An offshore bank account is a useful tool for any GCC-based expat. You don’t need to be wealthy to have one and there are multiple benefits.

Offshore banks are highly regulated and they are not just for the rich, or for anyone wanting to be a bit shady – quite the opposite!

To find out why an offshore account is right for you, and how to open one, read on…

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 you can transfer to the most beneficial currency at the time.)
• You have control over when you transfer between currencies
• High levels of investor protection
• Interest in excess of personal allowances not subject to home country tax
• Fully outside of the UAE/GCC
• Ideal home for an emergency fund
• No issues with accounts being in joint name, actually advisable

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 large sums in a GCC or UAE bank.

As the GCC currencies are pegged the US Dollar, a Dollar offshore acount is a good place to stash money that you don’t want to keep in the region but may want to move back, such as for paying rent. If you transfer to another currency, you leave yourself subject to exchange rate fluctuations.

How much money do I need to have an offshore account?

Not as much as you may think.

Accounts can be denominated in US Dollars, Sterling or Euros with a minimum opening balance of $7,000, or £5,000 or €7,000. You even have a few months to buld up to this amount. You can open accounts in more than one currency if required.

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 the Isle of Man, Luxembourg, Andorra and the Swiss banks. It can be anywhere outside of your home country, although there are other considerations.

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.

Does where the bank is based make a difference?

It very much does, especially for Brits.

From an inheritance point of view, it is important to note that the accounts that I recommend are in the Isle of Man, rather than the Channel Islands where certain banks  locate offshore accounts. You need to be aware that a UK will is not recognised or valid in the Channel Islands so will not cover any accounts or investments in Jersey.

The situation is a little different in the Isle of Man where it is usually the case that stated wishes in an UK will can be followed when applying for a Grant of Administration following death.

This is because the law in the Isle of Man is similar to English or Scottish law so that it can be respected for bank accounts and other investments, especially if the right wording is added to a UK will.

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.

As a GCC resident, you are not subject to tax on any interest payable from an offshore account.

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 offer an easier option as I have an agency with a major international bank that has an offshore division in the Isle of Man. This means that customers benefit from the high levels of protection afforded by the Isle of Man Financial Services Authority.

In addition, I am able to certify documents, making the account opening process much simpler, and also without any costs for you.

The bank operates mainly online with an easy to operate portal. A Visa debit card is also available.

US citizens cannot open accounts in the Isle of Man but you can blame the IRS for that, sorry.

For further details on opening an offshore bank account, or for information on any other personal financial planning issue, please contact me at keren@holbornassets.com

I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on radio, and on the Facebook group British Expats Dubai.

Please take a look at the other useful articles on this website.

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