We thought that the free information provided by Google is enough to bust myths that surround offshore structures, especially post-Panama-Paper-leaks. Unfortunately, we thought wrong.
We keep overhearing people voicing their opinions about offshore bank accounts and companies – mostly negative. One of the most common (negative) opinion: Only bad guys use offshore banks and companies; those who use offshore structures are up to no good, unethical and stealing people's money.
Sadly, the opinions are often found true. But to be fair, you need to view things from two sides of the coin.
Offshore banking and company formation are given a bad rap by the media. Just google for 'offshore banking' and you'll find some information that voices criticisms, negativity, and whatnot. Only several reputable online publications that voice fair and unbiased opinions.
As an International corporate services provider, we obliged to inform our clients, prospects and the general public what we know about offshore company formation and banking. That said, in this post, we'd like to, once again, clarify that opening an offshore bank account and forming an offshore company are as legal as your onshore bank account and company formation are. What makes them illegal is hiding them from your country of citizenship's Government.
Once a gray area, it's now official that not reporting your offshore holdings will get you into trouble more sooner than later – thanks to the AEOI (Automatic Exchange of Information) an initiative of OECD in reducing the possibility of tax evasion.
The initiative, along with U.S.' IRS' crackdown on naughty taxpayers, have successfully forced Switzerland and other popular jurisdictions to end the era of account privacy and for asset holders to declare, even repatriate, their assets.
If you still think that you can get away with your arrangements, think again – there are 101 jurisdictions that commit to AEOI, and more to come in the next two years.
So, why should I use offshore bank accounts and/or company formation when it's not that secure or secret anymore? Well, we need to adapt to the changes in laws and regulations.
There are still plenty of benefits of going offshore. The key is this: Before you open an offshore bank account, make sure that you do so for the right reasons.
The benefits of offshore banking and company formation, revisited
Here are some good reasons why you need an offshore bank account or an offshore company.
Benefits of an offshore bank account:
Reducing your political risk: If you lack of trust in your local government, having your assets offshore in a stable jurisdiction is a very good idea.Safer and stronger banks and banking system: Did you know that most banking systems in Western countries are unsound? This poses a big risk of insolvency, and you can't afford to lose your hard-earned money. Offshore banks, on the other hand, are among the world's safest. For example, Switzerland is a strong jurisdiction with some of the world's safest banks, such as Zurcher Kantonalbank and Banque Cantonale Vaudoise.Better protection for your asset: As we all know, there is no such thing as 100% safe when it comes to asset protection. However, offshore banks can offer you protection from the prying eyes of your competitors – and Government. You can learn more about the offshore banking benefits here.
So, what are the benefits of an offshore company formation?
Undeniable tax advantages: Nobody would want to do business in a highly taxed jurisdiction when there are legitimate options to do reduce the taxes in a particular jurisdiction, which typically located offshore. Globalized business: If your company do business internationally, setting up your company offshore is a good idea to protect your assets and business continuity abroad. That's the main reason why big corporations like Google has office in offshore jurisdictions (Google set one up in Ireland for International business activities.)Spreading political and economy risks: Having a presence offshore means that your business can now have two different sources of income. Should hyperinflation, unrest, force majeur, or any other 'disasters' happened, you have a business continuity plan in place. You can learn more about the offshore company formation benefits here.
The era of the offshore world like in James Bond movies has ended. The loopholes are getting fewer and smaller for 'creative' asset holders to capitalize upon. We all need to adapt, and at this moment, the best way to go is to play by the rule book.
You see, if your home country is as demanding as the U.S., then you can choose from three options:
Follow the rule;Operates in the 'shadow'– and put your business and personal assets at risk should you get caught; Renunciation of your citizenship. We can't choose it for you; the choice is yours. You can avoid or evade taxes; you can disclose or non-disclose your wealth offshore; you can follow the rule or living on the edge; bottom line, you decide.
One thing for sure, once more, we implore you to have the right reasons to go offshore with your personal or business assets. Why? Because we know that there are people who want to go offshore to evade taxes and other illegal/questionable purposes. It's a risky business to do that now, because it's a different world today - “thanks” to the AEOI and a global crackdown on offshore world.
Just like Brexit, you can 'vote' to leave your old ways of protecting your assets or keep doing what you're doing right now. In term of asset protection, I suggest you choose the former.