Offshore Bank Account

Offshore bank account is, actually, any bank account that is opened outside of one's native jurisdiction. The difference between local and offshore banks lies not in the field of service or benefits. The difference lies in the taxation system.

Many smaller countries like the Cayman Islands or the Channel Islands can offer offshore bank account services without a substantial investment of their own, along with such countries as Switzerland or Belgium.

Local legislation can limit or reduce the taxes placed on traditional bank accounts., this is why some companies and wealthy individuals prefer to open offshore bank accounts in small sovereign states and thus remain virtually anonymous.

Some time ago, an offshore bank account was a convenient way to hide profits from illegal activities or underreported business earnings. The offshore banks were not obliged to report the existence of these accounts, and the accounts, and the account holders could legally pay little to no taxes to the host country.

However, in the last years the rules governing an offshore bank account have become much more strict. It is completely legal to open offshore bank account for legitimate financial reasons. Residents of a politically or economically unstable country may arrange for an offshore bank account in a more stable country. Also, the exchange rate between foreign currencies is often more favorable with 'local' accounts.