The term has its origins in the Canal Islands (Jersey, Guernsey) which are physically located outside of the territorial waters of the United Kingdom and are considered tax havens. The term is much used at present to refer to tax havens or banking centers that do not impose taxes, whether they are islands or not.
What is an offshore bank?
An offshore or extra-territorial bank is a type of banking entity, almost always located in tax havens and is regulated by special laws that confer it a greater freedom in its operations, in addition to a much more favorable fiscal treatment, usually where taxes are not collected on capital gains. The objective of offshore banks is to attract deposits and investments from non-resident persons and companies.
Are all banks that work in tax havens considered offshore?
Not all banking entities situated in a tax haven function as offshore banks. They also co-exist with the same onshore banks (internal or resident). They offer services to residents, who do not benefit from the favorable tax laws. Some banks have offshore and onshore departments, and the accounts have different treatments according to whether they are residents or non-residents.
What differences are there between an onshore bank (local bank) and an offshore bank?
Generally, offshore banks prefer working with big clients, with the private bank and in promoting investments. If you need to regularly withdraw cash or your volume of business isn’t very high, you may have difficulties opening an offshore account. Some offshore bank consultants could find a way to facilitate opening an offshore bank account.
Which banks offer more advantages and which are more secure?
This will depend on the amount of capital you can count on and on the degree bank secrecy that you need. Banks have several classifications. For example, the best are AAA, but these only accept large clients. Each offshore bank will offer you several options, starting with the information you have presented where your estimated business volume appears, as well as the mount of money you are thinking of depositing in this offshore bank.
What is an offshore bank account?
It is an account opened and/or maintained in a bank that is located outside your country of residence. There is very convenient tax policy in that jurisdiction that offers diverse financial benefits for the holder of that account.
What are the benefits of an offshore bank?
The greatest benefit is that you either pay no taxes or at a minimum rate. Interest earned on offshore bank accounts isn’t taxed. Additional benefits include high levels of confidentiality, security and convenience, as well as world-wide access and ease in moving your money. In many cases, your presence is unnecessary for opening an offshore bank account. An offshore bank account gives you more freedom in your financial movements and is less subject to government intervention, nor do they have to comply with regulations such as exchange controls or investment policies. In addition you will have more privacy, since these accounts are set up in territories where strict laws regarding bank secrecy prevail. Another very favorable element is the financial and monetary stability since offshore banks are located in financial centers where political and monetary stability reign. Products offered by offshore banks also stand out, among which anonymous credit and debit cards or high profit investments stand out.
Are there any legal problems in having an offshore bank account?
Absolutely none, because offshore bank accounts are legal in almost all nations (in some countries it is required to declare this accounts in your tax declaration) . For decades offshore banks have rendered their services to individuals and organizations worldwide.
What disadvantages are there in using offshore bank accounts?
Some authorities and financial institutions show mistrust of offshore banks located in tax havens because they have been, in a few occasions, associated with tax evasion and money laundering. This influences certain transactions from these banks, gives rise to suspicion and is meticulously revised. In addition, expenses for maintaining an offshore bank account are higher than those for traditional accounts. Generally offshore banks charge a higher monthly or quarterly maintenance fees and, at times, they charge for opening or closing an offshore account.
Who can open an offshore bank account?
Any person or company is free to open an offshore bank account. Offshore banks have been widely used, by both natural persons as well as international companies. For security reasons, there are some countries that are on the “black list” of certain offshore jurisdictions; these are generally countries with a high risk of terrorism; it is also difficult for politically exposed people (politicians or politicians’ family members, etc) to open an offshore bank account.
What is the procedure for opening an offshore bank account?
The procedure for opening offshore bank accounts usually isn’t very complicated and in many cases is possible to carry out online, in a variable period of time. Starting with the speed with which the institutions you are dealing with work, and the time necessary for presenting the documentation, the process can take from a few days up to several months.
You can contact an offshore bank or an advisor for an offshore bank and do most of the steps online.
The requirements vary from bank to bank, and in certain cases have the option of substituting determined requirements.
The most common are:
Copy of a valid passport
Photograph of your passport opened to the photograph page
Work papers or a substitute statement
One or two bank references
Professional reference
Personal reference
Utility bill or proof of address; it can be a public services bill or another proof of address or a certificate of residence.
All documents must have an apostille
Consult with your offshore bank or favorite advisor to let you avoid some requirements.
How much money will I need to deposit when opening an offshore bank account?
There is no set amount; this depends on the bank’s policies and the offshore jurisdiction where you decide to open the account. There is huge variation among the quantities: from 1,000 to 1 million Euros as a minimum deposit or the equivalent in another currency. At times it is possible to obtain a more convenient deal through Agents or professionals empowered to introduce new clients than directly with the bank.