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