Offshore banking is simply banking in a country other than your own. However, most people who opt for opening an offshore bank account do so in countries that has little to no taxation.
The majority of offshore banks are located in islands, such as the Bahamas and the Channel Islands, but offshore banks1 can also be found in landlocked countries, including Switzerland and Luxembourg.
Benefits of Offshore Banking
The main interest that comes to mind with banking is tax limitations;2 it’s also the most misunderstood gain. Very few people qualify for the tax limitations because almost every country demands their residents to report all interest earnings, even if it’s gained abroad. Asset protection and confidentiality are some of the most important reasons why people bank offshore.
Protecting your assets is important because nobody wants to lose everything that they own, but the protection is only as good as the confidentiality laws. Offshore banks are not regulated as mainland banks, so government intervention is minimal. With offshore banks, your privacy is 100% guaranteed. Other interest to banking include escaping political and financial instability in your home country and major rates.
Disadvantages Of Offshore Banking
In answering the question what is offshore banking, one must look at the disadvantages to get a clear picture. One of the worst things about banking is the reputation that it has received. When people hear offshore banking they tend to think of the super rich hiding their money so they will not have to pay contribution.
While some use banking for illegal purposes, it’s a great option for many people who are looking to collect a top interest on their investments3 or whom simply want to protect their assets. Since the bank is located in another country, visiting the bank is not something you can do easily. Luckily, if you use a reputable company to set up your account there is never really any need to go visit the bank, everything can be done from home.
Is Offshore Banking Right For You?
Now that we have answered the question, what is offshore banking, you must now decide if it’s right for you. As you can tell offshore banking has many of interest, so choosing the right jurisdiction for banking is important.
You can contact us and speak to our reputed financial adviser if you want to know more on what is offshore banking. When it comes to asset protection and major rates, then banking becomes the best choice for your hard gained money or assets.
Offshore Banking Overview
This offshore banking overview will provide you with general information on banking.
You can then use this information to make educated decisions with regards to whether or not you wish to open an offshore bank account, as well as where the best site to open an account is.
When it comes to investing how do you know where to go, is one place really better than the other?
Every jurisdiction is going to provide something different; after all, they are trying to attract your business away from the other places. Offshore banking locations are generally divided into two groups, one with low taxation, and one with zero taxation.
Most European countries that provide accounts are in the first group. Countries such as Switzerland, Malta, Republic of Ireland, and a few others provide what is known as tax shelters. Central American countries, islands including but not limited to the Cayman Islands, Dominican Republic, and Panama, fall into the second group and are usually the preferred location for offshore banking.
Switzerland is probably the most preferred European location, but the Dominican Republic is often a far better choice. If you opt for the Dominican Republic you will never have to worry about your financial information being shared with other countries, this county does not recognise any international treaties that demand the disclosure of financial information.
However, where you end up opening a bank account will depend on what revenue you want to receive and how much you want to save in contribution.
Who Can Go Offshore
While it used to be that only the very rich or the larger corporations4 had bank accounts, it’s quickly becoming more commonplace. In general, anybody who wants to protect their assets or profit from high rates is welcome to go offshore. However, you will want to keep in mind that it does cost money to go offshore, how much depends upon where you go.
Benefits Of Offshore Banking
Many people think that tax limitations are the main reason why individuals and corporations choose to go offshore, but the truth is most countries need all earnings be reported no matter where it’s gained. Therefore, most people do not receive any type of tax interest by going offshore. Asset protection and top rates are probably the best advantage of going offshore but are certainly not the only revenues. Going offshore also allows people to escape any political or financial instability in their home countries, as well as reap the rewards of major rates.
With this offshore banking overview you will be able to have a basic understanding of what banking is about. However, if you need more information or just have some general questions that were not covered in this offshore banking overview you can contact us and speak to our financial adviser.
Offshore Banking Explanation
The tax benefits that an individual or business receives from banking is one of the main reasons why offshore banking is becoming so popular.
Tax advantage from banking is not the same thing as evading duties, even banks have to report how much money is in certain accounts. This offshore banking explanation will help you understand how it works in respect to reducing liability rather than evading what you owe.
Reducing Your Tax Liability
One of the best tax interest is the ability to reduce your tax liability in your home country. For those individuals and corporations who pay a high tax reducing the tax liability is necessary, the less they pay in taxes the higher the profits.
Offshore banking allows individuals and corporations to reduce their current tax liability by simply transferring money and investments to a banking account in countries that have little to no tax. This will only work in countries that do not need revenues earned aboard to be reported.
Lowering tax liability is a great concept, but it must be done legally. Very few individuals are in a position to lower their overall tax liability simply by banking offshore. Some countries demand revenues earned abroad to be reported, such as the United States. In general, the only people who gain from the tax savings are those who have a tax liability to a country that has little to no taxation but are currently residing in a country that has high tax rates.
Interest Rates And Taxes
Offshore banks often attract customers with the high rates they offer, there is no government intervention to place caps on the interest rates. Offshore banks are able to offer higher rates to their clients due to lower operating costs. Offshore banking supporters often claim that the regulations placed on banks by governments is a form of taxation because it lowers the interest rate individuals and corporations can earn on their deposits.
To make the attraction of top rates even better, banks often pay out interest on income before it has been taxed. For individuals and corporations that live in countries that do not need reporting on income derived from aboard, this is a huge interest. For those that live in countries that have a negotiable tax return, where tax is not paid on any income until the tax return has been agreed upon by all parties, it’s also a gain.
While offshore banks were initially used by the very rich and large corporations, it’s becoming more commonplace for even the moderately wealthy and smaller corporations. The banking explanation on tax benefits explains why so many are now turning to banking to grow their wealth.
Offshore Banking Eligibility
This offshore banking eligibility guide will help you check if you qualify or are entitled to open an offshore banking account. Offshore banking used to be something only the very rich or large corporations could afford, but today that has changed and almost anyone can open a banking account.
While bank accounts are open to just about everyone there are still certain demands that must be met, mainly how much money you must deposit. To open an account some banks will ask you to deposit £5,000, while the majority of banks require a minimum of £10,000.
Criteria For Opening An Account
While bank accounts are open to just about anybody, certain criteria must be met to open the account.
Not all banks are going to require the same information; here is a look at the basic criteria that must be met to open an offshore bank account:
- While you do not need to visit the bank to open an account you will need to provide detailed information about your business. This includes providing the actual name of the owner and controller of the business, as well as what type of business will be conducted.
- Beneficial owners and any person who will have signatory rights on the account must be identified in order to be on the account. They must also provide certain documents that have been legalised and notarised. Basic documents that must be submitted include a Certified Passport, second form of photo ID, professional reference, a cash flow forecast, and a description of the business.
Who Should Bank Offshore?
Although offshore banking is open to everyone that does not mean everybody should open an account. Here is a list of the main reasons why people open an account:
- Help offset the risk of political or economical risk when they live in an unstable country. Offshore accounts help these individuals protect their assets just in case something in their home country goes wrong.
- You own a company that conducts international business across numerous countries, such as an import/export business.
- If you travel frequently, having an account can help with the exchange rates5 costs and risks, but also provide you with better interest rates.
If you have any questions about offshore banking eligibility you can write to our office and speak to our reputable financial adviser.