Not only does offshore banking account benefit
individual account holders, but it also is a powerful means of protection and
convenience for offshore businesses. Why should you open offshore bank
accounts? Let’s get the answer below:
1.
Tax
Benefit: As a matter of concern, taxation
optimization is the top priority of most companies going offshore. High tax
burden makes people hesitate to open a bank account in their home country. By
contrast, opening an offshore bank account in tax havens allows account holders
to be entitled to a favorable tax rate-either a lower tax rate or even no tax
rate at all.
2.
Better
asset protection: Holding money out of the home country is an
effective way for your asset protection. You probably also know about many scenarios
of expats who were suddenly blocked from taking money out of accounts. In many
countries, the banking system has feeble and unsound protection to account holders’
wealth and assets. This, consequently, can pose serious threats to business
themselves.
3.
Convenience: Offshore bank accounts are strongly associated
with convenient services. If you are not based in a single country but need to
move around for business purposes, then an offshore bank account will be a good
choice. The reason for this is that offshore bank accounts are easily
accessible from anywhere in the world. Furthermore, offshore bank accounts
ensure sufficient service utilities for account user as they can find local or
international bank in their home country, such as customized services, 24/7
internet banking, debit/credit cards, ATM networks, and many more.
4.
Better
Security: Level of security is a
pull factor for many offshore account holders. Unlike accounts that you have
opened in your home country, an offshore bank account, especially in a reputable
and efficiently operated jurisdiction, will offer a high level of safety where
depositor’s money can be kept safe and undisclosed.
5.
More
Privacy: Another benefit of
offshore bank account is by dint of privacy law. Many offshore banking
jurisdictions have enacted several laws of strict corporate and banking
confidentiality. These highly put emphasis on anonymity for account holders,
allowing accounts information to be kept safe and undisclosed.
6.
Higher
Interest rate: Generally,
keeping money in offshore banks can offer higher interest rates of savings than
that in your home country. And one good way to obtain a good interest rate for
your offshore bank account is to set up a long-term account.
7.
Currency
Diversification: Offshore banking enables account holders to
have diverse currency portfolio in their offshore accounts. In other words, you
can own different currencies in your accounts, as well as make transactions
with multi-currencies. In this way, your account cannot easily be influenced by
currency fluctuations which can often be seen in home country.
8.
Investment
Opportunities: A plus for
offshore banking is that offshore financial centers have less government intervention.
It means that account holders are able to access a wide variety of investments
and funds opportunities.
9.
Multi-Currency
Banking: The first advantage of
offshore bank accounts is that their services are available in different
currencies. The services are especially available in the currency of the
country to which most customers belong.
Disadvantages
of offshore banking:
Despite
the multiple advantages of offshore banking, there are also some disadvantages.
Here are some disadvantages that you should know before opening a bank account
overseas.
1.
Different
Process: The processes of opening an
account are different in different locations. For example, the KYC process of opening
an account in New York will be different from opening the same account in London.
To find out the fight offshore bank account for your needs, you might need some
research and evaluation. Knowing the KYC requirements are important before
applying an offshore bank account.
2.
Access
can be hard: Accessing your
funds can be tough in offshore bank accounts. You may not be able to access your
funds as easily as in local bank accounts. While they offer you debit cards
that you can use for shopping and withdrawing cash, some transactions may take
three to seven days to complete. It can be difficult when you want to do the
transaction immediately or on the same day.
3.
Expensive
than local bank accounts: Overseas
bank accounts are usually expensive as compared to local bank accounts.
Companies offering offshore banking services recognize that wealthy people use
these international accounts and therefore charge accordingly. If you want to
establish an offshore company, the legal fees in this country could be high and
you could even own a property in this country before starting a business.
4.
Less
Security: You may not get FDIC protection
if your overseas bank accounts go down. There is no possibility of getting the
money back if the money is lost or the offshore bank goes bankrupt. If you
decide to put your money in a foreign account, be sure to sign up with a
professional to help you choose a reliable location.
5.
Negative
implications: The term offshore
has become synonymous with illegal and immoral money laundering and tax evasion
activity. Therefore, conceivably anyone with an offshore bank account could be
tarred, by some, with the same brush – even though their offshore banking
activity is wholly legitimate.
6.
More
due diligence needed: You have to
choose your offshore jurisdiction carefully. Whilst you may well be aware of
how the banking industry operates in your own home nation and how it is
regulated, the rules and regulations abroad differ massively. Also some
offshore havens are less stable than others.