How to Open an Offshore Bank Account

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 - from examining the benefits of banking offshore to finding and opening the best offshore bank account for your requirements.

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 - from examining the benefits of banking offshore to finding and opening the best offshore bank account for your requirements.

Where does the term ‘offshore’ come from?

The term ‘offshore’ originates from the Channel Islands (Jersey, Guernsey etc.) which are physically located offshore from mainland Britain and which enjoy a tax haven status.

The term is widely used today to refer to tax havens in general, whether they are island nations or not.

What is an offshore bank account?

Simply defined, an offshore bank account is an account held in a bank that is located outside your country of residence.

Usually such an account is located in a low tax jurisdiction and offers certain financial and/or legal benefits to the holder of the account. 

Who can legally open and hold such an account?

Generally speaking anyone is free to open an offshore bank account.

In fact, offshore banking has been widely used for many years by both individuals and organisations worldwide.

What are some of the general advantages of banking offshore?

There is no definitive answer to this question as every individual’s circumstances are unique, and there are so many different types of account available in so many different locations in the world, and each offers the individual customer different features and benefits!

But if you’re an expatriate living and working overseas for example, offshore banking could have tax benefits for you, as interest on your offshore account could be paid without tax being deducted.

And if you were to transfer your current savings and investments offshore as well you may be in a position to further reduce your tax liability in your home country.

Other general benefits not limited to expatriate account holders may include: -

- asset protection
- estate planning and inheritance tax planning
- privacy and confidentiality
- better interest returns
- lower taxation burden
- the chance to exploit active business interests overseas in low to no taxation jurisdictions
- and global access to assets and income.

Do I have to declare income I generate from interest on my offshore bank account?

Certain countries in the world require their residents to declare their worldwide income.  Tax is then payable on the income - the UK and the US are two such countries.

Most countries have no restrictions on where your business interests, investments or bank accounts are located; it is simply your responsibility to report any income you earn to the appropriate tax authority.

If you are not resident in a country that has reporting requirements you may not have to declare any income you earn. 

You are best advised to speak in confidence to an international accountant or financial adviser with an understanding of all things offshore to determine your obligations. 

If you need assistance locating a suitable adviser many advertise on the internet, alternatively we have a free service that can potentially put you in touch with an adviser in your area.

If you cannot find what you’re looking for or you have a specific query, contact us and we will endeavour to assist you.

Am I guaranteed absolute privacy and confidentiality from an offshore bank?

When it comes to the declaration of assets held and ‘savings income’ generated, the EU Savings Tax Directive 2005 may limit the amount of privacy you are afforded if you bank or reside in one of the countries affected by the directive. 

These countries are: -

Andorra, Anguilla, Aruba, Austria, Belgium, British Virgin Islands, Cayman Islands, Channel Islands, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Isle of Man, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg, Malta, Monaco, Montserrat, Netherlands, Netherlands Antilles, Poland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turks & Caicos and UK.

Simply put, the EU Savings Tax Directive 2005 is an agreement between the EU Member States to automatically exchange information about any customers who earn savings income in one EU State but who reside in another EU State. 

This is known as the ‘automatic exchange of information option’ and it is the ultimate objective of the Directive.

If you would like more information about this I suggest you read What is the EU Savings Tax Directive 2005?

If you would like to find out whether you can escape the restrictions of the directive we can put you in touch with an experienced financial adviser, please get in touch.

If you are not affected by this directive then your assets and any income you derive from them will be afforded a certain level of privacy.

But while most offshore jurisdictions offer very high levels of confidentiality, they cannot guarantee you absolute secrecy as all financial institutions worldwide have a legal obligation to report suspicions of serious criminal conduct - e.g., terrorism. 

If you’re not a terrorist or serious criminal then you are pretty safe!

All your personal data is subject to modern data protection legislation, and there are civil and criminal penalties for breach of confidentiality and unauthorised disclosure and it would never be in an offshore bank’s interests to breach this legislation.

If you desire further guaranteed levels of anonymity and confidentiality you may be able to benefit from various other offshore vehicles such as International Business Companies (IBCs) and/or offshore trusts.

