We look into common myths about offshore banking in this article. Many people would like to open offshore account but think one or more of this myths is true and thus avoid opening account.
1. Having offshore bank is tax evasion. Not true. Although some people use it for this purpose, the main purpose is asset protection and tax planning.
2. You need a lot of money to open offshore bank account. Not true. There are some banks which require 100k$+ for deposit yes, but many banks don’t. You can open offshore account for as little as 1000$ or even less, depending on jurisdiction and bank.
3. Only criminals use offshore banking. Not true. Offshore banks protect assets on normal citizens, like you and me, from governments in home country. Sure, also criminals use offshore banking, but this is a small percentage. Also, when it comes to illegal activities, banks don’t protect with secrecy anymore. Indeed, banks in Switzerland for example will not protect anyone suspected of money laundering.
4. You have to physically visit bank to open an account. Not true. Most offshore banks developed procedures to avoid expensive travel and visit of bank, however not all of them offer to do so. Also, you will be required to provide extra documentation to confirm your identity.
5. Offshore banks are located remotely, thus making it difficult to manage account. Not true. Offshore banks are indeed located remotely, but with state of the art technology and software, transactions, deposits and investments are never a problem. Also, using debit cards to access your cash from ATM from anywhere in the world is not a problem.
6. Offshore bank accounts are anonymous. Not true. While bank will protect your identity from foreign government, it is known to bank itself.
7. It is not safe to have an account in bank with global presence. Not true. Banks offshore are separated legal entities and will not give parent bank in your home country information about depositors.
8. Offshore banking is tax free. Partially true. Often it is free of taxes in bank’s jurisdiction, but many countries (including America) tax their citizens worldwide. This means you have to pay taxes on worldwide income, regardless of location of your bank or jurisdiction where you do business. However, with offshore business taxes can be greatly reduced. Check with specialists in this field.
9. Offshore bank accounts are not legal. Not true. Often home countries will require you to report offshore bank accounts to home authorities, but only few countries in the world prohibit its citizens to have offshore bank account abroad. And in some countries you don’t even have to report offshore bank accounts and other offshore assets.
10. Some offshore jurisdictions have poor regulations. Not true. There is a small number of jurisdictions where requirements are loosen, but these jurisdictions are subject to particular attention and might not be the best option for your offshore bank account. Better go with stable and sound offshore jurisdiction.
These are common myths, as you can see, offshore is not only for wealthy, but for normal people too. And it is not as complicated as it sounds. You gain great benefits with offshore banking, above all you protect your assets.