prop firm payouts and taxes - how is everyone handling this

[astroshade]

serious question for those making real money from prop firms. how are you handling the tax situation?

prop firm pays you in USD via wise/bank transfer. legally its often classified as 'income from contractor services' which is different from capital gains from your own trading. tax treatment varies wildly by country.

not asking for legal advice, asking what people actually do. self-employed registration? company structure? just declaring as misc income? curious what works.

[carterw]

UK based. registered as sole trader after my third payout. accountant treats it as self-employed income, NI applies, can deduct business expenses (computer, internet, subscriptions). cleaner than trying to fit it under capital gains.

[realtommy]

EU resident. set up a small operating company because at my income level the corporate tax + dividend tax was lower than direct income tax. accountant says this only makes sense above ~$60k/year in payouts.

[Leo]

what do you put on tax forms when its from a prop firm in like dubai or seychelles? the broker isnt in your country

[realtommy]

depends on residency. in most countries (UK, US, EU, AU) you owe tax on worldwide income regardless of where the payer is located. the prop firm being in dubai doesnt matter, YOUR residence determines your obligations. talk to a local accountant who has dealt with foreign income.

[Daniel]

the answer everyone is dancing around: most people dont declare it and never get caught. but i didnt say that.

[Ryan]

bad advice. since 2024 the common reporting standard means banks worldwide share account info automatically. you may not get caught immediately but tax authorities are getting better at cross-matching. its not 1995 anymore.

[cameronv]

switzerland resident here. trading income from props is just normal income, taxed at marginal rate. fortunately no capital gains tax for individuals (private investors) so the classification matters less. but the marginal rate is high.

[Adam]

find a good accountant. seriously.

[midnightzone]

i set aside 40% of every payout for taxes automatically the day it lands might be overkill but i never get surprised in april. peace of mind > marginal yield