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Tax Engineering

What is an offshore bank account?


What is an offshore bank account?


Offshore banking and offshore bank accounts in particular are very useful financial tools when it comes to tax saving and anonymity. What is an offshore bank account? An offshore bank account is a personal or business bank account that is opened outside the country of residence of the bank account holder and has some tax benefits that are not available his country of residence. Depending on the country where the offshore bank account is opened, it may have greater bank secrecy or not. Currently the most opaque countries to open an offshore bank account are Saint Vincent and the Grenadines, Belize, Samoa, Uruguay.

Recently, with the approbation of automatic banking information exchange treaty the privacy of banking sector in many countries has been shattered. OECD member countries have agreed to report the information about personal and business bank accounts to tax agencies of the beneficial owners. However, not all of them have signed bilateral agreements among them and therefore not all of them will exchange the banking data. Before opening a bank account you have to check the list of offshore jurisdictions that have signed treaty with your country of residence in order to avoid the exchange of your banking information. Please note, that the banks report only the balance you have on 31st of December and not the list of all the transactions you have made along the year.

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