An offshore bank is one that is not located in your country of residence. For example, if you live in Hong Kong, then a bank located in Switzerland is going to be deemed an offshore bank in your eyes. Consequently, if you open a Swiss account at this bank you are engaging in offshore banking.
It is quite a simple concept to understand and in essence an international bank is going to offer you all of the same services that your national bank would. So, why do so many individuals decide to engage in offshore banking? Let’s find out…
This is one of the primary reasons for opening an offshore bank account. Individuals pick countries known as ‘tax havens’ i.e. there is little to no tax present. This presents you with the opportunity to make substantial tax savings. Having said that, you aren’t going to evade tax altogether. You will still be required to pay tax on the interest you have generated from any of your offshore savings. A good tax preparation franchise business will be able to assist you.
In addition to this, there are a several countries whereby interest is added once the tax has been removed i.e. ‘net’. People living in these countries have a big attraction to offshore bank accounts because they have the opportunity to select a country whereby interest is paid before the tax is taken away i.e. ‘gross’. Therefore you will obviously be generating your interest based on a larger amount of money.
One of the reasons why people are attracted to offshore banking is because they benefit from a higher level of privacy and safety. It allows individuals to park their money in an account which is away from government scrutiny. This is especially beneficial in countries that are suffering from financial crises. Take the recent troubles in Cyprus as an example. Those with offshore bank accounts would not have suffered in the same way as those people who merely have Cypriot bank accounts.
You may think that it is an inconvenience to have a bank account in a different country. However, this is definitely not the case. By doing so you will be able to stay with the same bank no matter how many times you move to a different location. It’s also very beneficial for businesses. In addition to this, the beauty of modern banking means that most transactions are handled via the internet and most issues are dealt with over the telephone. Most people never actually have to go into their branch.
Competitive Interest Rates
Aside from the points that have already been mentioned, you should also consider the fact that offshore banking allows you to benefit from higher interest rates. This is because you will get the opportunity to take advantages of banks operating with a lower cost base. These interest rates may indeed even be higher than what is considered legal in your home country because of no government intervention and lower overheads.
Offshore banking is something many individuals are engaging in at present. If this is something that sounds appealing to you then it is always recommended to take the advice of professionals to ensure you choose the best offshore bank account for you specifically.