The type of offshore account required by business or individual will determine the process length and requirements for the offshore account set up. Offshore merchant accounts and offshore brokerage accounts are more specific and business oriented, while regular offshore banks accounts such as checking and personal savings accounts can be used for normal day to day personal and business operations. An offshore banking account is an essential tool for any individual or offshore company where foreign currency transactions, buying and selling and some form of international trade is conducted.
Offshore accounts are used for a variety of reasons. For the most part, offshore accounts, offshore banking is used as a tax savings plan, since most offshore jurisdictions where the offshore account is opened, have zero tax policies. This means that interest earning, capital gains and monies deposited from off shore are not taxed within the jurisdiction (but can be taxed elsewhere). But there are other reasons and advantages for offshore accounts as well; greater privacy, protection against political, economic or financial instability, better interest rates, wider range of banking services, greater access to international trade, tax free currency exchange.
Offshore accounts are not protected from taxation in ones own country, though the onus of reporting deposits and earnings of such offshore accounts is that of the account holder and not the financial institutions. In fact, offshore banks cannot reveal the identity of its account holders unless requested to do so by a court order issued by a court in that specific jurisdiction. For such a request to be made the courts first has to have sufficient evidence to prove that the source of funds is related to criminal, illegal trade or terrorist financing.
In some cases, there are treaties or directives that will directly affect specific nationals such as the European Tax Directive, where simply put; by agreement between your country of domicile and country with bank account, taxes owed are deducted from interest payments. Consult with a tax advisor before opening an offshore account of any type for guidance and information. There are over 100 tax havens or offshore jurisdictions with offshore banking centers where offshore bank accounts can be set up. Some offshore banks are not willing to open individual personal offshore accounts and do so only for offshore companies or entities, such as trust, IBCs.
Additionally the process of opening an offshore bank account is not as simply as walking into a bank and opening the offshore account. First off, offshore banks are normally remotely located and face to face contact sometime impossible. Hence the need for intermediaries; offshore service providers are facilitators of bank applications, and sometimes bank introductions.
In many cases banks will only accept applications on a referral or recommendation basis, and in other cases an introduction is required. Bank introductions are made available through offshore services providers, who normally provide this service “after” an offshore entity such as an offshore company has been incorporated through their business.
The paperwork and document requirements for offshore accounts may possibly vary with banks, but the list here is a standard set required documents for offshore bank account establishment.