The offshore category includes banking institutions whose activities are concentrated in one of the offshore zones. Their work is accompanied by some features, the main difference is the ability to provide services exclusively to non-residents of this jurisdiction. Clients can be citizens of any country, except for the one where the offshore bank is registered. They are not authorized to carry out any banking operations within the jurisdiction, their job is to act in the interests of customers, incl. from Ukraine.
Simply put, an offshore bank is a banking institution registered in one jurisdiction, but providing services to citizens of other countries or representatives of other jurisdictions. Often, such banks are located on the territory of states that, even at the request of the judiciary, will not provide information about the owner and the state of the account if tax agreements with the country of residence of the client are not concluded. Offshore banks registered in countries where you can open an offshore company and operate in the field of international business are considered classic, significantly reducing tax pressure.
Why offshore banks are so attractive
Opening an account in one of the offshore banks today is in demand due to many advantages. In particular, the account holder can count on:
- a wide range of tax benefits;
- lack of restrictions on currency control and banking regulation at the local level;
- low costs of the administrative and constituent plan;
- confidentiality guarantee;
- multicurrency flexibility of deposits;
- professional wealth management.
In addition, offshore bank clients get access to the international credit market, as well as to the network of bank correspondent accounts.
More about benefits
- Wide range of tax benefits. Clients are required to pay only a one-time registration and license (annual) fees. Income tax is provided only in some jurisdictions and in a small amount.
- Absence of restrictions on currency control and banking regulation at the local level. This advantage makes it possible to maintain foreign currency accounts both abroad and in the country of registration. As for the norms of banking regulation, they do not apply to the offshore sector; accordingly, there are no requirements regarding reserves, liquidity levels, or other restrictions on banking practice. Offshore banks do not buy treasury bills of the government or the Central Bank of the state and do not follow its discount rate.
- • Low costs for banking services. Obviously, reducing such costs when opening an offshore bank account allows you to conduct business more efficiently. When servicing a company in a conventional foreign bank, the account administration costs are usually much higher. Often, an offshore bank is a foreign current account and payment center of a financial and industrial group or holding. You can open deposits and current accounts.
- Privacy Guaranteed. Offshore banks allow the legal use of nominee services. In addition, the issue of bearer shares is allowed. Clients are guaranteed the secrecy of the bank account. Another important plus is the ability to open an anonymous account. True, there are situations when an offshore bank is obliged to provide the requested information to law enforcement agencies. This is regulated by a number of international agreements on cooperation in the field of taxation, signed recently. But agreements apply to a limited number of participating countries and are possible in exceptional cases, for example, when litigation is underway.
- The multi-currency flexibility of deposits is due to the global nature of offshore banks. Depositors' funds are protected due to the ability to disperse assets within various stable offshore zones with the most favorable conditions. Thus, the capital will be safe from all kinds of risks, including depreciation.
- Professional wealth management consists in the offer of the bank to take over not only the provision of the traditional package of services, but also the trust management of assets.
Why create an offshore bank account
In addition to the usual operations available in a traditional bank, an offshore account allows you to:
- comfortably carry out foreign trade activities, the supplier will not have to convert hryvnias, since payment for import deliveries is possible at the expense of funds in hryvnias on a correspondent bank account, and without currency control;
- use multicurrency accounts to work with the currencies of Eastern Europe and the CIS.
Offshore banking services will help to refuse the help of intermediaries in the implementation of certain operations (for financial companies) and reduce costs. When converting the hryvnia, banks will charge a 0.5-1% commission, and an offshore account will allow the operation to be carried out for a 0.25% commission. According to experts, it is possible to recoup the costs of an offshore account in just a week, even with an average level of activity of such operations.
Where is the best place to open an offshore account?
The choice of jurisdiction directly depends on the goals of your business. In any case, the safety of funds and confidentiality will be ensured, but you can get additional benefits in the field of taxation.
For detailed consultations, we suggest contacting the specialists of “Finance Business Service”.