We have all heard of the term offshore investment or offshore account. Probably, the first thing that comes to mind is some sort of criminal trying to hide money somewhere so that the authorities can’t track it down! Movies and TV series aside, offshore investments can offer some fairly attractive benefits.
Offshore investing is not quite as simple as opening up a secret account somewhere that the tax man doesn’t know about. They actually offers a variety of different options. Different types of account include growth, income and money funds. Unless you know exactly what you are looking for, my first piece of advice is to talk to an expert to put an offshore investment strategy in place. There is no one solution fits all here – depending on the duration of your investment and the sort of risk you are willing to take; every investment strategy is entirely unique.
Given that I can’t offer you any specific advice on individual offshore investment strategies, let me give you some great reasons why to consider offshore investments in the first place.
Diversify Your Opportunities
Offshore investment offers far more investment opportunities than onshore investment. More options allow for diversification of investments in international stocks and hence, reduced risk. Offshore investments funds are also some of the best performing in the world!
This is the big one! While there are various tax loopholes that can be exploited, there are two obvious tax breaks:
Expatriates Tax Relief
UK nationals who are living abroad or who are planning to move abroad can claim tax relief on the interest earned while out of the country. HMRC call this ‘time-apportionment’ relief. For example, if a you are a non-resident for 4 years out of a 5 years bond, you are only liable to pay tax on 20% of the gains. Equally, if you are considering emigration, the destination country may hold more favorable taxes.
Non-Domiciles Tax Relief
The law in the UK changed recently which resulted in non-domiciles being subject to pay tax on non-UK assets. By opening Offshore bonds, this liability can be deferred until non-domiciles return home / leave the country. Essentially, this prevents these assets being subject to HMRC taxation.
Circumvent Forced Heirship
You may be unaware of this point, but the legal systems of numerous countries (including France, Saudi Arabia and Japan) allow for a person’s will to be altered after death. Forced Heirship essentially involves dividing a persons assets into two portions – an indefeasible and discretionary portion. Assets can be reallocated under law and against the deceased wishes.
By investing in certain offshore options, you can avoid forced heirship under local laws and be satisfied that the divvying up of your estate will be executed according to your wishes.
If you have some money and a diversified and sound investment portfolio is what you are looking for then you should consider offshore savings. Like other financial products, different banks / institutions offer a wide variety of different products which come different benefits. Take some time to have a look what is available in your country and choose the best offshore savings accounts.
image courtesy – treehugger