Five Things You Need To Know Before Opening An Offshore Bank Account
Off shore banking used to be viewed as the sole province of those with mahogany toilet seats or criminals planning to steal large amounts of cash. However, corporate offshore banking has not only become more accepted, the benefits of it have grown in current economic conditions. Here we look at what you should know before you open an offshore banking investment account.
1. The first thing is a good news item – there are more benefits to banking offshore than you might realize. When you bank within your own jurisdiction, your money is not safe from unauthorized withdrawals, even by your own government. The debt caused by even a contested tax bill can be withdrawn at will by the government – this is as true for corporations as it is individuals.
If you have large amounts of funds in an offshore banking investment account, they are also not subject to withholding taxes on the interest earned, and therefore your money is growing quicker.
2. You should choose your jurisdiction for offshore banking investment and corporate offshore banking wisely. It is generally wiser to bank further away from where your company operates – your investment management services firm will most likely advise somewhere that is out of your continent or general geographical area.
This reduces the risk that your company’s money will be subject to local laws, and perhaps lower the benefits of banking offshore. You may be subject to your offshore bank deducting an undisclosed rate of tax from your accounts that bear interest, defeating the very purpose of opening an offshore bank account.
You may be advised to bank offshore in Singapore if your company operates in Europe, or to bank in the Isle of Man if you operate out of America.
3. It is better to choose a large than small bank, generally speaking, for your offshore investment biz. However attractive a small bank might seem – given that they offer better privacy, more personal service or that you’ll feel better looked after there. However, these banks must often operate under a sub-account of a major bank, which increases the time it takes to get to your money, and creates more restrictions on how you can conduct your offshore banking.
For example, if money is sent to your corporate offshore banking account at a small bank, the business may only be mentioned in the comments field of the deposit note, or in the ‘for further credit of’ area – meaning that according to official documentation, the bank itself is the beneficiary of the funds, not you. At a large bank, the account holder is the beneficiary, keeping your money more secure in your company’s name.
4. Be aware that if you are opening a corporate offshore banking account for privacy’s sake, that privacy is often conditional – privacy protection measures can be breached by presentation of a court order. Truly anonymous banking is a thing of the past, whether that is fortunate or unfortunate for your organization.
5. The last piece of advice about corporate offshore banking is that you shouldhave your investment management services contact the bank directly by phone, rather than paying via the internet for someone to open an account for you. Often all they will do is provide you the paperwork to fill out for yourself – saving you next to no time, and costing a decent amount of money.
Open the account yourself, via your business consultancy management service, and save your company funds for what they are needed for.
The Zetland Financial Group provides the offshore investor with fiduciary Services, investment management and corporate advisory services, offering personal service and professional advice with total confidentiality.
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