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An offshore bank account is simply a bank account in another country. Some people have them because they were born there. Some have them because they do business abroad. Some have them because they want to have money kept safe from nuisance law suits. Some have them because their own government is unstable. Some have them because their own currency is unreliable. Some have them because they want to hide money from the wife!
There are other advantages too. First, no tax is deducted from interest earned on deposits. Secondly, there will, or should be, be no active onshore bank accounts to aggravate your case for non-resident classification the Inland Revenue or IRS. And, third, private offshore banking is strictly confidential.
You might also want private offshore banking to:
- Expand your business;
- Simplify business administration;
- Asset protection;
- Global and/or tax-free investing;
- Trade worldwide.
Simplicity of operation may be even more important than lower taxes. If you are planning to set up a company other than a bank or other finance-related company, then you will find certain jurisdictions to be more suitable for business operation. Different countries obviously have different laws, and there may be huge differences between them.
Any country that is not your home country may be considered offshore and many of these provide as much or more safety to you and your banking offshore needs.
Some banks will open a so-called numbered account. A numbered account is maintained under a number (or a false name) only; the actual account holder's name is protected by the bank. Such accounts may be held by both individuals and corporations. The bank itself must know who you are, under 'due diligence' and 'know your client' rules.
Also, another benefit of going offshore is you may save money in taxes. Offshore banks are located in tax havens. Not having to pay taxes can save businesses significant amounts of money and is the main reason, other than privacy, that individuals choose offshore bank accounts.
However, you don't have to be ultra-rich. All you have to be is an entrepreneur interested in doing business abroad or via the world wide web.
Because credit cards provide easy access to offshore funds and accounts in tax haven countries, this situation allows income to be hidden. Although is not illegal to have an offshore credit card, the average person does not need one. Some individuals use offshore credit cards to evade paying taxes.
This is a foolish reason to get an offshore account. If you are resident in and doing business within a country, you are subject to its tax laws. If you are also a native, your ‘wiggle room' with regard to local taxes is likely non-existent. Take advice from a specialist accountant before trying to hide the revenue from your dry-cleaning business!
If, however, you are doing business abroad, and your money stays abroad, and/or you're are not domiciled in the country you're operating from, it becomes progressively easier to own and operate an offshore bank account legitimately. You just need to get up-to-date on local tax law.