Offshore or domestic forex: there are so many differences that it is hard to decide where to start. This guide sorts them out.
The core differences are four: the leverage cap, margin calls versus negative balance protection (zero cut), trust protection, and tax. Domestic brokers in Japan are capped at 25x by the FSA (Japan's Financial Services Agency). Their profits are taxed separately at about 20%.
This guide is based on the official pages of the FSA and the NTA (Japan's National Tax Agency), checked on 21 October 2026. It ends with which option suits which priority.
Conclusion: offshore and domestic forex differ on 7 points
Choose by fit with your goal, not by which is better. Offshore forex is strong on high leverage and negative balance protection (zero cut). Domestic forex is strong on Japan's stable regulation and tax system. Both can lose your capital.
For the basics of forex first, see the guide on this site "What is forex? A beginner's guide".
- Leverage: domestic brokers allow up to 25x for individuals. Offshore leverage differs by broker and account
- Margin call: domestic brokers may demand additional funds. Many offshore brokers use negative balance protection (zero cut)
- Trust protection: the FSA requires domestic brokers to segregate client assets. For offshore brokers, check each broker's terms
- Tax: domestic forex uses separate self-assessment taxation. Offshore forex is generally treated as miscellaneous income under aggregate (progressive) taxation
- Trading method, bonuses and registration also differ. Each has pros and cons, so neither is simply better
Offshore vs domestic forex: comparison of the 7 points
The checks below list all 7 points. The offshore side varies by broker. Items marked with an asterisk have conditions or exceptions, so check each broker's terms for the final conditions.
Source: FSA and NTA official information and this site's verified data (official pages of each broker), checked on 21 October 2026. For account types and leverage on offshore accounts, see the guide on leverage and stop out on this site.
- Maximum leverage: offshore varies by broker and account (for example, up to 1:1000 to 1:2000*). Domestic is up to 25x for individuals (margin rate of 4% or more)
- Margin call and zero cut: many offshore brokers use zero cut*. Domestic brokers may demand a margin call if the balance goes negative
- Trust protection: offshore brokers manage funds in different ways, so check the terms. Domestic brokers must segregate client money in a money trust at a trust bank or similar
- Tax: offshore is generally miscellaneous income under aggregate taxation. Domestic is separate self-assessment taxation at 20.315% (NTA)
- Trading method: offshore depends on the broker, and some support MT4 and MT5. Domestic has OTC forex and exchange-traded forex (FSA)
- Bonuses: some offshore brokers offer deposit and account-opening bonuses. For domestic brokers, check each company's own information
- FSA registration: offshore brokers point to overseas authorities for their registration. Domestic brokers must be registered as financial instruments business operators
Leverage: offshore vs domestic forex
A domestic individual account requires a margin of at least 4% of the trade value. That works out to leverage of 25x or lower (FSA).
Offshore leverage caps vary by broker and account. This site's verified data gives the examples below. Items marked with an asterisk have conditions.
Stop out is the forced closing of positions when the margin level falls below a set level. It corresponds to the loss cut at domestic brokers.
Required margin example, using hypothetical numbers: for a position worth 1 million yen, 25x requires 40,000 yen of margin. At 1000x it is 1,000 yen, and at 2000x it is 500 yen. A small deposit can control a large position, but losses grow at the same ratio.
Note: high leverage also magnifies losses. The higher the leverage, the faster a small price move lowers your margin level. The room before stop out also gets smaller. For a broker-by-broker comparison, see the column on offshore forex leverage on this site.
- XS: maximum leverage 1:2000*, zero cut available*, stop-out level: check the account and conditions
- HFM: maximum leverage 1:2000* (varies by account), zero cut available*, stop out 20% (0% for KATANA)
- Monaxa: maximum leverage 1:2000*, zero cut available*, loss cut 50% / stop out 20%
- Exness: maximum leverage 1:2000* (unlimited under certain conditions), zero cut available*, stop out 0% (forced closing at a margin level of 0%)
Margin call vs negative balance protection (zero cut)
In a sharp market move, forced closing may not happen in time and the account balance can go negative. The FSA also explains that a loss larger than the margin can occur even when a loss cut is applied.
This is where the two differ. At a domestic broker, the negative amount may become a margin call (a request for additional funds). A broker that uses zero cut returns the negative amount to a zero balance.
Note: zero cut does not prevent losses. You can still lose all of the money you deposited. How bonuses and account types are treated differs, so check the details in a separate column. See also the column on how zero cut works and when it does not apply on this site.
- Zero cut avoids a claim for losses above your deposit
- Funds lost before the loss cut are not returned
- Conditions and exceptions are set in each broker's terms
Tax: offshore vs domestic forex
According to NTA Tax Answer No.1521, profits from OTC forex with a Japanese financial instruments business operator are taxed separately by self-assessment. The rate is 15% income tax plus 5% local tax, with the special reconstruction income tax added. The total is 20.315% (the current rate).
Offshore forex is taxed at a rate that changes with your income. With a large income, the tax burden can be heavier than with domestic forex.
Note: individual treatment depends on the transactions. Confirm the final decision with the tax office or a tax accountant. For rate tables and calculation examples, see the column on offshore forex taxes on this site.
