Have you ever wondered how you could safely store your money or just reduce your tax burden?
We have some bad news: tax evasion is illegal in all countries of the world. There is no way to hide your earned money from the tax authorities.
However, there is a way to protect your hard-earned money from the heaviest tax rates – without having to hide it.
It is not highly recommended to keep your assets in one place – in this case the exposure is higher for the given financial institution or for the country itself. One or even more offshore bank accounts, on the other hand, can help you keep the rest of your money safe if anything unexpected happens to your main bank account.
What is an offshore bank account good for?
There is no denying that offshore banking does not have a good reputation. However, in practice, this does not necessarily mean illegal activity: there is nothing to prevent someone from opening an international bank account and living on much more favorable terms given by that country, in a completely legal way.
The crisis of 2008 caused severe damage to the economy, but not everyone was affected as badly. Typically, those who kept their assets in several places were the best to get out of the situation, so even if the value of their money declined somewhere, they may have had an international bank account that was less bearable by the crisis.
You don’t even have to go far for your own example: in 2011, the Hungarian government practically nationalized private pension funds in such a way that anyone who insisted on the amount he set aside in the private pension fund fell short of the expected state pension.
In contrast, money stored abroad is significantly more difficult or even impossible for the state to access. But it can also be a security for ex-spouses or former business partners.
It is worth looking around at the average yields offered by domestic banks: we can typically find values around 1-3%. At the international level, on the other hand, it is not uncommon for a higher yield, even 10% per year: we only need to choose the right country to store our assets.
More stable currency
You can already have an international bank account to keep your money in another currency cost-effectively. The Hungarian forint, for example, reacted particularly badly to the economic effects of the coronavirus, with which it reached several historical lows in a short time .
In a situation like this, we can also help stabilize our financial situation by converting some of our assets into an internationally stable currency – and not trying to store what we can attribute to us in gold or jewelry if we don’t store it securely enough.
Easier tax optimization
An international bank account can also have tax benefits – in a completely legal way. For example, an offshore bank account could be subject to tax benefits that domestic banks do not have. Of course, we need to comply with the appropriate legal requirements and also pay attention to tax returns. If the administration is in order, in return we can safely enjoy the benefits of lower tax rates.
How to open an offshore bank account?
Before opening an international bank account, of course, you should be thoroughly familiar with the conditions and laws of that country. Once you’ve verified with the help of an expert that you’re on the right track, opening an account typically consists of the following steps:
- Setting financial goals: what do we want to achieve? More security, more optimal taxation, or simply diversifying our money?
- Creating an offshore banking strategy based on goals
- Choose the bank that best suits your goal
- Open your account online or in person
- Place money in the opened account
- Perform the required administrative tasks
Open an account online or in person?
The process is very similar in both cases: either we have to make an appointment or we simply walk into a bank branch and look for an agent. There are places where only the latter is possible, but there are foreign banks where online account opening can also be solved with which we can save on travel.
If they have the opportunity, it is better to visit a bank branch in person: this will make it much easier to negotiate the terms. This makes it easier for the clerk to make sure that he can get a reliable paying customer to his customer base.
Are you sure this is legal?
Opening and managing a bank account is not illegal if we follow the law. We need to pay attention to what we are doing with it – not to do anything that is not allowed by the laws of our own country. If we store money abroad, it is not illegal in itself: if we do not admit it, it can already be that. And today, in addition to being banned, it is almost impossible to hide money from the tax authorities.
How do I get started?
Of course, you can also try opening an offshore bank account on your own. You may be at home in the world of finance, but you shouldn’t risk it either: you may be able to store your money on more favorable terms in another country by following the current conditions.
Therefore, it is better to seek the help of an expert who gets up and lies in the world of international banking – and is not only aware of the previous rules, but also follows the current changes.