Offshore investment

Although accessible to anyone who can meet the minimum investment amount, offshore investment is often stereotyped as attracting the extremely rich and the extremely dishonest.

Tax is the driving force behind 'offshore', but for the great majority of well-off individuals considering offshore investment, tax is not directly an issue. They reside in high-tax areas such as the EU, the US, Canada or Japan, they pay their taxes, and if they make 'offshore' investments, it is in pursuit of higher returns, and without any intention to evade taxes in their home countries.

Some investors are outside the jurisdiction of high-tax areas, either because they live elsewhere, or because they are temporarily non-resident for work reasons. Such investors can often avoid having to pay taxes on their investments, whether on or offshore, but that is due to the investor's circumstances, not the location of the investment.

So why might an 'offshore' investment be superior to an onshore investment?

The first answer is because it is less regulated, and the behavior of the offshore investment provider, whether he be a banker, fund manager, trustee or stock-broker, is freer than it could be in a more regulated environment.

Reasons for offshore investment:

• Avoidance of forced heirship

• Asset protection

• Less regulated (for example, hedge funds, which thrive in low regulatory environments due to their highly aggressive investments strategies thrive in offshore jurisdictions, principally the Cayman Islands

• Money Laundering

• Privacy

• Tax advantages (legal)

• Tax evasion (illegal)

See also

• Offshore banks
• Offshore financial centers
• Offshore funds
• Tax havens

From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.