- Taxation method: offshore is generally miscellaneous income under aggregate taxation. Domestic is separate self-assessment taxation
- Tax rate: offshore is calculated together with your other income. Domestic is 20.315%
- Loss carry-forward: offshore losses generally cannot be carried forward. Domestic losses can be carried forward for the following 3 years if conditions are met
- Loss offsetting: offshore losses cannot be offset against other income. Domestic losses can be offset within miscellaneous income from futures transactions and similar
Trust protection and FSA registration
The FSA requires domestic brokers to manage client assets clearly separate from their own assets. In practice this means a money trust at a trust bank or similar. The aim is to protect client assets if the broker fails.
Fund management at offshore brokers is explained differently by each broker. This site's verified data records it as follows.
Note: segregated management and trust protection are not the same. Segregated management keeps company funds and client funds apart. Trust protection goes further and deposits the funds with a trust bank or similar. For offshore forex, check in the terms what is protected and to what extent.
Registration also differs. Domestic forex requires registration as a financial instruments business operator. Offshore brokers point to overseas authorities, such as the Mauritius FSC for Monaxa and INFINOX. For more, see the column on the legality of offshore forex and the FSA warning on this site.
- Monaxa: states segregated management at Tier-1 banks. Check the terms for details
- Axiory: states a zero cut guarantee on its official site. Check the terms for fund management details
- XS: check the applicable terms for details of client fund management
Pros and cons of offshore forex
Domestic forex is strong on Japan's well-developed regulation and tax system. On the other hand, leverage is capped at 25x, which does not suit moving a large position with a small deposit.
For how bonuses work and their withdrawal conditions, see the bonus basics guide on this site. Source: this site's verified data, FSA and NTA.
- Pro: high leverage allows trading from a small amount
- Pro: zero cut makes it easier to avoid claims above your deposit*
- Pro: some brokers offer deposit and account-opening bonuses
- Con: profits are under aggregate taxation, and the tax burden can be heavier with a large income
- Con: the framework differs from Japanese trust protection, so you must check fund management for each broker
- Con: high leverage also makes losses grow faster
Offshore or domestic: which suits which priority
Decide by what you value, not by which is more profitable. The list below gives guidelines only. It does not recommend any specific broker or trade. Source: the comparison in this guide.
Note: you can lose money with either. Both offshore and domestic forex can lose your capital. Do not use all your leverage, and start with a trade size that leaves a margin of safety.
To choose among offshore brokers, see the broker comparison basics guide on this site.
- Moving a large position from a small amount: offshore is the likelier fit. Check the loss risk of high leverage
- Avoiding margin calls: offshore is the likelier fit. Check the conditions and exceptions of zero cut
- Keeping tax low: depends on the size of your profit. Compare aggregate taxation with 20.315%
- Valuing trust protection: domestic is the likelier fit. Check how funds are segregated
- Trading with a Japan-registered broker: domestic is the likelier fit. Check the financial instruments business operator registration
Checklist before starting offshore forex
Follow these four steps in order. Each takes only a few minutes.
See the list of offshore brokers covered on this site (brokers) for the next step.
- Step 1: Check the tax method. Assume a profit and estimate which is heavier, aggregate taxation or 20.315%. Confirm the decision with the tax office or a tax accountant
- Step 2: Read the broker's terms. Check the zero cut conditions, the stop-out level and the fund management method
- Step 3: Set your trade size from your own funds. Decide the lot size from your own capital, not counting bonuses
- Step 4: Compare brokers. Compare account types, deposit and withdrawal methods and whether Japanese-language support exists
Frequently asked questions
Q. What is the difference between offshore and domestic forex?
A. The main differences are the leverage cap, margin calls versus zero cut, trust protection and tax. Domestic forex is capped at 25x for individuals, and profits are taxed separately at 20.315%. Offshore conditions differ by broker.
Q. Is offshore or domestic forex better?
A. Neither is better. It depends on what you value. Offshore forex is the likelier fit if you want to move a large position from a small amount or avoid margin calls. Domestic forex is the likelier fit if you value trust protection or Japan's tax system.
Q. How is tax different between offshore and domestic forex?
A. Under NTA Tax Answer No.1521, OTC forex with a Japanese financial instruments business operator is taxed separately by self-assessment. Offshore forex is generally treated as miscellaneous income under aggregate taxation. Rates and loss carry-forward also differ, so confirm the final decision with the tax office or a tax accountant.
Q. What are the pros and cons of offshore forex?
A. The pros are high leverage, zero cut and bonuses. The cons are a heavier tax burden under aggregate taxation, fund management that differs by broker, and faster loss growth. Check the conditions in each broker's terms.
Q. Does domestic forex have zero cut?
A. At a domestic broker, a margin call may be demanded if the balance goes negative. The FSA also explains that a loss larger than the margin can occur after a loss cut is applied. Check the conditions in each company's terms.
Sources and conditions
FX Textbook is edited from official platform documentation, broker-published information and applicable terms where available. Account conditions, services and rules can change. Confirm the current terms in the broker's registration flow before you act.
FX Textbook is an independent information site, not a broker or provider of personal investment advice. Forex and CFDs involve risk. You may lose some or all of your invested capital. No trading result is guaranteed.
NEXT STEP
Once you know the differences, compare brokers that fit.
Compare leverage, account types and zero cut conditions across the listed brokers.