Offshore Banking Confusion
This past couple of weeks I’ve received at least three emails from people saying they now believe offshore banking is illegal, and asking why am I still talking about it.
Of course it is not illegal. Never has been. And when you realise what offshore banking really is, you’ll also realise that expecting it to become “illegal” is incorrect.
An “offshore” bank is simply a bank in a country other than your own. If you live in the USA, then a bank account in Canada is considered “offshore” – to you.
The simple rule for defining offshore – as it relates to your own activities – is to consider any bank account in a country where you do not have residence to be offshore.
In order for offshore banking to become illegal it would be necessary to ban the opening of bank accounts by non-residents. This would cause serious inconvenience to many people and organisations.
To give you a typical example of how offshore banking works for those who are not even interested in “offshore” – consider this typical example: many young people go on long global holidays as backpackers. Many countries make this possible and easier by granting special visas for such a purpose.
One example is that between the UK and New Zealand – which have reciprocal arrangements to allow young people (under 30 I believe) to get 12 month holiday visas. Now, one of the things these young people want to do is to open a local bank account while they are there – which they do.
So here is a clear example of a non-resident opening an account in another country – “offshore” banking in other words. If such arrangements were illegal then the young people I’m talking about would be unable to open bank accounts in their temporary host countries.
In fact, when I was in NZ recently, I noticed how it was possible to have a bank account opened in the UK before even travelling there. Offshore banking again.
Another example of “offshore” banking would be where a foreign corporation sets up business in another country. Naturally such a company would want to open a local corporate bank account. If such banking arrangements were illegal, then it would but a severe restriction on the activities of such companies.
No, opening an offshore bank account is not illegal. But what gives that impression to some is the hot air emitting from the mouths of populist politicians – who find it in their interest to lambast offshore banks as a way of diverting attention from their own country’s economic shortcomings.
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Hi David After buying your offshore ebook, I was dissapointed to find, that the Banks offered in your report, Paid less interest on GBP, that most British Banks, So for the ordinary Saver paing 22% Tax, There would not be any benifit, apart from the Taxman not knowing were your money was. But thats all changed now, They have ripped all the money of the savers ,and gave it back to the Debtor’s
Offshore banks often offer less interest on a particular currency compared with the domestic bank. That’s because the interest to be gained is not the primary reason for using such banks or why they are able to attract customers. In fact, many current accounts offer no interest at all. However, keep in mind that offshore banks do not tax interest at source – like so many domestic banks (which are often unofficial tax collectors for the state) – meaning you would need to allow for this in any “advantage” calculation. However, I will state again that the main purpose of an offshore bank account is not to gain a better interest rate than your domestic bank – but to move your funds out of reach of the long arms of your particular government.
I have spent a great many years researching Business Concepts and financial tool representations, and I have found that an offshore account, particularly attached with a debit card or some other mode of transferrance can be a good way to stage money, temporarily until such time that the funds can be brought into the home country without scrutinization from taxation organisations. In the case of the U.S., for example, one can now bring in up to 12,000.00 per transaction or (per day), without the IRS being alerted or knowing about it. This was the last count, when I looked at it recently. It may change however over time, based on laws that are adopted to curb money laundering practices and the other bad apples that ruin it for everyone else.
Sir: US law requires all money earned by a US citizen anywhere in the world to be declared and taxed. An offshore account, therefore, is not going to move a US citizen’s funds out of the reach of the federal government. Not legally, that is.
It’s true, US citizens (unlike most other citizens) are taxed on the basis of both residency and citizenship – meaning even if they are not in the USA they are still required to file an income tax return. As for an offshore bank account, for US citizens and residents such is required to be reported if the balance exceeds $10,000.
We (U.S. Americans) recently tried to open regular bank accounts in Switzerland; Three banks turned us down flat, because we are “U. S. people” and U.S. people have too many issues as far as the banks are concerned. We later went to London and while there we tried to open an account at Barclays and at two other banks. Barclays said “We’re not in the market for American Customers.” One other bank agreed to explore the possibility of a relationship, and after 4 hours of interviews and 6 days later they said OK. What an experience.
Is it legal for me to have offshore companies and bank accounts? How to start? Can I move my existing business offshore?
Thanks
It’s certainly legal for you to have an offshore company or bank account. Starting is easy enough. If your objective is to form an offshore company (and associated bank account), then I recommend you join SovereignLife – as we have excellent packages available to members at a steeply discounted price.
Here’s an interesting article:
Trillion Dollar Hideaway
Would you agree that having an offshore bank account in a “tax haven” does not provide an escape of U.S. taxes at all for any U.S. Citizen, and how do you feel the mandatory reporting of Offshore Accounts with form TD F 90-22.1 (with mandatory assertion of such accounts on the annual IRS Form 1040 Schedule B) that exceed $10,000 in aggregate impacts this question of privacy.
Certainly, US citizens are amongst the least free when it comes to financial privacy – and what you state is correct, that offshore accounts with an aggregated total of $10K or more need to be reported. However, privacy is not the only issue. There are at least two other reasons well worth considering. First the very fact you can get your funds out of the country. This is important, because even if reported, such funds are out of reach. Second, the ability to hold funds in various currencies other than USD. Once again this is an important advantage – given the over time the USD will continue to devalue.
I’m in agreement here. Read a report that pans Isle of Man as an offshore banking haven and praises Guatemala for these very purposes. Dunno…………….
Opening an offshore banking account isn’t illegal. But, an offshore company with solid International experience can help you deal with the issues judiciously.