ACM (Swissquote) Deducting International Withholding Tax

[George Mcall]

I have just had deducted from my account moneys representing 'International Withholding Tax'. It represents about 10% of the balance.

To quote FXCM 'Trade Forex, Metals, Oil, and Stock Indices tax-free* with FXCM LTD. by opening a Spread Betting account. Spread Betting accounts operate exactly like standard FXCM LTD. accounts, but enjoy special tax-free status in the UK and Ireland. The minimum to open a live account is £50. Only available to residents of the UK and the Republic of Ireland.'

I am a UK registered tax payer and entitled to enjoy the special tax-free status.

Is anyone else being inflicted by this problem or have I been selected for individual treatment.

ACM who have been acquired by Swissquote are a leading broker and one of the early ones.

 

[Pharaoh]

I have always heard that spread betting with a UK firm is tax free to UK residents.

Now's where things get complicated. If trading with ACM isn't technically considered "spreadbetting" by the UK, or if the exemption doesn't apply to non-UK firms, then you may owe the UK taxes on your profits (consult with a UK tax professional for details).

AC-Markets.com shows a UAE address on their Contact Us page. They also say that SwissQuote is registered with FINMA in Switzerland.

I can't be 100% certain, but I'm HIGHLY suspicious that they are not supposed to be collecting taxes on your profits.

I recommend you contact the tax authorities in the UK as well as getting in touch with FINMA in Switzerland. While you are at it, contact Advanced Currency Markets and ask them to please point you to the regulations involving these taxes so that you can show them to your accountant. Also, ask them for a receipt from whatever tax authority they supposedly sent the money to.

Please keep this thread up to date with what you find out and what happens.

 

[George Mcall]

Thank you for your post and your ideas. At present I am in discussion with their Legal and Compliance Department. Their latest email reads:

We write in response to your email of 28 February seeking a refund of the deducted withholding on the basis that we have incorrectly applied the withholding tax.



As far as our bank is concerned, unless a client duly completes and provides us with the required documentation for Voluntary Disclosure, the earnings made on a trading account are obligations for which a withholding applies by default.



We note that you refer to the EU Council Directive No 48 of 2003 on the Taxation of Savings Income in the form of interest payments. On 26 October 2004, Switzerland entered into an agreement with the EU in order that all Swiss banks would set up measures enabling the taxation of savings income of persons domiciled in a member state of the EU. The 2004 agreement affects interest payments only, and the deduction does not apply to dividends or capital gains. (You may refer to our Information Notice on the Taxation of Savings Income in the EU for further details).



On a separate note based on which a withholding was recently deducted to your account, the agreement between Switzerland and the UK on the introduction of a withholding tax was signed on 6 October 2011, with a supplementary protocol added on 20 March 2012 and amended on 20 April 2012, entered into force on 1 January 2013.



Kindly note that the previously mentioned 2004 agreement on taxation of savings income, is separate from the 2011 Agreement on the cooperation in the area of taxation between Switzerland and the UK (and Switzerland and Austria), the latter of which concerns interest, dividends, capital gains and “other income”. Your attention is drawn to Art.19(1) of Protocol amending the Agreement between the CH and the UK on cooperation in the area of taxation signed on 6 October 2011 for confirmation of the fact that other income (in addition to interest income is subject to the withholding tax) fall under the scope of this Protocol.



According to the agreement we have to receive a written communication from you, in case you wish to authorise us to disclose your banking relationship (account/custody account) to the Swiss Federal Tax Administration, for submission to the UK authorities. For this purpose, please fill the relevant form on our website SWISSQUOTE. if we do not receive written authorisation to disclose your account/custody account – the method of withholding tax will continue to be applied by default.



Otherwise, you will find further detailed information on our website SWISSQUOTE, as well as answers to Frequently Asked Questions which you may find useful.



Should you have any further questions, please contact our Customer Care on +41 44 825 88 88 (Monday - Friday, 08:00-22:00 CET).



My current argument with them is that they have misinterpreted the ejusdem generis rule which applies to all UK legislation. Basically the rule says that the words 'others' cannot add to a class.

For anyone sad enough to want to read the original protocols and directives, I attach copies.

View attachment Protocol amending the agreement between the United Kingdon of Great Britian and Northern Ireland.pdf

View attachment Council Directive 2003 48 EC.pdf

View attachment Agreement between the Swiss Confederation and the United Kingdom of Great Britian and Northern I.pdf

 

[Pharaoh]

Do you have an accountant in the UK? It might be worth showing all of this to an accountant.

 

[George Mcall]

Do you have an accountant in the UK? It might be worth showing all of this to an accountant.

Sadly I do not have an accountant in the UK as I am on PAYE and trading is a hobby which buys me my drinks at the bar and pays for my holidays. I have four main accounts including FXCM who are very clear about the tax position on their website.

Here is a link:

Spread Bet with FXCM, No Re-Quotes, No Dealing Desk, Spreads, Tax-Free Trading | FXCM


There is another tread which deals with tax in the UK though reaches no conclusions:

https://www.forexpeacearmy.com/forex-forum/forex-articles/395-tax-issues-forex-traders-uk.html

Yahoo AnyAnswers has a tread though again not terribly conclusive and HMRC really do not give any precise guidance. It is possible because most people lose money and they would then be able to set their loss against other profits. It may also be that the cost of administering any system would far outweigh any financial benefit that they may achieve.

http://uk.answers.yahoo.com/question/index?qid=20120502111501AAOQ3bl

There is talk from time to time to bring forex trading within the tax system and then it is probably time to go and live in Ireland!!!!

 

[Pharaoh]

I've asked BigT1 to take a look at this thread. He's a little tied up now, but should be able to check it out sometime soon (I hope).

Maybe you could take a copy of some of what ACM sent you down to Her Royal Majesty's tax collection offices and see what the clerks there think of the situation.

 

[Jason Rogers]

I have just had deducted from my account moneys representing 'International Withholding Tax'. It represents about 10% of the balance.

To quote FXCM 'Trade Forex, Metals, Oil, and Stock Indices tax-free* with FXCM LTD. by opening a Spread Betting account. Spread Betting accounts operate exactly like standard FXCM LTD. accounts, but enjoy special tax-free status in the UK and Ireland. The minimum to open a live account is £50. Only available to residents of the UK and the Republic of Ireland.'

I am a UK registered tax payer and entitled to enjoy the special tax-free status.

Is anyone else being inflicted by this problem or have I been selected for individual treatment.

ACM who have been acquired by Swissquote are a leading broker and one of the early ones.

Hi George,

Just to clarify on the text you quoted from our website, in order to get tax-free status on your trading, your account has to be classified as a spread betting account by the UK authorities. FXCM received such authorization to offer tax-free trading to residents of the UK and Ireland on our spread betting accounts. It's important to check with your broker, whether your account with them is set up as a spread betting account or normal forex trading account. Good luck!

Jason