Offshore banking

An expats guide

Richard Colburn

If you thought that one bank is much the same as another, think again. Most offshore banks offer a broadly similar core of basic services and features but they won’t necessarily offer everything that you want and need.

The banking needs of expats, whose money is held outside of the country where they live, are quite different from the needs of those back home. Here are some of the important aspects to help you with your choice.

Online banking

Accessing your money from far away is a key component of expat banking and is probably one feature that nobody would want to be without: but you might be surprised at how many of the larger international banks do not offer this facility unless you are holding, (in some cases), several hundred thousand US dollars on deposit with them. What is described as banking via the internet is sometimes limited to simply being able to view your statement online!

The best providers will enable you to transfer money securely via your computer to any bank account in the world and in multiple currencies.

Location, location, location………

Location is probably as important in the world of offshore banking as it is in the property world. By selecting an international financial centre in a group 1 OECD country or territory you can enjoy the highest levels of financial security for your savings. But even here, there are important differences in how these international financial centres operate, particularly when it comes to confidentiality.

EU Savings Tax Directive

The effect of this piece of legislation is to deduct tax from interest earned on bank deposits or to collect information about account holders. This law extends far beyond the member states of the European Union and has even reached the balmy shores of the Cayman Islands and the Turks and Caicos Islands. One of the best safeguards against the provisions of this law is to keep your money in a jurisdiction that falls outside its scope.

The personal portfolio bonds and other investment accounts offered by insurance based international financial institutions are specifically exempt from the EU savings tax directive as they are not classified as bank holdings.

Relationship balances

Many expats keep relatively small balances of cash in their bank accounts as their disposable incomes are often diverted to investment plans and perhaps mortgage payments. Pick a bank whose balance policy is in line with yours.

Being there

Some banks will allow you to open an account without actually having to visit their country. In many cases this can be done more easily by taking advantage of the services of a professional financial consultancy. Those who employ qualified accountants, lawyers and notary publics may be able to save you the time and inconvenience of visiting your Embassy, by certifying documents for you.

Offshore companies

Some working expats choose to operate under the structure of an IBC or offshore company. In some cases this is a legal requirement of the clients that they serve, particularly those working with Governments and multinational corporations. Others are simply anticipating the inevitable day when they will need the support of a professional full time staff.

But one of the world’s best kept secrets is that the EU Savings Tax Directive does NOT apply to companies, regardless of the place of incorporation of the company, or the nationality of the shareholders, officers and directors! Those choosing to operate their business in this way can have a wider choice when it comes to selecting a bank.

An offshore company may locate its bank accounts anywhere in the world but that doesn’t necessarily mean that they are able to do so. For instance many Singapore banks will only accept applications for corporate accounts from Singapore companies.

The right choice

There is probably as much to consider in selecting an offshore bank as there is in selecting your investment plan.

Professionally qualified financial advisers are often licensed intermediaries for brand name international banks and can save you considerable time and money in helping you select the right custodian for your spare cash.

It’s your money and your peace of mind.

Richard Colburn is a Certified accountant and a UK qualified financial adviser with Sterling Assets.

For more information: email us

Published on September 28, 2007 at 3:53 pm  Leave a Comment  

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