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Getting an Offshore Bank Account
:: Offshore Banking account ::

What is Offshore bank?

An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction that provides financial and legal advantages. These advantages typically include some or all of

- strong privacy (see also anonymous banking)
- less restrictive legal regulation
- low or no taxation
- easy access to deposits (at least in terms of regulation)
- protection against local political or financial instability

While the term originates from the Channel Islands "offshore" from Britain, and most offshore banks are located in island nations to this day, the term is used figuratively to refer to such banks regardless of location (Switzerland and Andorra in particular are landlocked).

One common misperception is that offshore banking can legally prevent assets from being subject to personal income tax on interest. Except for certain persons who meet fairly complex requirements, this is incorrect as the personal income tax of most countries makes no distinction between interest earned in local banks and those earned abroad. Persons subject to US income tax, for example, are required to declare on penalty of perjury, any offshore bank accounts they may have. Although offshore banks sometimes do not report income to other tax authorities this does not make the non-declaration of the income or the evasion of the tax on that income legal in most jurisdictions.
Advantages of Offshore Banking

- Offshore banks provide access to politically and economically stable jurisdictions. This may be an advantage for those resident in areas where there is a risk of expropriation or where there is corruption within the banking system, or bank officers may become liable to the influence of or pressure from criminal gangs.

- Some offshore banks may operate with a lower cost base and can provide higher interest rates than the home country.

- Offshore finance is one of the few industries that geographically remote island nations can competitively engage in.

- Interest is generally paid by offshore banks without the deduction of tax. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed.

- Some offshore banks offer banking services that may not be avalable in one's country of residence. One such example is paperless bank statements.

- Offshore banks in some countries (by law) partisipate in mandated bank account deposit protection insurance systems. A US person using a bank in Australia, NZ, Canada (or any EU country) would get similar deposit protection as using a US bank.
Disadvantages of Offshore Banking

- Few offshore jurisdictions have depositor compensation schemes, to bail out depositors in the event that a bank becomes insolvent.

- Offshore banking has been associated with money laundering and organized crime. There is a risk of reputation being tarnished by association.

- In addition, the advantages of offshore banking may come at a high cost as the returns on some offshore banking accounts may be substantially below those of normal bank accounts.

- The fees and minimum deposits required to open and operate accounts at some offshore banks can make them inaccessible to the general public.

- Offshore jurisdictions are often remote so physical access and access to information can be difficult.
 

 
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