Trading with USA - help please

Options
KaelaH
KaelaH Registered Posts: 131 Dedicated contributor 🦉
in General accounting discussion
I have just taken on a new client who has started trading on Amazon.com. The money he is making is held in the US until it reaches a certain value, at which point they send him a cheque for the funds less 30% US tax. The other problem he is having is that he's losing a proportion of his funds tranferring them to £ on his sales and also the opposite way when he pays costs in $.
I understand he needs to complete a W-8 BEN form to claim the tax back. I was wondering if anybody else on here deals with clients that trade in the US and do this on a regular basis? And also, what would be the most efficient way of dealing with his funds? Perhaps a US account might work if there are ones available to UK residents? I'm thinking that way he could make reciepts and payments from the same accounts and then just draw what he needs to bring it back onshore.
A little out of my comfort zone on this one! The rest of his affairs, in this country, are pretty simple.

Comments

  • K H
    K H Registered Posts: 81 Regular contributor ⭐
    Options
    I have dealt with this once before so i'll pass on my experience and hope it helps.

    I assume your client is uk resident in which case he is liable for tax on all profits obtained from anywhere in the world.(There is something called the remittance basis where you pay tax only on sums brought back into the uk but i don't think it applies or is appropriate here.)

    The withholding tax is taken into account at the year end as any other tax deducted at source is, as there is a double taxation agreement with the USA , so i wouldn't bother reclaiming the tax as he will get credit for it anyway.

    As for the currency problem i would advocate opening a dollar bank account with a UK bank and transfer the money into sterling when the exchange rate is favourable, you can also make payments from this account in dollars.

    Regards.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    K H wrote: »
    The withholding tax is taken into account at the year end as any other tax deducted at source is, as there is a double taxation agreement with the USA , so I wouldn't bother reclaiming the tax as he will get credit for it anyway.

    I would. If they are only paying 20% tax here then they are losing the extra 10%.

Categories

Privacy Policy