Offshore banking services and financial products are ideal for account holders who desire specialized services. There are three main advantages to selecting an offshore account. First, an offshore banking account provides a depositor with a low tax structure, anonymity, and flexibility. Secondly, investors earn tax-free interest in most offshore jurisdictions. Lastly, an offshore account provides the same functions as a traditional bank. Depositors can manage accounts online, transfer funds, apply for credit and loans, and use their ATM and credit cards at a participating institution. An offshore banking account comes with fewer restrictions and greater advantages than traditional banking products.
Types of Offshore Banking Accounts
There are three types of offshore banking products. Private investors can open a personal banking account. Companies can choose to open a corporate account. Small business owners can select a merchant account.
Personal Accounts
Personal banking accounts are financial packages typically designed for an individual investor. A personal account offers investors minimum protection. Depositors must use and attach their real names to the account. They must provide additional information to prove their identity. They must also provide photocopies of their passport and their full address on account applications.
Although personal accounts provide the least protection than other offshore accounts, they still fall under the same banking privacy laws as other offshore accounts. In addition, the costs to maintain and manage a personal offshore account are much less than other offshore banking products.
Corporate Bank Accounts
Corporations must register within each offshore jurisdiction in which they plan to hold a corporate account and conduct business. Registering the corporation incurs additional costs above expenses related to setting up the offshore account. In some jurisdictions, corporations can register and set up the offshore corporate account at the same time without assigning an individual’s name to the account. Choosing this option depends on the type of asset and the type of protection the company will need. In all cases, corporate bank accounts receive the highest level of protection.
Merchant Bank Accounts
An offshore merchant account provides advantages for both the small business owner and the customer. Small businesses typically open a merchant account to manage revenue and cash flows that result from everyday business transactions. They use an offshore merchant account to perform credit card transactions online. They set up the account in their home country with a local bank, but process the transactions offshore. This allows small businesses to reduce costs and pass on these savings to the customers.
Disclaimer: Many countries have laws regarding offshore entities and accounts. For example, citizens that form offshore entities, (for example an offshore corporation, offshore trust, offshore partnership, offshore limited liability company, etc.) own stock in offshore entities or hold positions within offshore entities may need to file a tax return. Citizens that form an offshore trust, move assets into an offshore trust or are the beneficiary of an offshore trust may need to file a tax return. Citizens that sign on offshore bank accounts or offshore investment accounts may need to disclose this fact to their government and pay taxes on any interest or capital gains. We strongly recommend consulting with a local, licensed professional to obtain tax and legal advice in order to understand the law and to fully comply with all applicable laws and reporting requirements regarding offshore companies, offshore trusts, offshore bank accounts and offshore investments.
HFS Offshore Banking - International Asset Protection 