When someone considers making an investment offshore, the first impression that comes to mind is getting involved in illegal activity and ending up in Pasadena jail in Texas state far away or other jails. Offshore investments are considered a shady business and, needless to say, only the wealthiest could think about getting into it. However, it is not without its advantages when handled sensibly. You can avail tax benefits, the privacy of business, and explore assets present in other countries.
In fact, tax advantages are the common reason why many businessmen consider taking the risk of offshore investment. There are many countries that keep doors open to such foreign investors and provide a favorable environment so that they are able to attract wealth from other states and foreign companies. It is also obvious that working with these types of investments can drastically increase economic activity within the country.
This is also an interesting way to restructure ownership of assets. Individual wealth in one state can be transferred and those worried about a lawsuit or creditors demanding collection of outstanding debts can move their assets to a location that falls outside particular jurisdiction. Once outside their home country, there is little that the local legal system can do.
So, What Is The Downside?
As interesting and attractive as the idea may seem, there are only selective offshore jurisdictions that are completely secure and present fair opportunities for offshore investment. Some common names here include the Bahamas and Bermuda. Other than these, more countries are now imposing rules and regulations that are more strict than ever before. This is because business giants like the United States itself have realized the extent to which it is suffering tax revenue loss. Therefore, the concerned departments are now making defined, restrictive laws to oversee such activities and make sure that involved parties are dealt with all legal means
Moreover, offshore accounts do not come cheap. Although the exact amount of setting up an investment depends on the goals and the jurisdiction, it is safe to say that they would cost at least triple of what a local, regional business would require. There are, of course, steep legal fees, excessive registration fees, sometimes a property-related charge as well that can be quite an amount. To add to that, most countries that allow offshore investment require you to make a minimum investment that is typically between $100,000 to $1 million. When you are talking about a business that is bound to make a lot of money, it is obvious that it will charge you accordingly.
With all the pros and cons set on a table, it is still a fact that more than half of the world’s assets and investments are currently in offshore jurisdictions. If you can work with a lot of common sense and find a reputable investment firm to guide you through, this scheme can be quite fruitful. Nonetheless, never forget to get a lawyer and specialized international investment officer on board as you never know when such activities turn into legal matters.
