Offshore Banking
It is defined as “the many banking and investment institutions available in countries and jurisdictions other than the depositor’s home country.” Any bank could be defined as an offshore bank as per the above definition but the real meaning of the term stands for specially created banks in the tax-haven jurisdictions that offer specific services. These banks are quite like the high profile Swiss banks and offer complete privacy to clients.
Offshore Banking has had periods and events of notoriety. Countries and national banks don’t want their funds to be deposited elsewhere and the media catches on to small incidents and scams and blows it out of proportion. Many such disgraceful events have occurred too, which include tax-evasion scams and money laundering schemes. Some have even labeled offshore banks and unsafe and unregulated. This is contrary to the truth that offshore banks are some of the most advanced ones in the world. Due to the staggering volume of funds dealt in, they simple need to be sophisticated. Foreign capital held up safely in deposits is sometimes the only source of income and investment for not just these banks but the countries themselves.
What exactly is Offshore Banking?
Tax havens provide asset protection and privacy benefits to the bank account holder. They relax the laws and restrictions even more for certain types of accounts. Some havens have very little tax liability and some like the ones in US charge interest on worldwide income. Confirmed and reliable havens include island-states such as the Cayman Islands, Channel Islands; Switzerland (has been a tax haven since 100 years). Swiss Banks have always been mired in controversies about them stashing black money from all around the world and also money from large multi-million dollar scams of politicians. All these problems have taken place mostly in Swiss Banks that have foreign branches. Switzerland-only located Swiss Banks have had the highest reputation of being untainted and confidential.
Different havens provide a different mix of incentives and laws. After careful consideration with a local knowledgeable consultant you can easily pin-point the place best for meeting your needs. Some place higher weight on taxation, while others offer more confidentiality, etc.
Some History
Europeans have historically always been heavily taxed. Necessary ID is the mother of invention and out of this compulsion to pay heavy taxes came the solution of transferring cash on which taxes are counted into other areas where they will be hardly taxed. Thus the first of many tax-havens got setup in Channel Islands for frustrated tax-burdened Europeans. Different people use the tax-havens for a wide variety of purposes. Unlike real banks in the home country, records at offshore banks were not scrutinized, were free from the risks of political instability and theft as they were located in relatively stable peaceful countries. Thus it was such these havens were the safe-houses for the cash and capital in those days.
Offshore banks today are very advanced offer all kinds of protection, intellectual, physical, tax, financial, etc. Assess your requirements and discuss these with certified agents before jumping into the arena.
