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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15302
Experience:  International tax
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I am a UK citizen, betting online on a USA registered and supervised

Customer Question

I am a UK citizen, betting online on a USA registered and supervised binary trading platform called NADEX.
I am betting online from the UK, will I be taxed; and how much, on my profit in the USA ?
And will I be taxed on that already taxed profit again; and how much in the UK ?
I am betting as an individual.
Many thanks for your quick and extremely accurate answer.
Submitted: 2 years ago.
Category: Tax
Expert:  TaxRobin replied 2 years ago.
Hello and thank you for allowing me to assist you.
By US Treasury standards, Nadex binary options are not true options and they are considered ordinary gain or loss. As such under US tax law a Nonresident alien of the US would not be taxed on gains. There would be no reporting of the gain for US tax purposes although you may be required to complete a W8 form to declare your resident status.
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Nonresident aliens are taxed on dividends if from holdings of US company. A withholding of 30% would normally be applied at source.
Article 10 of the tax treaty between the US and the UK provide for a lower rate on dividends:
However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that State, but if the
dividends are beneficially owned by a resident of the other Contracting State, the tax so charged
shall not exceed, except as otherwise provided,
a) 5 per cent. of the gross amount of the dividends if the beneficial owner is a company that owns shares representing directly or indirectly at least 10 per cent. of the voting power of the company paying the dividends;
b) 15 per cent. of the gross amount of the dividends in all other cases.
You would be allowed a lower 15% rate for dividends you were paid or even if reinvested the dividends would have 15% taxation.

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