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Investing Offshore can be a very attractive option for the discerning investor who would like to explore other markets, shield his or her investments from potential capital lawsuits, or grow them in a confidential, secure investment not governed by the rules and regulations of their home jurisdiction.

Over a year ago I posted an article Investing Offshore is Legal So Why Not Do It?  Most readers were confused because at that time the media were full of statements from politicians trying to paint offshore business and investment as illegal. The fact is it isn’t. There was also the problem of the banking crisis, which somehow was used to paint offshore banks in a bad light. Again, not true. Icelandic banks did have a problem and this also caused problems in the UK and the Isle of Man, but the major problems were to be found in the main financial centres such as London and New York, not in the offshore centres.

At first glance offshore investments might appear to be associated with a tremendous amount of risk in low-sophistication environments or jurisdictions. This is totally incorrect.  Offshore investment vehicles are usually found in jurisdictions that have quite sophisticated rules, regulations, and policies that direct how deposits and investments are handled and managed within their jurisdictions.  Let’s remember that these are often the same jurisdictions that rely upon offshore capital for their banking institutions and are hence quite concerned that they maintain their hard-earned reputations as low-regulation, high-confidentiality tax havens.

Benefits of Offshore Investing

American investors look to for offshore investments in order to diversify their investment portfolios, spread their risk in as wide an arc as possible, and also (very importantly) to shield assets from lawsuits.

Citizens of other countries often look for these same benefits but also seek out the stability afforded in these offshore jurisdictions.  They may already bank with an offshore institution in order to safeguard their assets from political or economic turmoil in their home country, and investing in these same haven jurisdictions is the next logical step in maintaining and growing their assets.

Who can Invest Offshore?

The simple answer is that almost anyone can though there are some countries such as North Korea, Zimbabwe and the like who won’t allow their citizens to take money out of the country. So offshore is no more an option for them than the UK or US would be.

Other countries, like the U.S., have legislation, which precludes most offshore investment companies from directly soliciting business from their citizens.  However in the U.S. whilst offshore investment companies are prohibited from soliciting Americans, Americans can legally solicit the companies and transact with them.

If any of you saw the BBC Panorama programme last week where a financial advisor from Lloyds TSB in Jersey was secretly photographed blatantly inviting a potential investor to evade paying tax please ignore what you saw. This was a case of entrapment and whilst the advisor was clearly in the wrong the fact is that in the current financial climate faced with the commission on a £4 million investment he was tempted – you could almost see the £ signs glinting in his eyes. But it was entrapment pure and simple and I suspect that it was carefully edited anyway to put him in the worst possible light. No excuses. He was in the wrong and could face legal action. Not only that there is no doubt that the bank compliance department would have stopped any deal on the basis of what was being promised.

The saddest fact is that there are perfectly legal ways that someone with £4 million to invest offshore could do so. The advisor had no need to sell on tax evasion, or even on tax avoidance.

Offshore investments can be as sound and secure as any home-based investment, with the same inherent risk-benefit scales. They provide added value to any investment strategy or portfolio by lending said portfolio added diversification, flexible investment vehicles not available in the home jurisdiction, and substantial lawsuit protection.

To learn more about offshore investing options and other private financial tools, please contact James Greenwho will introduce you to licensed professional advisors who can help you.

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