A simple look at what offshore banking really is
Yes! Offshore banks are legal and you can open an account too.
What is offshore banking?
An offshore bank can be defined simply as a bank located in various countries (tax haven) around the world. These banks have a special license that only allows them to accept deposits from corporations and individuals outside their jurisdiction.
In other words offshore banks are prohibited from engaging in business activities with citizens or corporations of the countries where they are located.
Furthermore, individuals looking to open offshore accounts should be careful to distinguish between a bank that’s in an offshore jurisdiction from one that is actually an offshore bank with an offshore license.
What is the difference between onshore and offshore banking?
An onshore bank is located in your country of residence and is subject to that country’s laws. While an offshore bank is located in a different country outside the depositor’s residence and works just like a normal bank but has more benefits.
Is it legal to have an offshore bank account?
Yes!!
Offshore banking is not about tax evasion or underground economies. It’s more about diversity and security. People in unstable countries are more likely to save their money in offshore accounts because of the stability they offer.
Many countries or governments nowadays require that offshore jurisdictions turn over information on account holders. By doing this tax evasion is capped and there’s no running from the IRS. An offshore bank account is simply not tax exempt.
What are the benefits of offshore banking?
- Wider range of investment opportunities.
- Access to economically and politically stable jurisdictions.
- Little to no taxation depending on jurisdiction.
- Easy access to your cash or deposits abroad.
- Improved features (Access to higher interest rates).
- Currency diversification.
- Improved asset protection.
- Enhanced legal conditions in the chosen jurisdiction.
How do you open an offshore bank account?
- Type of account.
The first step is deciding which type of account you want. Maybe you want an investment, personal or corporate account. Figuring out that first can help you narrow down to a suitable jurisdiction. - Jurisdiction or country.
Next step would be choosing a jurisdiction that meets your needs based on the account you want to open. Some jurisdictions are known globally for something that they are really good at. For example, asset protection.
If you’re a corporation certain countries are deemed to offer better services than if you are an individual and vice versa. - Choosing an offshore bank.
Now that you have decide which account and country you want, next is selecting an offshore bank. Do some research and make sure that the bank is properly licensed.
Alternatively, you can consult a firm in your country of residence that has connections and specializes in offshore bank accounts and they will help you. - Opening and depositing.
After identifying the best bank that suits your needs, the last step is opening the account. It is advisable to seek professional help from firms that liaise with offshore banks.
By doing this you are guaranteed to fulfill all the legal requirements pertaining to your offshore account and at the same time abiding by you country’s laws.
Which country is the best for offshore banking?
Depending on what you are looking for as stated above, the best country for an offshore account will vary significantly. Nonetheless, here are some examples:
- Switzerland
- Cayman Islands
- Germany
- Singapore
- Nevis
- USA
