Do You Need an Offshore Bank Account
When you think of offshore bank accounts
do you see shady characters carrying around bags full
of money? Todays modern bank legislation does not
allow banks to accept cash deposits or transfers of
US$ 10.000 and up without presenting proof of the
source of funds.
All serious establishments will ask
you to fill out forms known as KYC or know your customer.
Find out more about KYC: Know
Your Customer This is not only to be able to give
you better service but to protect themselves in case
you are accused of money laundering. These forms also
allow the bank to know your sources of income. Knowing
your cash flow the bank will not ask you to prove
the origin of the funds every time you make a transfer.
Even though you have filled out a KYC
form the bank may or may not at its discretion allow
you to start a relationship with them.
Whats the difference between your local
bank and an offshore bank? Basically any service you
will get locally will be available offshore. Then
why open an offshore account.
Offshore banking is no longer a handy
way to conceal income from illegal activities or unreported
business profits.
There are many justifiable monetary
reasons to open an offshore bank account. As a resident
in a country with an unstable political and economic
history, you want your money in a safe place. The
government could impose foreign exchange restrictions
or there may be a bank run. A coup detat may make
your money inaccessible.
Non-residents usually pay minimal or
no taxes on interest or profits from investments.
Depending on your citizenship, country of residence
and if you use an offshore company as the account
holder you may still have to pay taxes.
Many large international banks have
branches or are incorporated in tax havens. To be
on the safe side, you would probably be better off
not using a bank that has branches or is incorporated
in your country of residence.
American citizens must file an annual
tax return no matter where they live and include offshore
holdings. Starting July 1st, 2005, tax havens which
are British dependant territories, will apply the
European Unions Saving Tax Directive of 2005. Initially
this is 15% on returns of savings paid to nationals
of EU Member States. Corporations are exempt from
this withholding tax.
Always consult a tax specialist who
has experience with the jurisdictions involved before
starting your offshore tax journey. You do not want
any costly surprises after you open offshore company
and bank account.
David Jones is a freelance writer and
world traveler who writes about the use of offhsore
companies, finance and subjects in which he has apersonal
interest. Offshore
B anking
