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The Savvy Scot

Personal finance and lifestyle blog

Why Is Offshore Investing More Attractive?

By savvyscot

Offshore investing is not quite as simple as opening up a secret account somewhere that the tax man doesn’t know about.

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!

Tax Relief

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.

Getting Started

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

Filed Under: Personal Finance, Saving Money Tagged With: forced heirship, investing offshore, Offshore, offshore accounts, offshore banking, offshore bonds, Offshore investment, offshore products, offshore savings, prevent forced heirship, reasons for offshore accounts, reasons to invest offshore, tax relief expatriates, tax relief expats, tax relief for non-domiciles, top reasons to open offshore accounts, why should I invest offshore

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Lovely comments

  1. Mohammed says

    September 12, 2012 at 7:31 am

    Forced heir-ship is a problem that we face in the Middle East.

  2. Rachael says

    September 12, 2012 at 2:28 pm

    Hey Savvy, great post!

    I was asking myself those questions after reading this today http://www.thisismoney.co.uk/money/news/article-2202018/Tax-man-recovers-HALF-A-BILLION-wealthy-tax-dodgers.html?ITO=1490

    Funnily enough my mind did the same thought pattern (clearly I watch too many films) It’s good to know what all the fuss is about though! An insightful read.
    Rachael recently posted..Warning! Geeky moment!My Profile

    • savvyscot says

      September 12, 2012 at 2:51 pm

      Hi Rachel – thanks for stopping by! I actually read that same article today! Quite astounding really… Another reason to speak to an advisor at a trusted bank to get some good advice. The whole tax evasion / avoidance debate is sketchy at best!

      • Rachael says

        September 12, 2012 at 3:08 pm

        Couldn’t agree more! Too many factors to consider, I would have thought people with that kind of wealth have accountants and IFAs to advise them in tax matters.
        So it does makes you wonder whether it just slipped someone’s mind or slipped into someone’s pocket.
        Rachael recently posted..Warning! Geeky moment!My Profile

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