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An offshore bank account can be described as: “a bank account maintained by an individual or business in a bank in any country of which they are not normally a resident”. Basically what this long phrase means is that if you are a British resident and you open a bank account in somewhere like Spain for example, the bank account in Spain is considered an offshore bank account. Similarly an account in France held by a Spanish resident is also “offshore”. For me, as a resident of the Isle of Man, an account in the UK would be “offshore” just as an account held by a Hungarian in a Czech city (or vice versa) would be “offshore” – but neither country is near the sea!

Some countries often offer non-residents better banking terms than they do residents, even passing laws specifically to achieve this aim. The reason for such legislation is often simply to attract foreign investment into the country. If you reside in Britain, for example, and have funds in a bank account in Spain its most likely you won’t be withdrawing your money every other day of the week. This assumption also affects the logic that money kept within the banking system not only earns profit for account holder but also for the bank and the local economy.

However the fact is that most people are more likely to find the best offshore bank accounts in smaller legal jurisdictions such as the Isle of Man, Panama, or Jersey. Hence most people often assume that an offshore bank account means one that is located on some island located halfway around the world. The reason most people prefer offshore bank accounts in these jurisdictions is because they charge less tax, have more secrecy laws (though this is changing) and offer better interest rates.

3 Responses to “What is an Offshore Bank Account?”

  1. bugeye28 says:

    I’m interested in opening an offshore bank account. Where would you reccomend and have you any contacts with banks?

  2. David Irwin says:

    Hi George,

    I don’t see that investing offshore is more risky than investing in the UK or elsewhere. As I see it the problem with Kaupthang Singer & Friedlander was that the UK Treasury used anti terrorist law to freeze the money they had on deposit and won’t release it. It’s all rubbish to blame the Isle of Man.

  3. GeorgeKF says:

    Isn’t it risky to deposit money offshore? I’m thinking of the failures of Icelandic banks and their subsidiaries in the Isle of Man and Guernsey.

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