When you think of offshore bank accounts do you see shady characters carrying around bags full of money? Today's 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 at http://www.offshoreincorporation101.com/KYC.html.
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.
What's 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 d'etat 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 Union's 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.
About the author:
David Jones is a freelance writer and world traveler who writes about the use of offhsore companies, finance and subjects in
which he has a personal interest. http://www.offshoreincoporation101.com
