the cost of retail investors/traders, from our perspective at least. what's also funny is these regulations also apply to foreign citizens who stay here for more than 183 days/year. not going to out the country but if you research countries with tight capital control requirements, shouldn't be hard to decipher.

Ok, if you decide at some point to let me know about the country, you can PM me and I'd be happy to consult with Helios and the legal/tax team.

 

[world]

If you have questions, ask the CFTC/NFA. We have. This has been discussed a few times on EliteTrader regarding potential regulatory requirements if you’re a contractor. You’re trading someone else’s money. There are laws around that.

Do you mean (and you sound like that) if someone is contractor and trading for prop firm then he/she might be in need of additional regulatory requirements in the USA? Are these requirements for the firm or for the trader? Do u mean series 3 exam?

May be other prop firms can pitch in here to throw more light on: Are there any additional regulatory requirements if you’re a contractor?

As I said in my previous post also: each and every other prop firm I know (not only the funding companies but others with physical branches in my country) have taken an independent contractor route. So I was really curious to know why Helios is structured this way? What is the additional regulatory requirement which is applicable only to Helios and not to any other firm?

See I admire your firm simply because you are the only company that showed courage to go for the overnight product in the industry. That's something called as innovation in my books. However, I only wish the tax complexity would not have come here.

 

[Earn2Trade-Ryan]

Do you mean (and you sound like that) if someone is contractor and trading for prop firm then he/she might be in need of additional regulatory requirements in the USA? Are these requirements for the firm or for the trader? Do u mean series 3 exam?

May be other prop firms can pitch in here to throw more light on: Are there any additional regulatory requirements if you’re a contractor?

As I said in my previous post also: each and every other prop firm I know (not only the funding companies but others with physical branches in my country) have taken an independent contractor route. So I was really curious to know why Helios is structured this way? What is the additional regulatory requirement which is applicable only to Helios and not to any other firm?

See I admire your firm simply because you are the only company that showed courage to go for the overnight product in the industry. That's something called as innovation in my books. However, I only wish the tax complexity would not have come here.

Earn2Trade and Helios have gone to great lengths with our legal counsel as well as MANY discussions with the regulatory authorities as to what is required. I don't have all of the legal details but from my understanding from my own discussions with the NFA, if you're trading a clients money (which if you're a contractor to them, they are your client), you have regulatory responsibilities with the NFA/CFTC.

The way Helios is structured, you are actually a limited owner, which means you are trading your own firm money, not a clients. I am sure there are similar registration requirements to manage a clients money in other countries as well.