With all the negative attacks on so-called "tax havens" by high tax, big spending politicians, such as U.S. president Barack Obama and U.K. prime minister Gordon Brown, it's no wonder that the average American or Brit may question whether having an offshore bank account is a wise move.
Of course, these calculated attacks, by politicians whose sotto voce motto is "Tax and Spend," are designed to sow just such doubt in the minds of citizens. Tax collectors in both countries want people to keep their money and assets where the Internal Revenue "Service" or Her Majesty's Revenue & Customs can get to them with minimal effort.
Big Brother’s Big Lie
Underlying this war on tax havens is the belief on the part of Big Brother government that anyone who does business offshore, rather than in their home country, must be engaged in tax evasion or some other illegal activity.
Indeed, U.S. politicians such as Michigan's far left U.S. Senator, Carl Levin, (above) repeat this lie ad nauseam. I've heard U.S. government officials from the Department of Justice state it as one of their basic assumptions. And now President Obama has added his strident voice to this bogus chorus.
Big Business
Offshore banking is big business worldwide. Some estimates calculate that more then US$6 trillion is stashed in nearly 40 offshore banking havens that impose no taxes, have less onerous regulations, guarantee privacy and cater to foreigners. One-third of the entire world’s private offshore wealth is held in Switzerland alone.
And I suggest, offshore banking could be very good for you.
Avoidance Vs. Evasion
While legal tax avoidance, (as opposed to illegal tax evasion), does figure among the reasons some people bank offshore, it is certainly not the main one. Indeed for U.S. persons, offshore tax savings are minimal, because U.S. persons are taxed on all their worldwide income, no matter where it is earned.
So here are some good reasons you should consider for opening your offshore bank or investment account:
1) Investing for Greater Profits:
An offshore account is an excellent platform from which to diversify investment, with instant access to the world’s best investment opportunities, including currencies, precious metals, and real estate and without being limited by your home nation’s anti-investment restrictions. Foreign stock, bond and mutual fund trading are not covered by SEC rules.
You also can purchase attractive, tax deferred insurance and annuity products unavailable in the U.S.. Unlike most U.S. banks, offshore banks offer "multi-currency functionality", the ability to invest and transact business in your choice of currencies. And offshore assets can be moved more freely, without some U.S. reporting requirements applying.
2) Solid Asset Protection:
The United States leads all other nations in lawsuits. The odds that a U.S. person will be sued during their lifetime are high. But lawsuits seek cash and assets. If your assets are located in the U.S., they're at the mercy of any state or federal court.
If they're hard to get, located offshore, a plantiff’s attorney usually wont take the case. They know they're not likely to collect a judgment. (At times it makes good financial sense to discourage a potential litigant by letting him know just how difficult it will be to reach your offshore assets).
Because of defendant-friendly local laws in asset protection and tax haven nations, foreign judgment holders have a difficult time enforcing it. To reach your assets, a successful creditor must start all over, using the foreign judicial process to press a claim. That means the expense of hiring foreign lawyers and paying for travel and witness transportation.
Besides promoting compromise of pennies on a dollar, the delay in such a strung out legal process allows time for a defendant to fight the action. Many offshore havens have one- or two-year statutes of limitations that run from the date an initial claim arises. Since a U.S. lawsuit takes years to get through the courts, this means an American court judgment could be void under the foreign nation’s cutoff date.
3) Flexible Planning:
Having some of your assets offshore allows more flexible tax planning and inheritance tax advantages, such as the establishment of an asset protection trust (APT), private family foundation or a limited liability company (LLC) for business purposes, each of which may have their own bank accounts.
4) Better Privacy:
Offshore accounts offer wealthy individuals a way of legally concealing their wealth from prying eyes, (other than government reports that are required). In addition to avoiding becoming a target for extortion and kidnapping campaigns in countries where such occurrences are common, persons of wealth may well want to avoid news media attention or relatives or others looking for hand-outs.
In spite of the false impression you may have gained from all those rabid anti-tax haven attacks, far greater financial privacy is still available in many nations, such as Panama, Switzerland, Liechtenstein, Singapore, Hong Kong, Andorra, or Belize.
In such countries it is a crime to release financial information unless ordered by a court, and that includes foreign government requests as well. Although most tax havens now are moving to exchange of tax information, that exchange procedure applies only to individual cases in which probable cause of tax evasion or other crimes are shown.
One fact we know -- under the harsh terms of the PATRIOT Act, privacy is dead in America. And, to be honest, who knows what currency or other offshore controls may lie in the political future. The time to act is now.
Sovereign Society Members Banking Services
One of the major benefits of membership in the Sovereign Society is our extensive offshore banking advisory service and our banking connections in diverse jurisdictions. At a time when the IRS has frightened away some offshore banks from taking American clients, we can recommend Swiss and other European, Asian, Latin American banks that welcome our members.
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