Selecting an Offshore Bank

Selecting an Offshore Bank

Every person who is interested in doing business in low taxation countries asks him/herself the following question: Is opening a bank account or company in an offshore or low taxation jurisdiction legal? The answer is “Yes”, a foreign account can ne opened from anywhere in the world; illegalities arise when the beneficiary of said accounts and companies hasn’t informed the tax agency of his residential or high taxation (onshore) country; as we will see further ahead, one of the main characteristics of offshore jurisdictions is privacy and not revealing clients’ fiscal information. While choosing a bank, we would like to point out the following:
Bank Solvency: When we invest outside of our country of residence, what we search for is security to invest in safe products and institutions. What we need to do is search out old, respectable banks. There are fundamentally three types of offshore banks: 

  1. Small banks that don’t have branches in your country of residence; these banks represent the maximum protection and privacy. The only inconvenience is that they don’t have a wide range of financial services, and that’s why they are the most solvent and expert. Good examples would be banks in Switzerland, Liechtenstein, Panama, the Canal Islands, Andorra, Luxemburg, the Isle of Man, etc…
  2. Affiliates of large, important banks with subsidiaries in your country of residence; the services offered by these banks are very good and the privacy is more than good; however, if a client undergoes tax harassment from the tax agency in his country of residence (country of high taxation), this will put pressure on the bank so that the affiliate in the offshore jurisdiction could lift the bank secret; this will say NO, but if the pursuit and the crime are high enough, they could make special exceptions and lift the bank secret; this could happen with major crimes such as terrorism or drug trafficking.
  3. And last, we have the offshore bank par excellence, the one that has no activity in the enclave, accepts deposits from other banks’ client, and its formation requirements are minimal. They usually don’t have subsidiaries in high taxation countries, they aren’t strict with their clients and often work with other entities as a correspondent bank. To be a large offshore investor or businessman, using various jurisdictions and currencies is advisable; this way, your money will always be invested and safe.

Another of the main characteristics that a good offshore bank has to have is the communication system that it has established; these days practically the entire bank operates on-line, so you can make bank transfers from home to any country in the world; it also needs to have a good language support: even though the preferential language for offshore banks is English the majority of the banks also have preferential customer service in Spanish, French, German, Russian, and Chinese.

The offshore bank supplies the same services and products as the banks in high taxation jurisdictions (onshore): ease and immediacy in making bank transfers, 24-hour support, choice of currencies, regular bank statements, checks, credit and debit cards, and e-banking. The regular services are:

- Instant access account
- Security custody for good, documents, valuables, gold deposits, coins, objects of art, or collections.
- Safety deposit box available for customers
- Investments in the stock-market around the world.
- Investment funds.
- Savings and retirement plans
- Life Insurance
- Travel, accident and health insurance
- Convenient mailbox or “maildrop”.
- Tax advice

Types of Bank Accounts and deposits

There are many different types of accounts and deposits; the most common are:

  • Instant access accounts or “instant access deposit accounts”, “call deposit accounts”, “deposit accounts or savings accounts”; the main characteristics are:

- They are offered in distinct currencies, with the type of interest for each currency.
- They can have money immediately available or in a couple of days.
- Interest is paid beginning with a minimum amount or a minimum deposit.
- Interest will vary according to the amount of money in the bank account.

  • Checking Account or “current accounts”, “checking accounts” or “cheque accounts”; this is the most classic type of account and the most used because of its flexibility and immediacy in making bank transfers with immediate availability of funds; checkbooks are usually used and are accompanied by credit or debit cards.
  • Fixed term deposit accounts. As its name indicates the money is deposited for a fixed time and receiving a fairly high interest rate for it; in the case that he wishes to withdraw the money, the customer will have to pay a penalty. With this type of account, the more money you have in the account, the more interest you will be able to receive.

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