How Does Offshore Banking Work?
How Does Offshore Banking Work?
What is offshore banking?
# Offshore banking is the practice of saving one's money in a bank that lies outside the country in which the depositor lives. An example would be a U.S. citizen saving her money at a German bank. The term offshore is somewhat of a misnomer in that a bank need not necessarily be offshore or across a body of water from the depositor, meaning a French saver putting money into a Swiss bank could still be considered an offshore account. Like all banks, foreign banks run by bringing in capital and using it for a variety of lending and managing practices--banks generally do not discriminate where their money comes from.
Advantages of offshore banking
# There are several advantages to offshore banking which make it a desirable option for many savers. For one, an offshore bank can be used to avoid problems resulting from economic or political instability in a depositor's home country. Offshore banks may also operate with lower expenses, resulting in fewer or no handling fees, and might also offer higher interest rates than the home country. Another major reason for using offshore banks is that they present possible tax advantages; interest earned at offshore banks is often paid without a tax being taken out, so if the home country does not charge tax on income earned outside of the country, that money is earned tax free.
Criticism of offshore banking
# Since offshore banks present safe havens for money, often granting a great deal of privacy and anonymity, they have become known as a place for organized criminals and terrorists to safely hold and exchange funds. Switzerland, for example, is known for its secure and private banking system, which makes it difficult to trace potential criminal transactions. Another, more innocuous issue with offshore banks is that as tax havens, they can be used as a tool to earn interest while evading taxes, since foreign banks are not always required to report their depositors' earnings to authorities like the IRS. If depositors can hide their accounts, they can potentially earn interest tax-free.
I think offshore banking is misused by the criminals and terrorists. Usually this offshore banking facilities is located in a place where there is tax exemption and relax rules and regulations. All the scam HYIPs are operating from some of those offshore banking places.
Thanks for the nice article on offshore banking.
Yes, there are both advantages and drawbacks on offshore banking system.I think,for general people the advantages are more than drawbacks if criminal activities are minimized and regulated properly taking more strict action on malpractices or misuse of offshore banking system.
I think, you've just expressed widely spread prejudice. To my mind, off-shore banks are most popular among two categories of individuals - those who do not trust their local banking system and those who are living in territories with high tax rates.
Originally Posted by debnathpc
Almost everything in this world is abused so i am not suprised to see that even offline banking is greatly abused even by hyips so as to scam investors.
Offshore banking service is really wonderful offshore banking account provides a powerful tool for keeping money secure and making it exempted from taxes which are not available in domestic bank users.
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Does anyone know this blog, just heard of the term offshore and was wondering what it is, still not sure...
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Offshore banking centers and tax havens facilitate tax competition that is induces national governments reduce taxes and make business environment more favorable for businesses. That in turn translates into higher economic growth. So offshore banking benefits everyone ordinary people and HYIPs.
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