In short: Of course offshore bank accounts are allowed! There is nothing wrong with an offshore account and everyone is allowed to have one. In recent years, more and more customers have become interested in an offshore bank account. Countries like Switzerland, Liechtenstein, Singapore, Hong Kong or Georgia offer some advantages over German banks. Even if many are still skeptical about this topic. With this article I want to take away your “fear” to open an offshore account and show you the advantages.
Why it is worth opening a offshore bank account
There are several reasons why it is worth opening a bank account abroad. For example, you do not have to provide Schufa information, often benefit from faster transactions and often receive more interest (no negative interest). As a general rule, as long as you pay taxes on your money at your main residence or tax domicile, having a foreign bank account is legal and you have nothing to worry about.
In the following, I will show you the advantages and features of a foreign account in more detail.
No SCHUFA abroad
SCHUFA is a German company that collects information from citizens in Germany. It does not exist abroad. A foreign bank can access SCHUFA data on request, but must pay extra for it. For a simple credit account without a credit line, however, this is generally waived. In addition, most offshore banks do not offer a credit line for non-residents and therefore the matter is settled anyway.
But note: If you have a bad credit rating in Germany (also applies to Switzerland, Austria, etc.), so you would not get a loan there, you will certainly not get it abroad. Also foreign banks check their customers and as already mentioned as a non-resident so or so not possible.
A bank account abroad can therefore in most cases only be maintained as a pure credit account and is a useful tool to protect yourself from access and to diversify your portfolio.
Fast transactions with a offshore account
This aspect is very important, especially for business account holders. Because if you have important business relationships in a certain country, transactions in the same country are definitely faster and easier to process. An offshore bank account also makes sense if you have family in another country or want to conduct other money transactions there. Money transactions can be for example
- Purchase of real estate
- Brokerage accounts
If you have a second home abroad or are staying there for a longer period of time as a tourist, it can also be worthwhile to have a local bank account. It makes sense to have a bank account abroad, because you can often withdraw money, transfer money or do other things free of charge.
Some of my clients have set up a second residenz in Thailand and live there regularly. The banks there, charge high fees for a withdrawal with a foreign card. And that’s exactly why we have arranged accounts for our clients on the spot to avoid these fees.
Save lucratively with a offshore account
As most people know and have experienced, most banks in Europe offer almost 0% interest on savings. With some banks even negative interest rates. And that’s exactly why it makes sense to deposit your savings at a bank where you still get attractive interest rates.
Foreign banks often offer even more attractive interest rates, for example in Georgia. Our customers receive almost 5% on US Dollar deposits and 7% on Lari (GEL) deposits.
Advantages and disadvantages of a foreign account
The advantages are:
- no SCHUFA information
- faster transactions
- protection against access and seizure
- higher interest rates
- no automatic exchange of information
The disadvantages are:
- Transactions between two countries take more time and are more expensive
- no local service when you are not in the country
Last but not least: What makes a foreign account illegal?
Quite simply: tax evasion! Those who evade taxes usually try to do so with the help of foreign accounts. And this is not legal and you should stay away from it. Any income you earn from your foreign account, such as interest, must be declared and taxed according to the rules of your tax residence.
Therefore, I have specialized in legal tax structuring and with the right tax residence, interest income can even be collected tax-free if necessary.
An offshore account is perfectly legal if you follow the laws of your tax residence. Opening an offshore bank account can be worthwhile for many reasons. It offers more diversification as well as discretion and security.