While offshore bank accounts are not for everyone, they can offer huge benefits to the right person. For many small businessmen and entrepreneurs, a good offshore bank account has provided the "key" or competitive edge to unlock vast potential wealth. But first I want to dispel two big myths about offshore bank accounts.
#Myth 1 - Only the super-rich can afford offshore bank accounts. You don't need to be rich to open an offshore banking account. While it is true that a "wealth-management" service with a personal banker might require an initial investment of US$1MM, accounts with no minimum deposits certainly exist, and smaller minimums of US$500-5000 are quite common.
#Myth 2 - Offshore bank accounts are illegal, or used only by criminals. The confidentiality that offshore banking accounts offer has led to abuse by criminal gangs, but in fact these days many offshore banks have stricter due diligence than their onshore competitors. Criminal activity, wire fraud and money laundering will just as likely take place in New York or London (government sponsored or otherwise). Furthermore, ownership of an offshore bank account is never illegal, although not declaring that you have it can be illegal (laws will vary from country to country).
What can an offshore bank account do for you? Here are some of the advantages that have helped investors make their choice.
1) Privacy - Shield your assets from prying eyes. The phrase "If you're not doing anything wrong, you've got nothing to hide" is often used, but the brutal truth is that many citizens from countries all over the world are exposed to corrupt authorities and criminal elements. Even in more stable countries frivolous litigation can decimate a man's wealth, while he cannot trust the government to rule in his favour. Why take the risk? By shielding your financial identity with an offshore bank account you can escape the attention of greedy lawyers and experience the kind of total economic freedom that a domestic account can't offer.
2) Asset protection - Wealth held offshore is harder to reach for anyone who might want to get their hands it. Often the physical distance and legal complexity of attempting to seize an offshore account will ensure that a case against the account holder never takes off.
3) Earn tax-free interest - Many offshore accounts will not have interest taxed at source like your home bank account. In addition the offshore account can open up for you some of the best investment opportunities not available in the domestic market .
4) Multiple currencies at your fingertips - swiftly change between foreign currencies at a fraction of the cost of doing it at home. Some offshore accounts will also offer FOREX and Trading accounts, allowing you to instantly buy and sell at the click of a button from a tax-free offshore base.
5) Perhaps the best advantage of an offshore account is that it will allow you to make international transactions with little or no hassle and red-tape. If you try to transfer even relatively small amounts of money from your domestic account you will likely face a barrage of security questions and other invasive queries, but a good offshore account will allow you to make such transactions online effortlessly, and into the many millions of dollars.
Off shore banking used to be viewed as the sole province of those with mahogany toilet seats or criminals planning to steal large amounts of cash. However, corporate offshore banking has not only become more accepted, the benefits of it have grown in current economic conditions. Here we look at what you should know before you open an offshore banking investment account.
1. The first thing is a good news item - there are more benefits to banking offshore than you might realize. When you bank within your own jurisdiction, your money is not safe from unauthorized withdrawals, even by your own government. The debt caused by even a contested tax bill can be withdrawn at will by the government - this is as true for corporations as it is individuals.
If you have large amounts of funds in an offshore banking investment account, they are also not subject to withholding taxes on the interest earned, and therefore your money is growing quicker.
2. You should choose your jurisdiction for offshore banking investment and corporate offshore banking wisely. It is generally wiser to bank further away from where your company operates - your investment management services firm will most likely advise somewhere that is out of your continent or general geographical area.
This reduces the risk that your company's money will be subject to local laws, and perhaps lower the benefits of banking offshore. You may be subject to your offshore bank deducting an undisclosed rate of tax from your accounts that bear interest, defeating the very purpose of opening an offshore bank account.
You may be advised to bank offshore in Singapore if your company operates in Europe, or to bank in the Isle of Man if you operate out of America.
3. It is better to choose a large than small bank, generally speaking, for your offshore investment biz. However attractive a small bank might seem - given that they offer better privacy, more personal service or that you'll feel better looked after there. However, these banks must often operate under a sub-account of a major bank, which increases the time it takes to get to your money, and creates more restrictions on how you can conduct your offshore banking.
For example, if money is sent to your corporate offshore banking account at a small bank, the business may only be mentioned in the comments field of the deposit note, or in the 'for further credit of' area - meaning that according to official documentation, the bank itself is the beneficiary of the funds, not you. At a large bank, the account holder is the beneficiary, keeping your money more secure in your company's name.
4. Be aware that if you are opening a corporate offshore banking account for privacy's sake, that privacy is often conditional - privacy protection measures can be breached by presentation of a court order. Truly anonymous banking is a thing of the past, whether that is fortunate or unfortunate for your organization.
5. The last piece of advice about corporate offshore banking is that you shouldhave your investment management services contact the bank directly by phone, rather than paying via the internet for someone to open an account for you. Often all they will do is provide you the paperwork to fill out for yourself - saving you next to no time, and costing a decent amount of money.
Open the account yourself, via your business consultancy management service, and save your company funds for what they are needed for.
Both Patrick Winters & Gregory Smyth are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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