diff --git a/plans/2026-08-05-proxy-relay-error-attribution.md b/plans/2026-08-05-proxy-relay-error-attribution.md
new file mode 100644
index 000000000..63203ec11
--- /dev/null
+++ b/plans/2026-08-05-proxy-relay-error-attribution.md
@@ -0,0 +1,81 @@
+## Root cause: PRXY errors are attributed to the forwarding server instead of the destination relay
+
+When private routing is enabled and the destination relay is unreachable, the client reports
+**"Error connecting to forwarding server smp5.simplex.im"** — naming a preset server that the client
+connected to successfully. Retrying rotates to the next proxy (`getNextServer`, `Agent/Client.hs:689`)
+and produces the same message with a different preset server, so the destination server is never named
+and the failure looks like an outage of our own infrastructure.
+
+### Reproduction
+
+Connecting to a contact address on an unresolvable host (`simplex.server.home`, no DNS record):
+
+```
+-- private routing off (correct)
+BROKER {brokerAddress = "smp://VvXX…@simplex.server.home:5223",
+        brokerErr = NETWORK {networkError = NEConnectError {connectError = "…does not exist (Name or service not known)"}}}
+
+-- private routing on (misattributed)
+SMP {serverAddress = "smp://…@smp5.simplex.im,…onion",
+     smpErr = PROXY {proxyErr = BROKER {brokerErr = NETWORK {networkError = NEFailedError}}}}
+```
+
+### The asymmetry between the two proxied paths
+
+A server returns `PROXY (BROKER …)` only from `smpProxyError` (`Client.hs:804-815`), which is called
+exclusively where the proxy failed to reach the relay — `PRXY` (`Server.hs:1444`) and `PFWD`
+(`Server.hs:1466`). The error therefore *always* describes the proxy→relay hop. The two paths then
+diverge in how the agent wraps it:
+
+**PFWD — keeps both addresses** (`Agent/Client.hs:1183-1189`): the proxy's error arrives as
+`Left ProxyClientError` and is thrown as `PROXY {proxyServer, relayServer, proxyErr}`.
+
+**PRXY — drops the relay** (`Agent/Client.hs:713`): `connectSMPProxiedRelay` has no `Either` layer, so
+the error arrives as `PCEProtocolError` and `liftClient SMP` maps it to `SMP <proxyAddr> (PROXY …)`
+(`Agent/Client.hs:1244`). The destination address is discarded.
+
+Both clients read the second shape as a client→proxy failure and word it accordingly
+(`SimpleXAPI.kt:2692`, `ErrorAlert.swift:117`), which is never what it means.
+
+### Fix
+
+In `newProxiedRelay`, map proxy-reported `PROXY (BROKER …)` errors to the same shape `PFWD` already
+produces:
+
+```haskell
+proxyRelayError :: HostName -> ErrorType -> AgentErrorType
+proxyRelayError proxyHost = \case
+  e@(SMP.PROXY (SMP.BROKER _)) -> PROXY {proxyServer = protocolClientServer smp, relayServer = …destSrv, proxyErr = ProxyProtocolError e}
+  e -> SMP proxyHost e
+```
+
+`liftClient` applies this only to `PCEProtocolError`, so genuine client↔proxy failures (response
+timeout, network error, proxy transport version) still map to `BROKER <proxy> …` and remain attributed
+to the proxy. Both apps already render the resulting shape correctly, with no client change:
+*"Forwarding server smp5.simplex.im failed to connect to destination server simplex.server.home."*
+
+The guard is `BROKER` rather than every `ProxyError`, so the remap covers exactly the misattributed
+class and nothing else. `BASIC_AUTH` is deliberately excluded — the proxy returns it when proxying is
+disabled or the basic auth does not match (`Server.hs:1416-1420`), which is a client↔proxy fact and is
+correctly attributed today. `NO_SESSION` is returned only for `PFWD`. `PROTOCOL` describes the relay
+but is not rendered as a proxy-connection error by either client, so leaving it unchanged keeps the
+diff to the errors that actually produce a wrong message.
+
+### Blast radius
+
+- `temporaryAgentError` (`Agent/Client.hs:1572-1580`) and `serverHostError` (`:1594-1596`) already match
+  both shapes with the same helpers — retry and proxy-fallback behaviour is unchanged.
+- `clientServiceError` (`:1268-1273`) has no `PROXY`-shape twin for `BROKER NO_SERVICE`, but both ends
+  document that case as unreachable (`Client.hs:812`); left as is.
+- simplex-chat `Subscriber.hs:1819-1820` handles both shapes; send failures move from `SndErrProxy` to
+  `SndErrProxyRelay`, i.e. "Destination server error" rather than "Error" — also more accurate.
+- `SMP _ (PROXY _)` becomes unreachable, making `smpProxyErrorAlert` in both clients dead code. Removing
+  it is a follow-up in simplex-chat, not required by this change.
+
+### Verification
+
+- Reproduced before/after with a CLI built against this branch: the error now carries
+  `relayServer = "smp://VvXX…@simplex.server.home:5223"`, and the direct (non-proxied) path is
+  byte-identical to before.
+- `SMPProxyTests`: 45 examples, 0 failures — including `fails when fallback is prohibited` and both
+  retry tests, which exercise `newProxiedRelay` and the error classification.
diff --git a/src/Simplex/Messaging/Agent/Client.hs b/src/Simplex/Messaging/Agent/Client.hs
index bb4f1a950..0b45cb932 100644
--- a/src/Simplex/Messaging/Agent/Client.hs
+++ b/src/Simplex/Messaging/Agent/Client.hs
@@ -710,7 +710,7 @@ getSMPProxyClient c@AgentClient {active, smpClients, smpProxiedRelays, workerSeq
       pure (clnt, sess)
     newProxiedRelay :: SMPConnectedClient -> Maybe SMP.BasicAuth -> ProxiedRelayVar -> AM (Either AgentErrorType ProxiedRelay)
     newProxiedRelay (SMPConnectedClient smp prs) proxyAuth rv =
-      tryAllErrors (liftClient SMP (clientServer smp) $ connectSMPProxiedRelay smp nm destSrv proxyAuth) >>= \case
+      tryAllErrors (liftClient proxyRelayError (clientServer smp) $ connectSMPProxiedRelay smp nm destSrv proxyAuth) >>= \case
         Right sess -> do
           atomically $ putTMVar (sessionVar rv) (Right sess)
           pure $ Right sess
@@ -721,6 +721,18 @@ getSMPProxyClient c@AgentClient {active, smpClients, smpProxiedRelays, workerSeq
               TM.delete destSess smpProxiedRelays
             putTMVar (sessionVar rv) (Left e)
             pure $ Left e
+      where
+        -- proxy reports BROKER errors about the relay, not about its own connection,
+        -- so they include both addresses, same as PFWD errors.
+        proxyRelayError :: HostName -> ErrorType -> AgentErrorType
+        proxyRelayError proxyHost = \case
+          e@(SMP.PROXY (SMP.BROKER _)) ->
+            PROXY
+              { proxyServer = protocolClientServer smp,
+                relayServer = B.unpack $ strEncode destSrv,
+                proxyErr = ProxyProtocolError e
+              }
+          e -> SMP proxyHost e
     waitForProxiedRelay :: SMPTransportSession -> ProxiedRelayVar -> AM (Either AgentErrorType ProxiedRelay)
     waitForProxiedRelay (_, srv, _) rv = do
       NetworkConfig {tcpConnectTimeout} <- getNetworkConfig c