What would you answer if we asked whether you want to keep your capital safe? There is no doubt that you wish and hope to protect your assets. This means you do need a proper failure-proof solution – an offshore account.
The recent top search results on our portal show that our readers look for information about the nature, legal status, and merits of offshore accounts, the most common reasons for setting up offshore accounts nowadays, and how to quickly open an account.
This article revisits all the basic facts about offshore accounts. You can go straight to the topic you’re interested in by clicking on the relevant link or explore all of them one by one below:
What is an offshore account?
An offshore account is a bank account in a financial institution outside the country of your residence/permanent stay. An offshore account can be opened with a local bank on some offshore tropical island, with a high-street bank in a country just across your border, in Europe, Asia, elsewhere, wherever you may need it.
Any foreign account can be considered an offshore account. However, not every bank is suitable for offshore purposes. Let us see why offshore accounts are set up by individuals and companies.
Why would anyone need offshore accounts?
The main purpose for which offshore accounts are opened is to protect assets. What should accounts be protected from?
- from the bank failure and shutdown in the client’s country of domicile;
- from the economic crisis in the country of residence;
- from asset freezing and confiscation (like it was in Greece, and before that in Cyprus);
- from new high taxes;
- from scammers and corrupt officials;
- from any mishap that could lead to the sudden loss of all assets, ‘for you do not know what risks might lie ahead’ (like when you store all the eggs in one basket and someone drops it, so you lose everything);
- from the chance of being refused international cooperation just because your country is sanctioned or grey-/blacklisted;
- from currency and exchange control and restrictions in the country of residence or trade.
A foreign account opened in the ‘right’ jurisdiction with the ‘right’ bank ensures the safety of your savings and is likely to generate almost instant profits for you. Thanks to offshore accounts, you will mitigate risks, and in some cases, even increase the return on your investments.
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of personal bank accounts abroad for persons depositing €5000+. Expert services based on 7+ years of experience in banking.
Is it legal to use offshore accounts?
A wise client asks this question before applying for opening offshore accounts. Many readers ask it again and again, as the information landscape is full of negative stances and criticism of offshore jurisdictions, offshore companies, and offshore accounts. Some of the allegations can be justified to a certain extent, but most of them are mere sweeping propaganda statements and baseless assertions.
An offshore account is a tool. Just like anything, it can be applied both for legal purposes and for illegal ones, depending on the user. Let’s say, a kitchen knife can be a weapon. But it is not banned. Moreover, it is the most important tool in any kitchen.
The same with offshore accounts: they offer so many benefits to their holders, clients, partners, banks, and even states that they are unlikely to ever be banned.
However, we have to agree that authorities in all jurisdictions keep tightening their control over offshore banks’ and companies’ activities. Why so? In the past, offshore accounts used to be a popular legal ploy for some major corporations and HNWIs avoiding taxation. Too many wrongdoers abused foreign accounts to dodge taxes, arm terrorists, launder money, and commit other crimes. Thanks to the current amendments in national legislations, international treaties, and the upcoming automatic exchange of tax information, it is more difficult (and less profitable) for perpetrators to use offshore/foreign accounts to hide from taxation and other authorities.
Nowadays it is perfectly legal to use offshore accounts, as long as you comply with your country’s requirements and international rules. The main thing is to remember to pay taxes.
Where can you open a legal offshore account?
You can open an offshore account in any country other than the one where you live. But not any jurisdiction could be equally beneficial for your purposes.
Likewise, each bank in the world offers specific terms that can be favorable or disadvantageous for you. Before deciding where to open an account, you need to understand your aims and estimate your funds.
Depending on whether you need to deposit USD 500,000 or USD 10,000 on your personal account, and depending on the purpose of such a deposit, you can be recommended different banks and jurisdictions.
If you need a corporate offshore account for business, your bank requirements will differ from your criteria of selecting a bank for a personal account.
Moreover, some circumstances, such as the economic situation in the host country, the liquidity and reliability of the bank, the local legislation and reporting regulations, will also need to be considered.
European banks have been considered a great place for investment and offshore accounts for years. However, with the economic slowdown, growing bureaucracy and reckless policies in many parts of Europe, most European banks are having a very difficult time. To choose a really reliable bank, you need to clearly know where to turn to for advice and assistance. If you need a European account, you should discuss the pros and cons of available options during a free consultation with our expert. You are welcome to book the online private consultation for free by writing to our e-mail address at the top of this page.
You should consider opportunities in different geographical regions:
- European banks
- Switzerland as a separate specific destination
- Caribbean banks
- Asian banks (Singapore, Hong Kong)
- American banks.
You may appreciate interesting offers and benefits in each region. But there are also pitfalls to be aware of. In particular, beware of giant banks that used to be promoted as the ones that are “too big to fail.” Unfortunately, many of them are in a miserable state.
It seems to be more reasonable to choose medium-sized banks that feature safety margins, high liquidity, safe reputation. What kind of bank and offshore account is right for you? You are welcome to ask our experts right now: by writing to our e-mail address given at the top of this page.
How long does it take to open offshore accounts?
