Although we touched this issue in one of our previous articles (What is Offshore and Why do I Need It?), it appears to be not so obvious for many of our clients, especially when it comes to offshore banking. “I don’t have any business and look for an offshore bank account for saving and investment purposes, why might I prefer a corporate account instead of a personal one?”
There are a number of benefits available to you through a corporate offshore bank account even if you do not conduct any business activities.
Reason number one is the fact that personal bank accounts may fall under European Savings Tax Directive. The consequence is automatic exchange of information between the joined states about customers who earn savings income in one EU Member State but reside in another, or withholding tax of 20% (as of July 2008) at the source of income. If you and your bank are residents of one of the EU Member States, or UK Crown Dependencies (the Channel Islands and the Isle of Man), or UK Overseas Territories (Anguilla, BVI, Cayman Islands, Montserrat, Turks and Caicos Islands), as well as the Dependent Territories of the Netherlands (Aruba, Netherlands Antilles), and certain other non-EU countries that have voluntarily agreed to apply same or similar measures (such as Andorra, Liechtenstein, Monaco, San Marino, Switzerland, USA) this Directive may apply to you. If you use a company and hold a corporate bank account these regulations do not touch you.
You may want to keep your money in an offshore bank for purposes of increased safety and security as comparing to your home country conditions. A number of countries simply do not allow their citizens to have personal offshore accounts without special permission of an authorized state body, which in most cases is nearly impossible to obtain. You still can open a personal account offshore, because many offshore banks do not require you to provide any permission from your home authorities, but that would be definitely illegal. Instead, it might be more reasonable to incorporate an offshore company, open a corporate bank account, and use it as “a purse” for your money, keeping it within the letter of the law.
Having an account in the name of a company rather than in your own name lets you keep your offshore banking even more anonymous and confidential. It’s not that transparent how and where you spend your money and does not attract unwanted attention of a certain category of people such as con artists and blackmailers.
Your funds on the company’s bank account are legally separate from you. It’s not that easy to encumber assets of a company with your personal liabilities. Thus you build another layer of asset protection.
Certain offshore investment products that could be of interest to you may appear to be only available to corporate clients rather than individuals. This is the case when you should consider incorporation.
Transfer of shares of the company to future inheritors in many cases will allow you to mitigate inheritance tax and/or waive probate procedures.
Incorporation of an offshore legal entity involves extra expenses for set-up and account opening, as well as ongoing administration fees, at least fixed annual governmental fees with no reporting.
However, considering the wide choice of offshore jurisdictions and competition between them, you can always find a cost-effective solution to fit your case.