Underground economy, tax evasion, and money laundering, among others used to be the first things that come to mind at the mention of offshore banking especially some decades ago when this subject was barely tackled. Although the intention of the pioneers of offshore banking was to offer full financial privacy and lower taxation, this attracted many illegal entities that were able to work their way around the trade.
The reputation may still be there but offshore banking has come a long way. People from various sectors actually consider this a smart move in terms of managing their finances. If you still do not get the hang of it, read on.
Offshore Online Banking Explained
Offshore banking is simply opening an account in another country. Many people take this option to protect their savings and take advantage of the low to zero tax imposed on interests by local banks, as originally promised when this system was organized.
Over time, financial institutions offering this service expanded their reach and made offshore banking more convenient for clients around the world. Using the power of the web, anyone can now open an account overseas in just a few clicks in the comforts of their own home.
Offshore Banking Pros And Cons
Opening an offshore account should not be decided upon in a haste. Not because you can means you should at once. First, look at the benefits and downsides that come with this attempt. It is necessary that you understand the full details surrounding offshore banking before taking the plunge.
• Stability. If your offshore bank is situated in an economically stable country, trust that your finances are safe from risks especially if your country is experiencing economic turmoil.
• Possible higher interest rates
• Developing countries can also benefit economically especially if the source of the account is based in a country with stable economy.
• Tax-free interest payment
Remember that everything has its pros and cons. While opening an account in another country has a handful of advantages, there are also some downsides such as:
• Indeed, offshore bank accounts can also pose some risks in terms of banking stability. Remember in 2008, during the recession period, people who have offshore accounts were heavily impacted by the banking crisis?
• Not everyone who owns an offshore account is involved in illegal transactions but the stigma is can be hardly ignored. It does not largely impact an offshore account owner’s reputation actually especially now that more and more people already recognize the benefits.
• The geographical differences may become a huge factor in the future when some important matters need to be settled personally.
How To Open An Offshore Account
Opening an offshore bank account is almost just the same as opening a domestic account but more documents may be required to establish your identity as a depositor. Aside from the usual requirements such as birth certificates, proofs of identification, and social security number, which should be notarized or bear apostilles by the way, you also have to present passport and certificates relating to your current finances. These are obliged from a potential depositor to prevent tax fraud and various illegal transactions, which are often linked to offshore banking.
Anyone can open an offshore bank account as long as you deposit the required amount. Some banks set a minimum of $5,000 while others need lower balance limits. Most people consider Singapore, Hong Kong, Austria, Switzerland, and other ‘tax havens’ as the best places to open an offshore account.
Almost the same process goes with offshore online banking. The difference is that you will have to send the requirements in digital format. It depends on the bank how long the processing will take. You can get such information during your research on the best offshore banking service to target. Especially if you are someone who only knows little about banking and finance, you should not only scout for information online but also refer to an expert. Offshore online banking in general is legal but before you fix on it, you must be aware of implications. Talk to someone who knows everything about the subject first in order to protect not only your money but also your own.