Offshore banking: what are its advantages?

For quite some time, offshore banking has been considerably gaining in popularity. While it was previously seen as something reserved for skilled financial experts, big corporations or the super wealthy, it is becoming more and more accessible than ever. Have a look at some of its advantages.

Tax incentives

One of the most significant factors motivating investors to bank offshore is the tax benefits. In countries like Mauritius, tax rates are extremely advantageous to investors. Offshore banking is a resourceful way to generate wealth. Thus, the countries devise incentives so that both parties can benefit from this venture. For instance, as long as investors do not participate in local trade or make their money within the country, their assets are not subject to local tax laws. This implies a decrease in income tax, capital gains tax or property tax, among others.

Better asset protection

Thanks to offshore banking, investors have a lot of ways to better protect their assets. You can either simply store your liquid assets offshore in a traditional checking or savings account or you can take things further, branch out and explore additional structures for asset protection. For instance, you can set up different types of trusts in Mauritius. This will allow you to preserve and protect existing assets and enjoy tax benefits without losing control over how they are managed. Moreover, many offshore banks and banking countries aim to protect the assets of investors and they have a legal system that is beneficial to foreign investors to do so.

Privacy and anonymity

It goes without saying that offshore banking will provide you with greater privacy. Investors might not wish to have their financial decisions made public for several reasons. Thus, when they bank in international waters, they can benefit from greater financial privacy, confidentiality and even anonymity if they wish to. This does not mean that you are opening a bank account in secret. Instead the offshore company you patronise will take the responsibility of confirming your identity and your place of residence. This will allow them to authenticate your standing to legally required entities while also protecting your identity. This type of protection will allow you to buy more stocks in a single company or simply keep your financial dealings private. This involves activities ranging from setting up an offshore savings account to establishing a large trust for future generations of beneficiaries.

Decreased vulnerability and increased diversification

Banking, wherever you choose to do so, involves inherent risks. Domestically, there are political and economic factors to take into consideration and these extend to offshore banking as well. However, offshore banking can decrease your vulnerability to these risks because it increases your diversification. Everyone in the financial sector is aware of the importance of diversification. By choosing to process all your financial transactions on domestic land, you are making yourself more vulnerable. Offshore banking ensures geographic diversity. You are spreading your wealth around, creating a financial safety net, and reducing your vulnerability in a significant way.

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