This question is quite good. I won't talk about other countries, let's just discuss China. If someone is a tax resident of China and incurs losses when trading US stocks, do they need to pay taxes?

Firstly, I understand that the friend is asking whether CRS information needs to be submitted for losses, because regardless of whether one makes a profit or incurs a loss, the CRS exchange will happen.

Secondly, it's important to note that China's taxation doesn't look at the total gain or loss from the time the account was opened until now, but rather at the overall gain or loss within the same tax year.

For example, if last year you lost 300,000 USD in your US stock account, and this year you made 100,000 USD, many people understand it as, "I am still down 200,000 USD over the two years, so I don't need to pay tax on the 100,000 USD I made this year."

This understanding is likely incorrect.

Because foreign stock trading can be offset within the same tax year, but generally inter-year offsetting is not allowed. In other words, the 300,000 USD loss from last year cannot be used to offset this year's 100,000 USD gain.

For example:

In 2025, your US stock account lost 300,000 USD throughout the year. There were no positive earnings that year, so typically, there won’t be any property transfer income tax generated from US stock trading.

In 2026, your US stock account gained 100,000 USD throughout the year. Although the two-year total is still a loss of 200,000 USD, looking at 2026 alone, it is a profit, which means this 100,000 USD may need to be reported as foreign property transfer income.

If we calculate at 20%, that would be:

100,000 USD × 20% = 20,000 USD equivalent in RMB tax.

Moreover, what is looked at here is the total annual account gain or loss, not individual transactions, nor the cumulative loss over multiple years.

It is also important to note that if they are the same Chinese tax resident, the same tax year, and the same type of foreign stock trading, generally, we look at the annual total result, not mechanically breaking it down by individual account, individual brokerage, or individual country.

For example, if you have two accounts:

Account A: lost 100,000 USD throughout the year

Account B: gained 200,000 USD throughout the year

Then for the year overall, it is:

200,000 - 100,000 = Net profit of 100,000 USD

If we calculate the foreign stock transfer income at 20%, theoretically, it is:

100,000 USD × 20% = 20,000 USD equivalent in RMB tax

This is not based on directly taxing the 200,000 USD from Account B, nor is it because Account A lost 100,000 USD that no tax is owed at all.

It’s not over yet 😂

I mentioned earlier that if both accounts are foreign stock accounts, one loses 100,000 and the other gains 200,000, you can attempt to handle it by offsetting the net gain of 100,000 within the same tax year.

However, if one is stocks and the other is futures, you cannot simply merge them.

Stocks generate income from foreign stock property transfer, while futures are derivatives trading; their tax properties are not entirely the same. Futures losses should not directly offset stock profits.

So if stocks gained 200,000 USD and futures lost 100,000 USD, then the stock income should first be taxed separately on the 200,000 USD, and the futures should be reported separately.

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