Offshore Bank Accounts

Offshore savings account

Offshore savings account is similar to onshore savings accounts. The main difference is that interest is generally paid by offshore banks without tax deducted. From one side, it is an advantage to individuals who do not pay tax on worldwide income, also to expatriates in particular cases, however every client of offshore bank should get tax advice before receiving benefits from such arrangements. The most recent example is the European Union Savings Tax Directive where EU countries agreed to exchange the information about any customers who earn savings income in one EU State being the residents of another EU state, as such earnings is subject to withholding tax. Moreover, there are offshore banking jurisdictions that have agreed to exchange information with EU - for example Andorra, Channel Islands, Isle of Man, Liechtenstein, Monaco, San Marino, Switzerland, Turks and Caicos Islands. To resume all above said - offshore savings account is a wise way how to reduce tax burden, but it should be used only if it is allowed by one's country. So, many countries not only allow to open offshore savings account, but specially in their laws indicate the sum on which the residents are entitled to have an onshore tax free savings entitlement in each tax year. This money can be placed in a qualifying investment investment vehicle, for example, offshore savings account.

Taxation is not the only benefit of offshore savings account, some offshore banks operate with  lower costs and can provide higher interest rates than the rates of onshore banks, due to reduced expenses and less government intervention.