Investing Offshore, Could it Be for You
Is offshore investing only for the rich and famous? Probably
not, although most of us don't know a lot about offshore
investing. Here is a simple primer for the fledgling offshore
investor.
Offshore investing is simply placing your investment dollars in
an account with a bank that is not in the United States. There
are several advantages to investing offshore.
First, there is less regulation. Some may feel that this makes
the investment riskier, but that is not necessarily the case. It
does allow the fund manager or company to act more freely. The
lack of regulation also means less taxes. Most offshore accounts
are invested in countries that have minimal tax laws for these
investments. That means that more of your money is available to
work for you.
Privacy is also an issue for some investors. Most of the
countries typically involved in offshore investments have laws
making it illegal for the investment firms to release any
information regarding their investors. There is virtually no
governmental reporting. This ensures that your investments and
personal information will be confidential. For many who want
privacy, this is a major benefit of offshore accounts.
In our lawsuit happy society, those with assets want to protect
them from litigation. Many of the offshore countries chosen have
laws that don't recognize foreign awards so the assets placed in
these countries are not subject to seizure. Although not a major
consideration for everyone, for many it is a factor in deciding
to choose an offshore investment vehicle.
Many of the offshore jurisdiction have much less complicated
estate laws and tax structures. Utilizing offshore accounts for
estate planning purposes is becoming more and more popular. Many
set up an offshore charitable foundation in countries with
favorable estate tax laws.
In order to set up an offshore investment account, an individual
must either reside in or establish a legal presence in the
offshore country that will make the gains taxable in that
jurisdiction and not the onshore one. There are several
companies that will help you set up a corporation and complete
the required paperwork to get started in offshore investing.
These firms will help you set up a corporation called an
International Business Corporation (IBC) or a Limited Liability
Corporation (LLC).
If you're happy with your existing portfolio, but you want to
move it offshore, you can move to a brokerage firm offshore once
the legal paperwork is completed. The brokerage account will be
opened under the name of the IBC, and then the brokerage
completes your orders in the name of the IBC. Your personal
identity is never involved. Of course, these brokerages can
invest in offshore mutual funds or any investment worldwide.
Offshore investing may not be for everyone, but if you have
assets that you want to protect from seizure, you want to
maintain the strictest confidentiality, or you want to seek tax
relief, investigate the possibilities. You may find that
offshore investing will help you reach your financial goals.