Getting a bank account offshore simply means opening an account outside your country. Apparently, if you have lived in another country for a period of time, you are very likely to have an offshore Swiss Bank Account already.
A separate type of offshore banking contains an offshore bank account only for external persons. Offshore banks or financial enterprises operating as such are often banned from offering banking services to citizens of the country in which they are licensed under their charters. A typical example may be an offshore bank on a Caribbean island that offers services to American and European citizens but is not allowed to provide services to the island residents.
Apart from the simple need to have a separate account when you live in a foreign country, what are the offshore accounts so attractive? Why are the rich people making them?
1) Offshore bank accounts in more than one currency are often open. This makes them extremely useful for those who work or fly in a different country. It is also very useful as a cover against dramatic currency movements to your average investor. For example, some investors might like to buy in money that’s stable, such as the Swiss franc, so that all their money isn’t contained in one currency such as the dollar.
2) A hedge against domestic financial instability. If most people think of offshore banks, they can think of the infamous shell banks. The physical presence of some of these banks, unregulated and sometimes out of the bedroom, is a brass plate on a building with hundreds of similar unlicensed institutions. However, shell banks in Western countries are increasingly being favored and ostracized by domestic banks. The seriously operating offshore banks are well-governed and safe or even safer than conventional domestic banks.
3) Security. Offshore bank accounts may be much more private than on-shore accounts, depending on where and how exactly you bank offshore. There are many reasons why this protection is sought and, more generally, defend against threats against criminals or unfair lawsuits on your property. Although Swiss banking accounts and cayman bank accounts are traditionally considered the most discreet, international developments have made them less private than before.
4) Offshore investment exposure. It’s often not just a bank account that people decide to move part of their wealth offshore. This offshore bank account also acts as a gateway for other foreign equity investments, offshore assets, and financial instruments with high-interest rates. Some of these contributions can be completely tax-free, depending on your personal situation.
5) Tax fees. International. When a domestic bank is used, sending and receiving massive wire transfers outside of Germany can be a nightmare. Mountains of questions and documents are to be answered. That’s understandable. That’s understandable. Domestic bank accounts are actually for domestic transactions and not fit for large volumes of transfers from abroad-like a mini metro for off-road transfers. Offshore bank accounts, however, are specifically designed for sending and receiving money from foreign countries and for making the process as quick and efficient as possible.
If you don’t really need one, you don’t have to set up an offshore account. If you can do what you need with a simple domestic account quickly, this is the best course to take. On the other hand, if some of the above suggestions reach you in agreement, it may be a good time to move outside!