What are offshore investments?

‘Offshore investments’ is a term given to people or companies who keep their money and investments in a jurisdiction other than your country of residence. The reason for doing this is normally to take advantage of less regulated financial systems, particularly regarding tax. Countries that are known for low rates of tax are referred to as tax havens and include places like Grand Cayman which is a British Overseas Territory.

Traditionally the idea of stashing your money overseas was considered the domain of crooks and money launderers and to a degree it still is. However, that is simply no longer the case all the time and well regulated offshore financial centres are now a legitimate alternative for investors seeking better returns, or at least lower tax on those returns.

Example: Many large UK based property companies buy and sell huge commercial properties such as office blocks in the City or West End while in the form of a Jersey Property Unit Trust (JPUT). The property is set up in its own Jersey based company, for example ‘30 St Marys Axe’ might be the company name and all that company owns is that building. So when that property is sold they transfer the ownership of the company, and the property is included in the sale of that company.  This move saves on stamp duty, very sneaky, on a £50,000,000 property and stamp duty at 5% that is a saving of £2,500,000 in this example which is usually split between the buyer and the seller. 

Offshore solutions are widely used and are available to anybody who can pay the associated fees or meet the minimum investment requirement. If you have more than £1,000,000 in investment assets then this might be worth looking into as anything less than this amount you will find savings eaten up by the fees and costs associated with running your accounts in the tax haven. Tax is the most common driving force behind offshore investments. As a tax reduction vehicle offshore investment are increasingly the norm and over half of the world’s financial assets are held in offshore accounts. Offshore Investments may also be of particular interest to the expat community.

Why invest offshore?

There are a number of reasons to invest offshore. By far the most common is to benefit from lower rates of tax, but other reasons include:

  • Lower levels of financial regulation – Some investment vehicles, such as hedge funds for example, use aggressive financial strategies which can be hampered by high levels of regulation. By investing in an offshore jurisdiction with low levels of regulation a wider and more varied range of investment options can be considered;
  • Avoidance of inheritance regulations – Offshore investments may be passed on to the preferred heir on death, regardless of the laws applicable in the investor’s country of residence;
  • Privacy – Confidential financial information can be highly important to an investors needs, particularly with regards to taxation and inheritance;
  • Specialist financial services – Offshore financial centres actively seek to attract investment and as such have expertise in a variety of specialist financial services which may be of interest to the investor;
  • Pensions and retirement planning – If you have high value assets then can be worthwhile to invest plan your pension and retirement offshore. Moving property, shares, pensions and other assets to offshore trusts in time can save you and your heirs a substantial amount of money. However nothing is easy or free and good financial advice which saves you money is scare and therefore expensive. You may find that unless you are a multi millionaire that any potential savings are swallowed up by the offshore management fees. 

All of the major UK financial institutions provide a wide range of offshore investment vehicles for the individual investor. From simple offshore banking to savings plans, bonds and a dizzying array of investment plans. As with all investments you should research any banks, institutions or products thoroughly before parting with your hard earned cash.

Alternative investments

Overseas property

High growth investments

Ethical investments

African investment

High return investments

Green investments

Brazil property

High yield investments

Classic car investments

Caribbean property

Long term investments

Diamond investment

Cyprus property

Offshore investments

Gold investment

Florida property

Retirement investments

Hotel room investment

Turkey property

Short term investments

Student accommodation

 

High growth investments

Whisky investment

 

 

Wine investment