Living Abroad and Understanding Offshore Banking
Published on 08 August 2007
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There is an increasing amount of information available on the internet about banking internationally or managing finances when moving abroad because more and more people are researching their relocation options.
In this article we’ll be looking at living abroad and understanding offshore banking because as an expatriate – or a soon to be expat – you have many more options when it comes to banking internationally, saving tax and gaining flexibility in terms of your finances.
In terms of the wealth of information that’s being disseminated largely via the internet, thankfully a lot of it is now being written in more straightforward, accessible and practically applicable terms rather than being pitched to international business persons seeking asset protection offshore or who are looking to minimise their corporate taxes for example!
On this website for example we have a good mix of articles and information for both international business persons seeking offshore solutions and expats or would-be expats trying to find out about how to bank abroad.
We always try to provide relevant and appropriately targeted information and solutions to both groups of people - so expatriates can learn more through the Expatriate Essentials section and those requiring more in depth information can go straight to our Offshore Banking section.
In terms of the offshore banking institutions favoured by expatriates, HSBC was one of the most popular banks among our readers until they decided to ramp up international and offshore bank account charges and penalise those whose current account balances fell below a relatively high threshold.
Judging by email comments we have received, HSBC have possibly lost a certain amount of business as a result of their decision.
Having said that, because expats generally require flexibility from an offshore account rather than the layers of privacy and transactional confidentiality that international business persons require, high street banking institutions like HSBC, Barclays and Lloyds TSB will always be their first and possibly only port of call when seeking an offshore or international banking solution.
We understand that this is because the expat in question is dealing with a known banking institution and this gives them peace of mind at a time when they will be under a lot of stress trying to organise all other aspects of their move abroad.
No matter which banking institution you favour there is one essential piece of information that anyone thinking about living abroad must keep in mind and that is this – naturally it completely depends on your personal circumstances, but anyone legally able to retain a bank account back home is strongly advised to do so. If you do not, it can be literally be impossible to get back home should you ever decide to repatriate.
Taking the UK as an example, with no bank account in the UK already it can be impossible to open a bank account in the UK, with no bank account it can be impossible to get credit history, with no credit history you can’t even rent a property in the UK nowadays let alone raise a mortgage to buy one.
So if a relocating UK individual can legally retain a UK based bank account then they are strongly advised to do so - but they should always check out their eligibility and also find out about any tax or reporting requirements placed on them of course.
In terms of getting advice and information about your own personal financial circumstances and offshore eligibility, it can be very difficult for expatriating individuals because every single nation has different taxation rules relating to its domiciled citizens, its residents and the way they generate or receive their income, and there are also double taxation agreements to take into account.
While many people are aware that as an expatriate they often have a taxation advantage over their peers or family and friend back home, they are unaware of how to tap into that advantage easily and legally.
In terms of who to speak to to get advice – it’s imperative that someone planning on moving abroad to a given location considers their financial and taxation situation before they make their move. After all they don’t want to move to a country and pay more tax or end up in a location where their state pension is frozen for example.
So forewarned about all these matters is certainly forearmed.
Then, once the person in question has moved and has changed their residence status to that of their new home country, it is at this stage that it can be advantageous to speak to an offshore financial adviser to explore their financial options. Just make sure the adviser spoken to is qualified, regulated and accountable for the advice they impart.
And finally, remember that no one has any obligation – moral or legal – to overpay their taxes. Therefore those with an ‘international’ lifestyle, expatriates and anyone thinking about moving abroad would be well advised to explore their offshore options to determine whether they can legitimately reduce their current taxation burden.
Just bear in mind that the two keys to understanding and embracing the concept of offshore are as follows: -
1) If you’re going offshore, do it right – i.e., ensure your actions are within the law and that they will benefit you.
2) You must report your offshore activities where a legal reporting requirement exists…
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