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Moving abroad is a good opportunity to
evaluate your financial position and indulge in some
much-needed financial planning. There is often much
to do but don’t ignore the financial side, as
time spent in sorting your banking and financial affairs
is time well spent.
For many expatriates, offshore banking can offer many
advantages over an account based in your home country.
The most important are:
Tax efficiency
The interest earned on your savings and investments
can be paid without deduction of tax at source. Expatriates
may be able to benefit from the tax treatment afforded
through investment in specialist offshore funds designed
with the expatriate in mind. There can also be inheritance
tax benefits for you if you have a foreign domicile,
and you may also benefit from tax planning advantages
if you hold assets offshore.
Worldwide investment perspective
The investment perspective of offshore fund managers
is typically worldwide rather than one-country centred.
This may give you special investment opportunities,
which are not available to non-expatriates.
Choice of accounts
Being “global citizens”, it is often the
case that you will have dealings in major currencies
other than your local currency, that is, Sterling, US
Dollar and Euro. Transactions become easier if you open
accounts in these major currencies, as it cuts out exchange
rate fluctuation risk and bank conversion charges incurred
when converting local currency. Thus, you can make and
receive payments, withdraw cash or transfer money between
accounts relatively easily and cheaply.
Choosing the right offshore bank account
You may wish to consider a bank account that offers:
Stability and security
When banking offshore it is important to choose the
right offshore location for your savings – one
that is well regulated, politically stable and enjoys
modern communications, such as Jersey, Guernsey or the
Isle of Man. These islands have a long history of stability,
security and confidentiality, all of which should instil
a sense of confidence and peace of mind for an expatriate.
Choice of currencies
When choosing an offshore bank, it is important to first
determine what the account will be used for, that is,
receiving salary, paying in a regular credit into the
account, or frequent international transactions. Then,
decide on the currencies which you are most likely to
use. This is where offshore banks are advantageous,
as they normally deal in most major currencies, for
example, Sterling, US Dollar and Euro. Also, their staff
are more familiar with dealing with transferring funds
internationally and are able to advise you on the international
financial opportunities available to you.
Cards
Sterling, Euro and US Dollar debit cards with worldwide
acceptance are extremely useful if you are travelling
to the Euro zone or US Dollar-accepting countries, and
can limit the need to carry large amounts of cash or
travellers cheques. Moreover, these make purchasing
easy by reducing or eliminating bank charges and conversion
charges when withdrawing from a cash machine abroad
with a different currency debit or credit card.
The better offshore banks offer worldwide access to
funds by linking up their debit cards with Visa or MasterCard
networks, which allow you to withdraw cash from other
banks and ATMs, and also pay for goods and services
worldwide.
Relationship management
Access to dedicated relationship management through
the support of trained and experienced managers means
that you can always have an English-speaking manager,
who knows about your personal account and situation.
Face-to-face contact
The opportunity for face-to-face meetings with visiting
relationship managers, according to your convenience
can be very useful to help you plan your future financial
requirements.
Easy access round-the-clock
Instant access and availability to funds are important
to people living and working abroad, as you are constantly
‘on the move’. Account information needs
to be accessible 24 hours a day, seven days a week.
Most offshore banks allow you to access basic account
information such as balances, statements, and so on
online. Automated and round-the-clock telephone and
internet banking services are pre-requisites together
with a website offering a comprehensive range of product
and service information plus financial and lifestyle
tools. It is also important to ensure that you can manage
your currency accounts online and over the phone.
Is an offshore company right for
you?
If you live in a country that taxes your worldwide income,
there can be many advantages to establishing an offshore
company as part of your basic tax planning. It is widely
believed that setting up an offshore company is complicated
and expensive, but this is not always necessarily the
case. To discover whether you would benefit from setting
up a limited liability company, first look at how you
earn your income:
Are you self-employed?
If you work strictly for yourself, as an entertainer,
an author or a consultant for example, then using a
company rather than acting as a sole trader could have
tax advantages. You may be able to assign or contract
with an offshore company the right to receive your fees.
The offshore company, which then “employs”
you, may not have to pay tax on its profits. Payments
to you can often then be structured in such a way as
to minimise your personal tax liability.
Do you hold a patent or copyright?
If this is the case, you can sell or assign the right
to this to an offshore company. In many cases, royalties
paid from a high tax area attract withholding taxes
at source. An offshore holding company may give the
opportunity for a reduction in the rate of tax withheld.
Do you own property?
Using a company to hold property such as buildings,
boats and even classic cars can be cheaper and may provide
savings on tax and property transfer costs (but take
care because some countries have recently tightened
up the tax rules for companies).
There are many other uses of an offshore company.
Tax and other benefits that can be obtained by use of
offshore entities usually depend upon the country of
residence of the beneficial owner and its anti-avoidance
legislation.
In this respect, it is always recommended that you
first seek out appropriate professional advice before
registering your company.
For more information about opening an
Offshore bank
account please contact Lloyds TSB Offshore Limited.
For Personal Accounts call:
Tel: +44 (0) 1624 638000
For Company Accounts call:
Tel: +44 (0) 1539 448019
E-mail newaccs@lloydstsb-offshore.com
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