When using an offshore bank account and receiving international wire transfers, be sure to consult a tax professional to ensure that you are complying with all tax regulations, both domestic and foreign. If you are looking for an offshore bank account, you may need more specific guidance.
Many offshore banks will want to know the nature of your account transactions before you can start your business. In order to open an offshore bank account, you will need to provide ID and other documents to prove your identity. If there are minimum requirements for your offshore bank account, you will also need to provide proof that they can be met.
In particular, the offshore bank may request supporting documents, usually bank statements from the last few months, from your current bank to provide them with an assurance that you have acceptable minimum balances and an ongoing good relationship with the financial institution. Like your local bank, an offshore bank account will require you to verify this information using a government-issued ID — a passport or driver’s license — and something like a utility bill or something similar. If you are contributing funds under an insurance contract, you may be required to provide a letter from your insurance company. For example, a salary from your employer will likely be sufficient if you use your account to make deposits from your employer.
While this can be an interesting feature, it’s important to understand the implications of keeping your account in different currencies. If you don’t like the rates offered by banks, check out the Wise multi-currency account. A Wise account is ideal for people who move from one country to another for work or make regular trips abroad, can store multi-currency balances, make direct debits, have access to various bank details and use an international debit card, but we’ll talk about it later.
You can log into your account using a debit card or by making a bank transfer. Many major banks also offer offshore checking accounts with debit cards, credit cards and the ability to perform day-to-day banking functions. Offshore checking accounts usually provide easy access to funds on a daily basis.
Other features of an offshore checking account may include mobile/online banking services, low-cost international transfers, and additional services such as loans and insurance. While offshore bank accounts must be registered in the country of residence of the person holding the account, some foreign countries do not impose capital gains tax, so the ability to grow an account without undue onerous tax consequences may be attractive. Having an offshore bank account is completely legal and makes business sense, minimizing capital gains taxes and diversifying currencies and assets due to political or economic instability in the country where the individual is located.
Offshore accounts are rarely protected by the same guarantees as local banks in your home country, but that could also go the other way and have you benefitting from more protection instead of less. While offshore banks can provide security for people living in financially or politically unstable countries, funds are unlikely to be protected by mortgage schemes.