Time is money. In the context of asset protection, this phrase is even more meaningful than usual. The fact is that procrastination for 1-2 days in critical situations can cost a fortune. Then if you do not create an offshore emergency reserve now you can lose everything quite soon.
This has happened many times in history: private wealth and corporate assets were devalued, confiscated, frozen almost overnight in many countries across the world in times of trouble in different epochs. Those who kept their assets ‘in one basket’ got deprived of their funds.
Therefore, timing is everything. How long will it take to open a new offshore account?
It depends both on the bank and on you because there are two critical steps to take – the preparation of application documents and their verification by the bank.
First, you need to compile the documents. As you will find out during a free consultation with our expert, each bank has its specific list of papers to be submitted. It is important to know that the documents need to be translated into the language in which the bank operates, plus they need to be certified according to the bank’s rules.
You can get all important tips and recommendations from our experts. And your portfolio can be revised for errors. The point is, banks are extremely cautious about new clients and any mistake they detect in the course of the Due Diligence procedure. That is why you need to know the requirements and be very attentive to details.
This stage of compiling a portfolio of documents takes from 1 to several days – depending on the availability of your documents or the opportunity to get and submit the entire package quickly.
The second step is the stage of Due Diligence conducted by the bank. It takes from 1 to 10 working days. In some cases, if you intend to deposit millions on the new account, the verification of your application documents may take longer, up to 2 months.
The bigger the deposit, the more favorable conditions for opening and using accounts the bank offers, and the more closely the banks study the applicants’ background and the legality of their funds’ origin.
You need to be prepared for a thorough check. Depending on the bank, the procedure will last from a couple of days to several weeks.
Important note: the period of bank’s consideration of the application starts from the date of submission of all documents (including the additional papers the bank has the right to request).
How to open an offshore account for an individual?
An offshore account can be opened by individuals and legal entities. Here’s what the procedure looks like for individuals:
1. Send a message to our e-mail address (given at the top of the page) and tell us why you would like to open an account and book a free consultation;
- Choose a particular bank (or shortlist several banks for the pre-approval procedure which is a proven method reducing the risk of rejection), and then pay the fee for opening an account.
Payment for our expert services is accepted by cards or bank transfers.
- Prepare all the documents under the supervision of our experts. The main ones are:
- passport
- a document confirming your place of residence (payment of utility bills, etc.)
- your application to the bank
- document(s) confirming the legality of funds (tax return, sales contract, etc.) are required in some cases.
- Wait for the decision of the bank.
- Start using the account!
How to open offshore accounts for a legal entity?
The purposes of opening an offshore account for corporate entities and for individuals slightly differ. We can even say that, despite many legislative changes, it is easier and more convenient for legal entities to use offshore accounts than for individuals.
That is why private investors in some cases decide to open a foreign company and set up its foreign account.
Besides the benefits of protecting your assets, an offshore company and an offshore account allow you to plan taxes – legally (!), perform international transactions not subject to restrictions, make investments in new, inaccessible previously tools.
How to open an offshore account for an individual?
- Send a message to our e-mail address (given at the top of the page) telling us why you would like to open an account and book a free consultation;
- Choose a particular bank (or shortlist several banks for the pre-approval procedure which is a method to reduce the risk of rejection), and then pay the fee for opening an account.
Payment is accepted by cards or bank transfers.
- Prepare all the documents under the supervision of our experts. The main ones are:
- passports of owners and directors of companies
- documents confirming the place of residence of directors and owners (payment of utility bills, etc.)
- your application to the bank
- statutory documents of the company
- certificates of reliability;
- additional documents requested by the bank
- Wait for the decision of the bank.
- Start using the account!
What is an offshore account?
Any country in which you do not reside and in which you are not resident will be offshore for you. In turn, not every foreign bank can be automatically considered as an offshore bank, but an offshore account issued in a relevant offshore bank is a convenient tool to protect your funds from any force majeure likely to happen in your state. It is also an instrument of asset diversification and a pass to the leading financial markets of the world.
Is it legal to use offshore accounts?
Modern offshore zones and jurisdictions are tightly controlled both by their national authorities and by countries interested in the financial purity of their citizens. There are also special international organizations controlling the transparency of banks around the world. Please note that if you have registered an offshore account, you are required to report domestically your profits received abroad and pay taxes in the country of your tax residency. It makes your activity legal.
Where can you open a legal offshore account?
You need to always remember your goals for opening an account overseas. Do you need a personal account or an account for a company? How much do you intend to deposit on your account? Which bank fits the relevant criteria? Is it important for you to plan your taxes? Or, are you after a better banking service quality? Having analyzed and answered the above-mentioned key questions, you can choose a bank in the European, Asian, American, or offshore island jurisdictions. Much depends on your criteria. If prestige is a priority for your business partners, you may need to set up a European account. Last but not least is the political stability of the country, so you should not apply wherever unrest or revolution is likely to occur and impose risks for your funds. Other selection parameters may include the features of the market and the countries in which you are going to develop your business, or invest, be employed, study, etc. In any case, your decision needs to be based on your goals and the study of possible options.
22 June 2021 