Request a callback
Tax Engineering

Offshore bank accounts

Opening an offshore bank account without automatic information exchange is a complicated but not impossible task. The latest international regulations against tax fraud have established cooperation between countries to automatically report on the balances of bank accounts that a physical or legal person has in another country. On October 29, 2014 in Berlin more than 100 countries signed the most ambitious automatic exchange of information treaty against tax evasion. The countries that have signed this treaty have committed to automatically exchange information between tax agencies on existing and pre-existing offshore bank accounts as of January 1, 2017. The peculiarity of this treaty is that of more than 100 committed countries not all of them will share the information, that is, each country will have to sign a bilateral agreement with another country to share the information on a bank account. For example, France is interested in Saint Vincent and the Grenadines sharing information about the accounts that French citizens have there but Saint Vincent and the Grenadines is not interested in sharing it. So, since there is no mutual interest and no bilateral agreement has been signed, there will be no exchange of information between these two countries.

Opening an offshore bank account is completely legal and there are several ways to avoid the automatic information exchange treaties. The solutions are the following:

  • The first solution would be to open an offshore bank account in a country that has not signed the information treaty, for example, the United States, the Philippines, Vietnam, Guatemala, Honduras, Nicaragua ... etc.
  • The second advisable option would be to open an offshore bank account in a country that has not signed a bilateral agreement to exchange information with another country. For example, Hong Kong has been one of the countries that have signed the information treaty but to date it has not signed any kind of bilateral agreement with any other country. As a result if a person of French nationality opens a personal or corporate bank account in Hong Kong no report will be sent to France.
  • The best way to achieve anonymity and avoid information treaties would be to open an offshore bank account in "Payment Entities". What are Payment Entities? The automatic exchange of information affects Custody Funds Institutions, Deposit Institutions, Investment Entities and Insurance Companies. That is, the entities that will report information to the fiscal agencies will be the banks that have deposits from third parties and which service is to charge for the loans granted or pay interest for the deposits made. Payment entities that do not keep funds and do not pay interest, such as, for example, companies sending money through bank transfers, payment entities for receipts, credit card payment processors, debit and credit card issuers they will not carry out any type of information exchange with a tax agency. There are currently "Payment Entities" regulated by central banks with the same obligations as a traditional bank, being the "Entities of payment" very professionalized since they are focused on a single service.
  • The fourth solution to avoid information treaties would be to open an account in Bitcoins. Currently, the central banks do not consider Bitcoin as a legal currency since it is not regulated by any central bank and logically there is no regulated bank that is working in this currency due to the high volatility index. However, there are regulated Payment Entities that accept to work with Bitcoin and we could open for you an offshore bank account in an entity regulated in this currency.

Opening an offshore account outside of your fiscal residence is not a crime. It is completely legal and any physical person can open an offshore bank account for him or for his company in any country and be listed as the final beneficiary. If you, as a physical person in your home country have the obligation to declare all world income, it is more logical to declare the account to your tax authorities and then through the double taxation treaties eliminate the taxes you have paid in the country where you are not a tax resident. Through an offshore company there would be the possibility to "delay the payment of taxes", that is, a person who has a company abroad can allocate the generated benefits to the maintenance of the company and investments, or convert it into dividends for the final beneficiary of the company. But if the owner of the company decides to repatriate these dividends to his country of residence, logically he will be obliged to declare them and pay tax for this additional income. Any individual is obliged to pay taxes when there is an economic increase in their bank account balance but as long as the individual does not have an increase in equity there will be no tax payments. That is, if the company does not generate profits or losses the owner of the offshore company will be obliged to declare the bank account that he has in the name of the company but will not pay taxes for it since there is no favorable economic performance.

To be able to open a bank account in an offshore country, it is necessary to hire the introductory agent to represent you in the bank or in front of authorities of the country. The introductory agent will provide greater security, privacy and will make sure that the process of opening your bank account goes faster. Our consultantcy is an official introducer of regulated financial entities in the most important financial centers of the world.

The advantages of opening a personal or corporate offshore bank account are the following:

Offshore bank account without taxes. If you have a personal bank account in a country where you are not a tax resident and the country has favorable fiscal laws, then you will not pay any taxes. If you are required to declare all the world income in your country of residence, we advise you to declare the benefits obtained in offshore jurisdiction and then through the double taxation treaties eliminate the taxes. For example, if you are the tax resident in Germany and have a personal bank account in Cyprus, then you will not be taxed in Cyprus because your obligation is to declare the offshore bank account to the German authorities and then apply the double taxation agreements.

Anonymity for bank accounts. For reasons of money laundering of illicit origin the numbered bank accounts have disappeared and the banks need to know who is the final beneficiary. A personal account today has no anonymity since both the issuer and the recipient of the bank transfer are reflected in both banks. The best option for the client in this situation is to have a company and an offshore bank account in her name so that the transactions are more anonymous and the recipient of the bank transfer is a company and not the final beneficiary of the company. There are several factors that affect the level of bank secrecy: nationality of the person, bilateral agreements between countries, uses of Payment Entities ... etc. Currently, depending on the nationality of a person, one country may be more anonymous than another. A bank account in France, Germany, Italy or Spain will not have the same bank secrecy as a bank account in Switzerland, Czech Republic, St. Vincent and the Grenadines, Belize, Latvia, Cyprus or Hong Kong.

Protection of money with an offshore bank account. Personal and corporate offshore bank accounts are very secured against any seizure or fine issues by the bank or any other organ. It is almost impossible and very expensive for a German or French bank, for example, to seize a bank account in Cyprus for the non-payment of a credit card, mortgage or pending receipt. The German bank will never have jurisdiction to seize the money from your offshore bank account for a debt incurred in your country of residence.

Opening a new bank account is quick when you re prepared. If you want to open a bank account quickly, the best option is to go physically to the country. In this way the bank can make your identification in person and in 1-3 days you will have the bank account opened. If you want to open the bank account without going to the country, then the process is somewhat slower since the Due Diligence department of the bank requests minimum requirements to know you (KYC). The estimated opening time is 7-10 business days, provided that the customer provides the documentation required by the bank. Once the documentation is verified and validated by the bank official, the entity will open the bank account.