PAMM accounts are becoming increasingly relevant when trading on the foreign exchange market, gaining popularity because beginners do not always have the skills and experience to make a profit. It is trust management of investor’s money, that is, a PAMM account, that is the best solution.
According to one of the authoritative sites, the term “PAMM Wallet” and “PAMM Account” are registered trademarks owned by Alpari, which has a Cyprus registration. But here’s the problem: not every country’s legislation allows the transfer of funds to trust management. For example, in Russia only banks and management companies that have an appropriate license have the right to trust management. However, brokerage companies often do not inform the principals about this, and of course they do not have licenses. So on the face of violation of the law.
When choosing a brokerage site, be sure to pay attention to the company’s transparency and the legality of its actions. The broker itself is the guarantor of the execution of the offer made between the investor and the trader, however, in case of illegal actions, the investor risks losing the invested money.
Keep in mind that the terms of the offer do not correspond to the form of a trust agreement, and therefore a violation of such agreements can not be considered in court. That is, the investor bears the risk on his own by transferring money to the trader.
PAMM accounts and taxes
It is quite obvious that to control the receipt of income on the Internet, and even more so, the income received from trading on Forex with the help of sites registered in offshore zones, have not yet practically learned. Therefore, questions about taxation in terms of trading in the foreign exchange market are almost not raised. And in vain. If we are talking about incomes in the range of 3-5 thousand USD, then the investor will have no problems with taxation, and it does not matter which country resides in the post-Soviet space. But with serious amounts, the question arises not only when cashing them, but also in general, before the tax inspectors.
With regard to PAMM accounts, taxation has some absurdity. On the one hand, in the same Russia, it is necessary to pay 13% of the income. However, it is not clear why, when transferring your own money in trust, should an investor pay income tax? However, Ukraine also recently imposed a tax on deposits, so accept this nuance.
In the tax office a surprise is waiting for you: it is unlikely that someone will be able to tell you how to calculate the taxable base correctly, and even less how to reflect this in the tax return. But then, does the state really care? So how can you avoid penalties for evading tax on income received from trust management through PAMM accounts?
Brokers bypass this problem by registering offshore, thereby shifting this responsibility onto the shoulders of the investor.
The investor as a proof of income has the right to request from the broker a certificate-report on the income received, assuring him with a wet seal. When filling in the declaration, it is not necessary for the investor to report exactly where the income was received, confirming its existence by an extract from the bank. However, if after a while the inspectors have a question about income from currency trading, the investor will not only confirm the figure with an account statement and a declaration, but also a broker’s certificate, confirming the transparency and official income.
And at the end we summarize: do not be afraid to start trading! Legal issues should worry you only when you receive large incomes, but by that time you will be a experienced trader yourself and you will surely know all the legal nuances!