Why do people open offshore bank accounts? This is not to launder money acquired through bribes or by selling drugs, not to conceal their incomes from the tax authorities, and not to evade taxes.
The days when offshore zones were used for criminal purposes are long gone. Offshore banking today simply means banking in a foreign country. So why do people open accounts with foreign banks?
Every person will pursue his or her own main goals when setting up a foreign bank account. Below we list the main benefits that you can acquire by opening an offshore bank account.
Facilitating International Business Transactions
If you have clients or business partners in a foreign country, you can benefit greatly from opening a bank account in that country.
Transferring money to a domestic bank is always less troublesome than transferring money to a foreign bank.
Many of us feel safer when banking at home rather than banking abroad. The reasons for that may be psychological rather than logical but the fact remains anyway.
So if you make it easy and psychologically comfortable for your customers to pay for your services or for the goods that you sell, you will thus improve your chances of getting paid!
Exploring Banking Opportunities in Foreign Markets
When a forward-looking entrepreneur is planning to enter a foreign market, he or she will enquire into the banking opportunities that are available in that region of the world.
If you would like to do business in Europe and open an account with a European bank, for example, you have to realize that non-resident banking in the EU can be rather problematic.
If you come from a country outside Europe, you have to legalize your presence in this part of the world before you can open a bank account there. This task is not as challenging as it may seem at the first sight.
First, there are European countries that administer residence-by-investment programs and second, registering a legal entity such as a business company in a European state can often make you a resident of the state for legal purposes.
Legalizing Presence for Non-Residents in Europe and North America
The same is true for opening a bank account in North America: you’d better be a legal resident there to be able to use all the banking opportunities found in the U.S.A. and Canada.
And these opportunities are superb indeed if you are a legal resident of one of these countries. You don’t have to be a citizen of the United States or a green card holder to legalize your stay in the country and open a bank account there.
An Investor visa or company registration will also make you qualified for residence. The same holds for Canada. As far as registering a company in North America is concerned, we recommend that you consider the states of Delaware and Wyoming for this purpose as well as the Canadian province of Ontario.
Diversifying Financial Assets for Stability
If you live in a country where the political and economic situation is not very stable (unfortunately, this description of the political and economic situation is applicable to a large number of countries these days), you may benefit from diversifying your financial assets just to feel safe.
Switzerland probably has the best foreign banks for non-residents who want to keep their money in a secure place.
Other European countries where your money is going to feel as snug as a bug in a rug include Liechtenstein, Germany, and Great Britain.
We must admit, however, that the latter two countries have been facing some economic challenges lately due to the military crisis in Europe and the sanctions that it has entailed.
Safeguarding Against Exchange Rate Fluctuations
Having an account with a foreign bank usually means having an account in a foreign currency. This is one more reason why people open foreign bank accounts: they want to protect themselves from exchange rate fluctuations.
You don’t have to engage in FOREX trade but having a few accounts in several national currencies is always a good idea if you have more than a few dollars.
You should bear the following fact in mind: banks in your home country will usually pay a much smaller interest on your foreign currency account in comparison to the interest that they will pay on your account in the domestic currency.
For example, you can normally earn more on your euro account in Europe than you can earn on your euro account in the United States. The opposite holds for a US dollar account.
Seeking Better Interest Rates in Foreign Banks
This said, you should also realize that banks in some countries will pay a better interest on your deposit than the banks in some other countries.
If you are looking for a bank account in Europe, you may want to consider the opportunity to bank in some former Soviet republics, some former Yugoslavian republics, and probably in the Czech Republic and Slovakia as well.
These countries can be referred to as ‘newly independent states’ because they were part of larger countries less than three decades ago. Now, any newly independent state will always have some economic challenges to tackle.
This means that the country will highly welcome any foreign investments that can help promote its economic development.
Banks of Serbia and Georgia are outside the Euro Zone but the countries are located in Europe anyway and the interest rates that you can find there are much more attractive than the interest rates that the banks in ‘old’ European countries offer.
Conclusion
Besides, there are some foreign countries that welcome foreign investors because they are doing even worse economically than the newly independent European countries.
Such countries offer serious tax incentives to foreign nationals opening bank accounts there and establishing economic presence in other ways, by registering business companies in these countries, for example.
A considerable number of Caribbean states and territories in particular are characterized by beneficial taxation systems applied there and some of them can rightfully be called the best countries to have a bank account there.
In addition to that, a bank account in the Caribbean will give you easier access to Central and South American markets. A bank account in Grenada can even enable you to freely trade with North American countries.
