Offshore Banking

In financial services the term ‘offshore’ comes originally from the Channel Islands, which are off shore from mainland Britain.  These Crown Dependencies have always maintained certain fiscal and taxation autonomy to the United Kingdom, and were among the first jurisdictions to be referred to as offshore financial centres.

Today there are about 70 offshore financial centres in the world, as defined by the likes of the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).  However, if you choose to bank in any jurisdiction other than the one in which you’re living, yours could be considered an offshore bank account.

Banking offshore has many potential benefits; particularly for certain demographic groups such as expatriates for example.  Others who may benefit include those seeking flexible company bank accounts, those seeking privacy of their assets and transactions, and anyone who requires an international account.

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Before you moved abroad you may have thought that a bank account was a bank account – i.e., that there were few if any variations on the current account theme!  However, as soon as you move abroad and begin contemplating how you’re going to manage your money, you may well discover that there are different types of offshore bank account to choose from.

Some are actually just the repackaging of a plain vanilla current account – jazzed up to catch your eye!  Others have very real and clearly definable advantages that some expatriates or international businesspersons may be looking for.

In terms of the different types of offshore bank account you can access they include international accounts, multi-currency accounts and business bank accounts.  Some banks then offer different levels of bank account – from a premium or premier account to a simple current account.  So which one is most suitable for you?

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For an expat there are definitely more advantages than disadvantages to having an offshore bank account.  Having said that, how you choose to manage your money will always be a personal choice! 

To help you make that choice a fully informed one, please allow us to detail the pros and the cons of choosing an offshore bank account.

You can use the lists below and compare them to your own personal circumstances, and in so doing hopefully identify the best way forward based on your individual situation.  If in doubt, always seek the advice of a qualified financial adviser when it comes to decisions affecting your wealth status.

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There’s a commonly held misconception that the term ‘offshore,’ when applied to financial services, relates to immoral or illegal activity.  Governments and onshore banks are happy for this myth to pervade and colour people’s opinions about the likes of offshore bank accounts.

The reasons being your government would rather have all your wealth onshore where it can see it, tax it and generally benefit from it, and the onshore banking community would like you to retain all funds with them so that they can profit from them.

The fact of the matter is however, banking offshore is not illegal, nor is it immoral.  For some people it is the only safe way to manage their money, for others it legitimately saves them being over taxed.  What’s more, as we will now demonstrate, offshore banking will never be made illegal.

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Introduced in 2005, the EU Savings Tax Directive has affected many who hold assets offshore within the European Union.  It has eroded their privacy or their returns.

The Directive was introduced in a bid to prevent cross-border tax evasion within the EU and associated territories.  The ultimate objective of the Directive is for all tax authorities to disclose and share information about any savings income payments made to those who hold accounts locally, but who reside elsewhere within the EU.

This is in a bid to ensure that everyone is declaring all assets and income correctly, and to ensure taxation due is paid to the correct tax authorities.  However, opponents of the Directive are quick to point out its many flaws…

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If you’ve determined that an offshore bank account is suitable for your needs you now need to identify which account is the best account!  There are a number of criteria you should bear in mind when comparing and contrasting offshore bank accounts.

However, as we will now explain, your considerations have to go beyond which account type is most flexible or beneficial.  Because you’re going offshore, you have to carefully select not only your jurisdiction, but the best banking provider as well.

Allow us to guide you through the considerations you need to have in mind when researching which is the best offshore bank account.

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One of the most commonly sought types of offshore bank account is a company account.  There are those who legitimately need a business account for their company’s transactions for example, and there are those who seek such an account as a means of adding a layer of privacy to their financial affairs.

There are plenty of benefits and advantages to offshore company bank accounts, however there are also many who offer such services but fail to provide them, leaving a client with a useless offshore company to which no back account is assigned.

We will discuss the uses of an offshore business bank account in this article, and explain how you can go about opening one and avoiding those who prey on people seeking assistance with opening such an account remotely.

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It seems to me that until you’ve lived abroad for quite some time and met many other expats and learned from them, or unless you work in a financial services facing business abroad, most expatriates don’t learn about their realoffshore options for a long time.  This is a genuine shame because it means that expatriates are missing out on the myriad benefits available to those who can legitimately bank, save and invest offshore.

As a writer constantly commissioned to cover issues related to the offshore financial industry, I could run the risk of becoming blasé about the benefits and advantages of ‘going offshore’ if it weren’t for the one thing that keeps my feet firmly on the ground.  And that one thing is the reader enquiries I receive every single day from those who really don’t know where to begin, and who aren’t sure whether what they’re reading about is really applicable to them.

It’s all very well for offshore banks and international financial services providers to pitch their marketing material at those who are already sold on the concept of investing in a different jurisdiction, but what about those who are beginning from the position that they’re not even sure whether all expats need an offshore bank account?  A reader asked me today whether they needed such an account now that they’re working overseas, and it’s a totally valid question that needs a proper answer.  So, if you’re new to the offshore world of banking, saving and investing, read on to find a way in to what can seem a confusing business.

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If you’ve ever wondered whether you could benefit from an offshore bank account, or you’re considering opening an account but you’re not sure which one to go for, this guide has been written with you in mind!

We take you right through the process of choosing the right account, and opening it.  We examine the benefits of banking offshore and help you to find and open the best offshore bank account for your requirements.

We discuss why you have to choose your jurisdiction carefully, and how ‘know your client’ due diligence now means that it is harder than ever before to open an offshore bank account - but it’s not impossible!

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So you’re interested in opening an offshore bank account but you need to know a little more about the offshore banking process first?

No problem, with our FAQ we will attempt to answer some of the most commonly asked questions related to opening bank accounts offshore.

Covering everything including: -

How do I open and access an offshore bank account?
What is an offshore bank account?
Where does the term ‘offshore’ come from?
Who can legally open and hold such an account?
What are some of the general advantages of banking offshore?
Do I have to declare income I generate from interest in my offshore bank account?
And much more….

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