Often, offshore investing or insurance is demonised by the press, painting a
picture of investors secretly stashing their loot with some
illegally formed or acquired company that is located on some obscure
and tiny Caribbean island with zero tax rates.
While it may be true that shady offshore deals will always be found, the bigger portion of offshore companies and accounts are perfectly legal. Similar to any investment, common sense is necessary when forming or buying an offshore company. It is financially prudent to consult with a reputable and experienced investment advisor, lawyer or accountant whose speciality is international investment.
Leading offshore countries include the Cayman Islands, Bermuda, the Bahamas, and Isle of Man.
Investing offshore or buying an offshore company comes with a number of advantages:
Taxation Benefits :
A good number of countries (also referred to as tax havens) provide attractive tax incentives targeting foreign investors. These are designed for the goal of attracting outside wealth through promoting an investment environment that is healthy. The offshore company plays the role of an umbrella for the accounts held by the investors, protecting them from the higher levels of taxation they would have been subjected to in their country of origin. As the company is not engaged in business operations, it faces little or zero taxation.
Protection of Assets:
Many individuals and investors who are wary about lender foreclosures due to outstanding debts or lawsuits opt to transfer a good portion of their wealth (or holdings) from their private estates to a separate entity that is located outside their home country. Through necessary and legal on-paper ownership transfers, the investor is no longer vulnerable to domestic troubles or legal seizure. per.
Diversification of Investment :
A number of countries place restrictions on international investment opportunities for their citizens. Lots of investors feel constricted in terms of their ability of truly diversifying their investment portfolio. When you buy an offshore investment company, it gives you unlimited access to all major world currencies and global markets.
The bulk of offshore destinations provide the complimentary secrecy legislation benefit. Such countries have put in place strict banking and corporate confidentiality with serious consequences in case of a breach.
However, it must be pointed out that in cases of clear illegal activities such as money laundering or drug trafficking, offshore laws do permit identity disclosure.
Setting up or buying an offshore accounts is not cheap. It will mean heavy legal fees, account or company registration fees. Some countries will even require that you own some property (usually a residence) in their country to operate an offshore or holding company.
Most tax agencies aren't ignorant of the strategies being deployed by offshore companies. They've put more effort at clamping down on the traditional methods used in avoiding taxation.
One thing that is clear is that offshore investment goes
beyond what the majority of investors can accomplish. However,
despite the pitfalls, it still can pay off to move some of your
investment assets to a tax haven by acquiring or investing in an
In the majority of cases, the offshore advantages by far outweigh the risks and costs associated with acquiring an offshore holding company. Just like you would do with any significant investment, carry out your research prior to plunging in.