What is an Offshore Account?

What is an Offshore Account?

26th November 2015

Generally, the term “Offshore Account” is used to describe bank accounts held in a bank located in an offshore jurisdiction. There are many jurisdictions globally considered offshore, including the Crown Dependencies of Guernsey, Jersey and the Isle of Man plus Monaco, Switzerland, Lichtenstein and islands across the Caribbean, Indian Ocean and Pacific. An Onshore Account by contrast is generally considered to be a Current or Savings Account held in a bank in an individual’s country of residency.

Offshore accounts may be provided as savings or current accounts in a variety of currencies, although most commonly in Sterling, Euro and US Dollar.

Offshore savings accounts are mostly provided in Easy Access, Notice or Fixed term versions and occasionally more sophisticated offshore accounts may be found, for example, linked to stock market, base rate or Libor movements.

Each offshore bank will have varying minimum account opening balances (at Skipton International all our offshore accounts have a minimum opening balance of £10,000). Some offshore account providers may require minimum balances of £100,000 or more depending upon the type of customer they are targeting, e.g. High Net Worth individuals.

Offshore accounts mainly have interest paid gross, i.e. without the prior deduction of tax. Of course there is a duty for individuals and companies to declare income from offshore bank accounts to their relevant tax authorities and as such offshore accounts have often been associated in the media with those seeking to avoid tax. However, the reality is that in an age of transparency with initiatives such as Tax Information Exchange Agreements (TIEA), the OECD Common Reporting Standard (CRS) and US Foreign Account Tax Compliance Act (FATCA), that individuals using offshore bank accounts are unlikely to be successful if seeking to evade tax.

There are many legitimate reasons why people use offshore bank accounts, some of which are outlined below:-

  • You are a retired British Expatriate and have savings which you would like to invest. However, being resident overseas most UK banks and buildings will not allow you to open a new savings account. Offshore savings accounts support expatriate savers like you.
  • You are not a British Citizen and have acquired wealth, possibly through inheritance, investment or even working in a sterling economy, but are now resident outside of the UK. An offshore bank may support your sterling savings.
  • You are an expatriate worker and tend to move countries periodically. Having an offshore account holding your savings in an independent location may be more convenient than attempting to open and close savings accounts with each change of residence.
  • Of course you may be resident in a jurisdiction that is considered offshore, so a local offshore bank may be conveniently located.

Whilst you can open an offshore bank account in many jurisdictions. Guernsey is widely respected for being well regulated, stable and use sterling as our currency.

Skipton International is a leading offshore bank offering a range of attractive offshore accounts. We generally have a range of variable rate easy access and notice accounts on offer, plus occasionally augment these by adding fixed rate offshore accounts.

Our approach to offshore banking is customer focussed; we understand the needs of expatriates and Channel Island residents whom we have been serving for over 20 years. We ensure we support our customers in a friendly, efficient manner whilst ensuring compliance to the offshore banking regulation operating in Guernsey, one of the leading offshore banking jurisdictions.