Why Open an Offshore Bank Account?
Though there are certain misconceptions that link offshore bank accounts to criminal behaviours, money laundering, and illegal tax evasion, it is a well-accepted fact that offshore banking is 100% legal.
Not only does offshore bank account benefit individual account holders, but it also acts as powerful means of protection and convenience for offshore businesses. Why should you open offshore bank accounts? Let’s get the answer as below;
1. Tax Benefits
As a matter of concern, taxation optimization is the top priority of most companies or investors going offshore. High tax burden makes people hesitate to open a bank account in their home country.
By contrast, opening an offshore bank account in tax havens offers a favourable tax regime – either a lower tax rate or even no tax rate at all.
In this way, you can keep your money out of reach from the tax authority of your resident country, protecting it from exorbitant tax rates.
You can use offshore bank accounts to plan your tax strategy, but you should not go beyond the line to tax evasion.
2. Asset Protection
Holding money out of the home country is an effective way for your asset protection. You probably know about many scenarios of ex-pats who were suddenly blocked from taking money out of their accounts.
In many countries, the banking system has fairly feeble and unsound protection to account holders’ wealth and assets. This, consequently, can pose serious threats to businesses themselves.
Fortunately, an offshore bank account can make you feel secure as your asset is safe, especially when your foreign account is opened in such a highly transparent and regulated jurisdiction with a strong privacy law such as Swiss offshore banks.
3. Convenience
Offshore bank accounts are strongly associated with convenient services. If you are not based in a single country but need to move around for business purposes, then an offshore bank account will be a good choice.
The reason for this is that offshore bank accounts are easily accessible from anywhere in the world. It provides account holders around-the-clock access regardless of your location or timezone.
Also, many reputable banks from sophisticated financial offshore hubs, Mauritius for example, do allow account holders to register their accounts remotely – no need to live near a branch of the bank.
Furthermore, offshore bank accounts ensure sufficient service utilities for account users as they can find in any local or international banks in their home country, such as customized services, 24/7 internet banking, debit/credit cards, ATMs networks, and many more.
4. Security
The level of security is a pull factor for many offshore account holders. Countries with uncertain and unfavourable economic climates, as well as frequent risks such as seizures, high inflation, bankruptcy, or any other financial risks, can lead to insecurity for your bank account.
Unlike accounts that you have opened in your home country, an offshore bank account, especially in a reputable and efficiently operated jurisdiction, will offer a high level of safety where your money can be well-protected against such cases.
5. Privacy
Another benefit of offshore bank account is the privacy laws. In general, many offshore banking jurisdictions have enacted serval laws of strict corporate and banking confidentiality.
These highly put emphasis on anonymity for account holders, allowing accounts’ information to be kept safe and undisclosed.
To note, Belize for example is a well-known jurisdiction with a high level of privacy for your offshore bank accounts.
6. Higher Interest Rates
Generally, keeping money in offshore banks can offer higher interest rates on savings than that in your home country. And one good way to obtain a good interest rate for your offshore bank account is to set up a long-term account.
7. Currency Diversification
Currency diversification is one of the key benefits of making an investor open an offshore bank account. Offshore banking enables you to have a diverse currency portfolio in your offshore accounts. In other words, you can own different currencies in your accounts, as well as make transactions in multi-currencies.
As such, your account cannot easily be influenced by currency fluctuations which can often be seen in
your home country.
Bonus: Expanded Investment Opportunities
A plus for offshore banking is that offshore financial centres have less government intervention. It means that account holders are able to access a wide variety of investment and funds opportunities.
Generally, you may find that several regulations do restrict the foreign investment possibilities of their residents. Further, offshore accounts flexibility offers entrepreneurs and investors unlimited choices to reach international markets.
Choosing the Best Offshore Banking Jurisdiction
To harness the benefits that come with opening an offshore bank account, an investor would generally need to consider what the target jurisdiction to open the offshore bank account offers. Below would be useful in guiding this decision;
• The Country’s Reputation
In general, reputation shows the jurisdiction and banking system quality. Moreover, a well-reputed banking country is likely to bring a highly pro-business and stable environment.
Though, challenging if you as a foreigner open bank accounts by yourself in such countries. Due to its complicated requirements as compared to those in other countries, more efforts will need to be made to open an offshore bank account in these places. The best option is to engage a professional service provider to work with in the entire account opening process.
• Possibility of Remote Opening
Many foreigners’ are huge fans of remote account opening, as this will relatively make great convenient for them. Unlike the traditional method, the remote opening allows you to open an account without a personal visit with the banks. As such, you can save a lot of time and money.
• Low Initial Deposit Requirements
A low deposit is one of the key factors for the best offshore bank account. This is especially important
for start-ups, entrepreneurs, or SMEs.
Some offshore banks do not require the initial deposit for opening a bank account. On the other hand,
some banks may require a deposit from foreigners, but at a minimal cost.
Additionally, several captivating banks and banking jurisdictions like Hong Kong, Singapore, or Panama
often require high deposit minimums while some options of low-deposit banking countries do exist in
Belize, Puerto Rico among others.
• Short Bank Account Application Processing Time
The process of opening an offshore bank account is considerably lengthy in most cases. More often than not, the timeframe of most offshore banks for the account opening process tend to differ from bank to bank and, on a case-by-case basis.
Typically, it can take you only a few working days or weeks to get your accounts opened. However, it should be noted that how fast and how trustworthy the provided supporting documents are will be significantly important in determining the processing time.
• Other considerations
a) The Possibility of Opening Merchant Accounts
If you’re running an e-commerce business, you will want to consider merchant accounts. There are specific requirements for this type of account to be opened, which strongly depend on your choice of merchant provider.
b) Nationality of Customers
Each offshore bank has its specific list of prohibited countries. Therefore, searching the suitability between your nationality and the bank policy is very necessary.
c) Business Category of Customers
You can open an account more easily if you fall into the preferential categories of the banks. However, this is not always the case. In general, offshore banks share in common what business categories are allowed or prohibited (like forex or crypto). As such, sifting the connection between your business category and the bank’s policy is relatively essential.
How to Set Up an Offshore Bank Account
The process of setting up an offshore bank account is fairly simple and straightforward however from experience gained across diverse financial centres, it is highly recommended to engage a professional offshore service provider.