When talking about offshore bank accounts we often refer to the benefits achievable for expatriates relating to international accessibility for example, or the benefits to business clients in terms of confidentiality of the structured solutions available.
However, there are many more advantages to banking offshore…and one of the most prominent and beneficial for expatriate account holders is often overlooked.
If you were wondering whether an offshore bank account actually makes sense for you to sign up to, but you’re not too fussed about the international accessibility ‘thing’ or the client relationship management promises from the major international players, you may just want to know that an offshore bank account could lead to the much easier management of your wealth and perhaps the tax enhancement of your overall financial position.
If you hold cash in any bank account you’ll be well aware that you’ll get little or no interest on current account balances…therefore the fact that you can earn that interest gross in an offshore bank account is often of little interest to expats as it makes hardly any difference at all.
Therefore, when talking about the tax benefits of going offshore in terms of your bank account, you could be forgiven for thinking that the benefits are marginal and hardly worth mentioning. So, if you’re already under-convinced that an offshore account could benefit you, this argument is hardly going to be sufficient to get you to sign up is it?
But just hold on a minute…
In a number of expat-popular countries globally there is the rule that you only pay tax on the money you remit to that nation…therefore, if you earn your income into an offshore account and you hold any other monies in that account, you may legitimately be able to avoid being taxed on it.
Furthermore, such an account can be used for the funding of regular savings commitments offshore, and it can be used to receive interest and dividends earned from other offshore investment and savings plans and vehicles.
In other words, for expats who can legitimately save tax by keeping their money out of their new nation, an offshore bank account can be a lynchpin to enable their tax-free savings and investment activities.
The utilisation of such an international account can therefore make sense for many expats for whom it makes fiscal sense to save, invest, diversify and grow a portfolio offshore.
Aside from the legitimate tax saving advantages highlighted which are available to some expats depending on their country of tax residence, anyone who lives in a nation with an unstable or weak currency, or who lives in a country with a volatile economic or political situation locally, or who would otherwise be exposed to unsatisfactory levels of currency fluctuation risk could potentially benefit in a similar way by keeping their money outside their country of residence.
Is so doing an account holder can ensure that their earned income is tied to the one currency of their choice for example, and they can manage their money in what is potentially and perhaps a more secure environment than if they held funds in a local bank account in their nation of residence.
Once again the potential benefit of having a centralised account for the management of all fiscal activity, (from saving and investing offshore to paying bills and accessing funds internationally), can mean that an offshore bank account is a valuable tool in an expat’s financial armoury.
Please note that this article does not constitute advice, nor has it been written to promote the utilisation of an offshore bank account. Any decisions you make relating to your financial position have to be ones taken when they have been assessed and then deemed wholly appropriate to your own personal circumstances. Advice should always be sought from qualified, professional, experienced, independent financial advisers who understand expats and the offshore financial marketplace.