According to a great deal of international banks an offshore banking account for expats is an absolute must and if they had their way no self respecting expatriate would leave home without one. This article takes a look at offshore banking accounts that are aimed at expats and examines just how necessary they really are.
What is an offshore banking account?
While an offshore banking account may sound like something only the mafia would be interested in, the truth is that the concept of an offshore account is actually very simple—it is a bank account that is held outside of one’s native country or the country within which they are currently living. While these types of accounts probably are very appealing to fugitive billionaires and James Bond type baddies, they are also pretty useful for expatriates because they offer flexibility and convenience and provide people living overseas with a secure location for their funds. Above all, they offer the potential for saving on tax dollars.
What are the advantages of offshore banking accounts for expats?
- One of the biggest advantages of an offshore account is that it offers expats flexibility. If these individuals travel on a frequent basis with work then having one central account that they can access from anywhere can be very handy.
- Some expats are required to deal with various currencies on a regular basis. They may be paid in a currency that is different than the currency of their host country and may regularly need to transact in alternative currencies, to settle bills back home, for example. In these cases having an offshore bank account can make life much easier.
- Having one account can help expatriates to develop a strong relationship with their bank, something that will work in their favor over time and will hopefully lead to an improved service from the bank as they gradually start to recognize your requirements and how they can meet them.
Why some expats do not need offshore banking accounts
A large number of expatriates relocate overseas and are paid in one currency. They can receive wages into their account and use that account on a daily basis for all their banking needs. These expatriates have straightforward banking needs and, for them, an offshore account is totally unnecessary. While having an offshore account may sound extremely glamorous, the truth is that it will only introduce additional cost into their lives and unnecessary confusion.
In addition, for many expatriates—U.S. citizens for example—offshore banking accounts are not entirely legal and setting up and holding accounts overseas may land you in hot water. If you’re a U.S. citizen and are tempted by an offshore account make sure you fully research what you are, and are not, allowed to do when it comes to offshore banking.
Offshore banks may also be unsuitable if you are seeking security for your money. Many countries insure the money held by their residents in the home banks while such a guarantee will not be available in an overseas account. If you place significant amounts of money in an overseas jurisdiction that then faces a coup or a major national disaster you could find your entire savings wiped out—and you will not be able to do anything about it. In addition to this, you have to bear in mind that offshore accounting is a business that is founded on legal loopholes and skirting the law. You may therefore come across some very dishonest people and find yourself scammed out of your money.
While the majority of offshore banks are very legitimate, it is important that you comply with your home country’s laws and reporting requirements. Offshore banks can help expats to save money on taxes and can make life much easier for those who operate in different countries and currencies. If you are uncertain as to whether or not an offshore banking account for expats will be suitable for your own needs then you should consult an experienced financial advisor.