There is further information about these options available on this site.

How do I choose the right offshore bank?

Many banks advertise their various accounts on the internet, in fact the number and variety of banks and accounts on offer is daunting and the problem isn’t likely to get any easier with time as more and more account types and variations on the theme are becoming available from more and more institutions year on year. 

Each back is vying for your business and attention. 

So, how do you sort the wheat from the chaff and make sure that you select the best establishment for your money management needs?

Firstly, select your jurisdiction carefully, and pay particular attention to the local regulatory rules and regulations that govern the jurisdiction.  After all, you need to be sure that any investment you make within an offshore centre is going to be secure.

When you have a particular location in mind consider doing a little research into which financial and banking big brand international names are located within your favoured offshore centre.  Though this is not an exact science, chances are the jurisdiction is considered secure and legitimate if the larger international banks have offices there.
Now you’ve narrowed down your location options you will need to decide which institution is worthy of your business.

Do your research and find out who exactly is the money and security behind a particular bank and see if you can learn a little about the bank’s history in terms of its stability, security and customer/staff turnover - this due diligence is particularly applicable to those thinking about investing with a lesser known offshore bank. 

Obviously if you’re considering opening an HSBC offshore bank account your research needn’t necessarily be so intense!

Make sure you’re happy with the bank’s general attitude towards its customers - there is nothing worse than ringing up for a balance inquiry and speaking to some stroppy employee who couldn’t care less about you and your needs! 

Also, if you’re considering online banking make sure your connection to the bank is secure - further details about a bank’s security methods can usually be found on their website.

Which is the best offshore bank account?

The answer to this question will depend entirely on you requirements, your favoured banking jurisdiction and your preferred financial institution.

The key is to always stay in touch with your immediate money management requirements.

Many offshore bank accounts these days come with more bells and whistles than you could imagine!  And chances are these features don’t come for free! 

So ask yourself this -

“Which features of an account are essential to me today, and which features can I really live without?”

Often the ability to access and manage an account remotely - either via the internet, telephone or fax machine - is an essential requirement.  If this is true for you, consider how you would like to be able to manage your account and make sure that option is available to you from your chosen bank.

If a plain vanilla deposit and easy access account is all you really need, then make that your goal.

If on the other hand you would like to save and invest through your favoured offshore institution consider the more sophisticated packages of banking facilities on offer from the institutions in your favoured jurisdiction.  Check out their charge structure and what additional features they offer you in an attempt to win your business.

Money management techniques, interest rates, multi currency options, investment funds on offer - all of these points and more may be of importance to you if you’re looking for a more sophisticated banking package - make sure you get what you need and don’t accept less than the best.

Ultimately, when it comes to your money, you are the buyer and in this case, it’s a buyer’s market.  Therefore you need accept nothing less than the very best because the banks and offshore financial centres are seeking your investment and commitment; therefore they have to offer you the features and security you desire in return for your commitment.

Finally, how do I open and access my offshore bank account?

Generally speaking you neither have to visit the country in which you wish to open an account, nor do you have to travel to the country to carry out any banking activity.

Most offshore accounts offered through legitimate organisations will allow you to carry out all your banking activity via the internet, e-mail, post, fax or telephone. 

Furthermore, many offshore bank accounts offer full credit card services and in some cases, debit cards are available as well allowing you easy and direct access to your funds at all times.

Conclusion

If after reading this article you believe that an offshore bank account is the solution to your needs you will need to think about the jurisdiction you favour, the financial institution most suitable for your needs and your preferred account type.

The internet is an excellent place to begin the next stage of your research.

Alternatively, if you’re tired of searching for the ‘right’ solution we may be able to assist you. 

For example, if you have any ‘offshore’ questions - from banking to investing to relocating - feel free to .(JavaScript must be enabled to view this email address).  If on the other hand you would like us to assist you with finding and opening the right offshore bank account for example, simply complete the Offshore Advice Form with your details and requirements and we’ll do our best to help you.

Whichever path you now choose to take we wish you money management success.