The term offshore, in connection with banking, used to evoke images of tax fugitives or money laundering but in reality offshore banking is a very useful tool for personal money management. Offshore banks are highly regulated and the services on offer are very similar to those offered by your standard high street bank but with some added benefits.
To find out if an offshore account is right for you, and how to open one, read on.
Why is it called offshore?
The term ‘offshore’ originated from the Channel Islands being offshore from the United Kingdom. While most offshore banks are located on islands, this is not compulsory. These days the term is used figuratively in respect of locations such as Luxembourg, Andorra and the Swiss banks. It can be anywhere outside of your home country.
What are the benefits to me?
There are advantages in keeping monies outside of the UAE or any GCC country whilst you are resident there with the main reasons being:
- Political stability
- No issues with Sharia law and accounts are not frozen on the death of any account holder
- Accounts not frozen on leaving a job
- Multi-currency accounts (so can transfer to the most beneficial currency at the time.)
- Gross roll up of interest
- High levels of investor protection
- Interest in excess of personal allowances not subject to home country tax
Obviously you have to keep sufficient monies for day-to-day expenses and minor incidental expenses in a local account, but over and above that, for most people it is beneficial to move funds to an offshore account rather than keeping monies in a GCC or UAE bank.
Is my money always protected from taxes?
In most countries, the tax authorities make little distinction between interest earned from local banks or ones based offshore, as personal tax liabilities are usually based on the residence and home country of the individual.
Even if you do have ongoing tax liabilities an offshore account can give you more control over the timing of any payments due.
Where is the best place for me to bank offshore?
Each offshore centre offers a variety of banks, levels of regulation and different services, but for most expats from Europe, the best known centres are the Isle of Man and the Channel Islands. which include Jersey and Guernsey, followed by Switzerland and the Cayman Islands.
Offshore centres are frequently home to insurance companies or investment houses, which like many banks, are the subsidiaries of internationally known companies and offer similar advantages to the banks.
How do I open an offshore bank account?
The requirements for opening accounts offshore tend to be stricter than for onshore home country accounts but need not be especially painful. The main issue for many has been the requirement to provide sight of original passports which has meant sending them through the post or having to pay a lawyer to certify them, neither of which is ideal.
I can now offer an easier option as I have an agency with a major international bank that has an offshore division in the Isle of Man so customers benefit from the high levels of protection afforded by the Isle of Man Financial Services Authority. This means that I am able to certify documents, making the account opening process much simpler.
For further details on opening an offshore bank account, or for information on any other personal financial planning issue, please contact me at firstname.lastname@example.org