Most people view offshore banking as a shady practice used by people who have something to hide. You can thank countless Hollywood blockbusters for depicting remote islands or countries like Switzerland as hustler paradise.
However, the preconception is not entirely based on fiction. Indeed, people have used offshore accounts to hide shady financial practices, evade paying taxes and hide ill-gotten money from drug trades or weapon deals for years and years.
However, offshore banking today does not have to be linked to criminal activities. In fact, legitimate entrepreneurs and businesses find offshore banking beneficial for the privacy, acceptability and flexibility it offers.
Still, there are a lot of myths that keep serious entrepreneurs from using these advantages. But once they learn the truth they become much more open to the idea and are able to make decisions that can benefit their business.
In this article, we are going to debunk the most persistent, notorious offshore banking myths.
Offshore Banking is Illegal
The most notorious offshore banking myth is that this practice is illegal and that offshore accounts are linked to criminal activities by default.
This myth is mainly based in the Hollywood movies mentioned above. However, offshore accounts are completely legal as long as they are not misused. For example, you will be subject to fewer taxes, but still be obligated to pay the taxes in your native country.
Fortunately, even if you have been misusing your offshore account, there are programs like the Offshore Voluntary Disclosure Program that can help you get back on the legal side of things. You can participate in this program provided you are not currently under investigation from the IRS for tax evasion. The program is aimed at people looking to come clean and report their foreign investments, insurance or income-generating assets guilt-free.
However, as this program is scheduled for termination by September 2018, you might want to take advantage of it before it is gone for good. If you do not report your offshore accounts and trade you might face criminal charges and considerable fines that go with this type of tax evasion.
Offshore Banking Isn’t Safe
The second most persistent offshore banking myth is that it isn’t safe. There are a lot of stories of people losing all of their assets because their offshore accounts just vanished. However, this is only possible in countries with a pool legal system. In countries with a stable government you won’t have to worry about your assets suddenly disappearing.
Offshore Banking is for the Wealthy
Lots of people can benefit from the benefits offshore banking has to offer, not just the 1%. Offshore accounts can help you protect your financial privacy and protect your assets from various lawsuits. However not many people are ready to go through all the trouble of opening an offshore account for a relatively small sum
You Need to Visit a Bank Abroad
In most cases you don’t have to travel to the country where you want to open an offshore account. If you are dealing with a big bank, they likely have numerous procedures to make the process easier such as using online banking, email, phone or a courier. Some banks might require you to be present in person, but there are services that can act as a liaison.
It’s true that most of these banks are located on small islands, the Internet has allowed offshore banking to function the same as with any other domestic bank. You can easily deposit money, invest or do a transaction with a reliable online banking platform the offshore bank supports. And in most cases, you can use a debit card to access your funds from anywhere in the world via an ATM.
You’ll Be Free of Taxes
The biggest misconception people have is that once they open up an offshore account they don’t have to pay the taxes. However, countries like the US tax income worldwide. Therefore, you need to look into the laws of the country where you’re opening an offshore account to make sure you don’t break any taxation laws here or abroad. Don’t be afraid to reach out to an experienced tax attorney to ask about any procedures you are not familiar with.