Offshore Banking for Expatriates

Expatriates are privileged when it comes to their banking and investing choices because in general they are free to pick and choose from the best options and opportunities available to them from the global financial product market place.

Expatriates are privileged when it comes to their banking and investing choices because in general they are free to pick and choose from the best options and opportunities available to them from the global financial product market place.

Of course, certain choices may be limited depending on the home country of the expatriate and the nature of that country’s tax regime, but usually expatriates remain non-resident for the entire period of their overseas sojourn meaning they are free to take advantage of offshore banking and investing opportunities and the tax efficiency such solutions may offer during that entire period.

And of course, an expatriate doesn’t have to move to an offshore jurisdiction to take advantage of the offshore world because many countries, including high tax countries, offer non-residents tax breaks, investment opportunities and banking advantages that are simply not open to their resident citizens!

As an expatriate you don’t have to be high net worth to take full advantage of an offshore bank account either, all expats regardless of financial status (well, assuming you’re not stony broke!) should consider the possibility of offshore banking because it provides you with tax efficiency, confidentiality, flexibility and high accessibility.  And even if you only need a bank account into which you will receive funds, consider that any interest you receive on these funds will be tax free and you begin to see the advantages of offshore banking for expatriates.

When it comes to the types of account available, again flexibility and choice is unlimited.  You can choose from current accounts with varying degrees of access including instant access or debit/credit/cash card access, savings accounts including term deposit and notice accounts and accounts with various rates of interest payable depending on the restrictions of that account.

In terms of access to funds and transaction information most offshore banks offer internet and telephone access together with traditionally posting account statements and offering direct debit or standing order facilities.  You can generally choose to open an account in your currency of choice meaning you can protect yourself from currency fluctuations, you can open an account in the currency in which you get paid and/or the currency local to your new country of residence.

Many banks now offer offshore credit card and offshore debit card facilities to their customers meaning expatriates can manage all their financial transactions through one offshore bank if they so choose, thus removing the necessity to hold accounts back home, offshore and in the new local country.

Whether this central solution is wholly applicable is a matter of personal choice and circumstance of course, as is selecting the right offshore jurisdiction, financial institution and account type!

Offshore credit cards can be secured or unsecured.  Unsecured credit cards should only be offered by reputable banking institutions to their well known customers but unfortunately there are a number of unscrupulous banks offering ‘too good to be true’ offers of unsecured and anonymous credit cards to almost anyone.  Such offers are indeed too good to be true more often than not and result in the individual losing an initial administration and set up fee and never hearing hide nor hair of the fee or the promised credit card again!  A secured credit card on the other hand is offered by many legitimate offshore banks in exchange for a security deposit which is usually equal to two times the cards credit limit.

Offshore debit cards work in the same way as a regular debit card and they allow you instant access to cash from ATM machines world wide.  Of course you have to have enough money in your account to cover your day to day transactions otherwise you run the risk of going overdrawn, incurring substantial fines and the logistical nightmare of quickly transferring funds from one jurisdiction to another securely to cover the shortfall!

The most important considerations an expatriate needs to make relate to jurisdiction and institution.  There are over 70 official offshore jurisdictions, some are subject to proper regulation, some are not, some are considered more secure, some are considered less restrictive.  It is up to you to do your homework thoroughly to ensure you have chosen the most applicable jurisdiction to offer you the best options but also the highest levels of protection.  When it comes to choosing the right institution, consider the history and pedigree of the institution, its reputation, the levels of security and protection it can offer you and only then when you have chosen a jurisdiction and institution you are happy with should you look at account types etc.

Offshore banking for expatriates can be simple, straightforward and highly effective - but make sure you do your due diligence as getting it wrong can be costly!  If you would like assistance in choosing the right offshore jurisdiction, bank and account type please contact us.