What Countries are Best-Suited for Offshore Banking?
Before we begin, let’s clarify what an ‘offshore bank account’ means. It is simply a bank account in a country that is not the country of your permanent residence. A foreign bank account. In the case of a corporate account, it is a bank account in a country other than the country of your company domiciliation. If your company is incorporated in Singapore, for example, and you open a corporate account in Hong Kong, this is going to be an offshore business account.
Reasons why you should consider banking offshore
There are many reasons why you should consider setting up an offshore bank account. First, the geography of your business operations may make it sensible to set up a bank account in the region of the world where you have business interests. Second, your offshore account can hold the money in different national currencies. Third, you can find attractive tax incentives in some jurisdictions (but not all). Fourth, an offshore bank account can bring you many new investment opportunities. Fifth, banks in some countries offer interest rates that may well be higher than those in your home country. Sixth, the banking privacy in a couple of countries is superb. Finally, you can have foreign debit and credit cards if you open an offshore bank account.
Choosing the country where to bank
The choice is rather wide and there are several factors to consider. Your ultimate decision will largely depend on your top priorities. Some advantages that can be found in one country may be unavailable in another country.
The first factor is the reputation of the jurisdiction that you are considering for banking. You should bear in mind that some countries are experiencing pressure from international regulators such as FATF and OECD, for example. If you have a bank account in a country that is sanctioned, you may be unable to transfer funds from it to other countries. Yes, the country may be offering serious tax benefits but these can be outweighed by certain drawbacks.
Another aspect is the banking security in the country that you are looking at. Most countries that incentivize foreigners to open bank accounts there will be safe for banking. After all, they are interested in attracting foreign capital and they have to be protective and caring if they are to be successful at this endeavor. Besides, they have to provide high quality banking services. In any case, you should check beforehand if your offshore deposit is going to be insured and what the insurance amount is.
The third factor to take into consideration is the required amount of the security deposit. Some banks want considerable initial/ security deposits while others will be happy with any balance that your account has as long as it is positive. Besides, different banks have different commissions and fees and this is important to make a note of it too. International transfer commissions and monthly/ yearly account maintenance fees can be rather high with some offshore banks.
Finally, you should inquire if your offshore bank account can be opened remotely. If the country that you are considering is located far away from your place of residence, traveling there can take a lot of time and money. On the other hand, we live in a digitalized world and a large number of banks provide an opportunity to open accounts remotely with them.
Countries where you can bank
What are the best countries for offshore banking? As we have noted above, the answer to this question will depend on what sort of benefits you are looking for in the first place. Below we list 11 countries that you may find attractive if you are thinking of setting up an offshore bank account. Each of them offers some specific advantages and some of them have certain drawbacks.
Please also note that the political situation and the tax legislation in many countries may change over time. For example, some small insula states that used to be blacklisted have left the black lists now after adapting their national legislations to the international standards. Other countries ‘misbehave’ and tough pressure is applied to them by global regulating agencies.
Singapore
The Singaporean economy keeps growing and there seems to be no end to the growth. The country is especially popular with wealthy foreign nationals who open offshore bank accounts there. This is because some superb wealth management services can be found in Singapore.
Hong Kong
Hong Kong also offers fantastic opportunities as far as offshore banking is concerned. You will find a perfect financial infrastructure in this jurisdiction, a tax system that offers many perks to foreigners bringing their money there, and an efficient legislation that protects the interests of Hong Kong bank account holders.
Mauritius
A small island, Mauritius has the second largest economy in Africa and its growth continues. Opening an offshore bank account in the country is rather simple and it does not take too much time.
Seychelles
There is no tax on foreign income in Seychelles and the level of banking privacy is high.
Nevis
Nevis is especially popular with US citizens registering business companies there. They often couple company registration with opening offshore bank accounts in Nevis.
The Caymans
The Cayman Islands is the best jurisdiction to bank if you hate paying taxes. Nowhere else on the planet can you find so many tax benefits.
Panama
The territorial tax system is applied in Panama, which means that only the income made on the territory of the country is taxed.
Belize
The economy is very stable in Belize and the main advantage that the country offers is high interest rates on bank deposits.
Georgia
The interest rates are even higher in Georgia than those in Belize, even though the local currency exchange rates fluctuate.
Germany
Germany has the largest economy of all EU states and it is the safest country to keep your money.
Switzerland
Trillions of dollars (euros, francs) are kept in Swiss banks and half of the total amount belongs to foreign nationals. Switzerland is the most popular country for offshore banking.
