Benefits of an offshore savings account
A savings account is more than just a low risk place to keep money, it is a fundamental part of your wealth strategy. Whether you are working to achieve a long-held dream or planning for retirement, choosing the right savings account now can be a step on the journey to future financial freedom.
Offshore savings accounts may provide the ideal conditions for building wealth in tandem with managing your personal finances – plus a range of other benefits – for expats looking to optimise their capital while living or working abroad.
Convenience – Saving offshore enables you to deposit and withdraw funds in a variety of currencies. You’ll also find that choosing an offshore savings accounts helps you to keep a closer eye on your growing wealth. Keeping savings in the same physical location as other accounts makes day-to-day financial operations – like paying school fees or rent – that little bit easier.
Low risk – The Swiss economy is famously stable, making it a desirable place to watch your savings grow. A traditionally strong Swiss franc, transparent judiciary and highly developed financial infrastructure enable offshore savers to bank with confidence. Swiss law requires that banks maintain high levels of capitalisation and provide strong protection for depositors, which means that Swiss savings are very safe.
Tax efficiency – Interest on UK savings accounts is paid net, meaning basic rate tax is deducted before you receive your interest. Interest on offshore savings is paid gross, although in some countries you will be subject to an EU Withholding Tax if the UK has an agreement in place with the country you have your savings in. Even if a withholding tax is not applied, you still have a legal obligation to declare any interest to HMRC and the amount of information being shared across borders has increased substantially to prevent tax evasion. Failure to declare funds in accounts offshore can result in heavy fines, but depending on the type of account you have, you may still be able to benefit from tax efficiency if the tax does not become payable immediately.
In many cases, interest paid at the end of April will not become due until your subsequent tax period, effectively enabling you to defer payment for up to 20 months. Keeping that money is in your account, means it can be earning interest that you otherwise would not have.
Privacy – The UK and Swiss governments entered into an agreement that took effect in January 2013 which compels the Swiss authorities to provide the bank details of UK residents with Swiss accounts if requested.
This means that UK residents must either pay a withholding tax or make a full disclosure to HMRC or provide full details of their Swiss savings, either directly or via the Liechtenstein Disclosure Facility.
Nonetheless Swiss banking still offers a significantly higher degree of privacy than available in other countries. Even as the banking sector achieves compliance with international standards set by the OECD, privacy remains at its core. It is still illegal for your bank to disclose your identity without your permission.
Service & local knowledge – Offshore banking traditionally delivers as standard a degree of financial counsel, wealth planning and tax advice that outperforms equivalent services in the UK.
Banking offshore as an expat puts you in contact with a network of experts with in-depth local knowledge. Whether it is guidance on investments or recommending ancillary financial services, where you choose to save should depend on more than financial mechanics and returns – you deserve a highly personalised service.