Offshore Banking

   An offshore bank account will allow you to safely and privately explore, with few restrictions, the far reaches of the vast and diverse financial universe; from the bond markets of Korea to the stock exchanges of Eastern Europe; from ultra-private Liechtenstein trust arrangements to the most successful funds; from unique commodity investments to Caribbean corporations; from Israeli nanotech start-ups to age-old European blue-chips; from the mysterious and secretive world of offshore mutual funds to tax-free Swiss gold accounts; from Isle of Man Insurance contracts to Danish multi-currency investment accounts; from uniquely structured tax-free Austrian funds to Bulgarian mortgages; and much more beyond.

  With one phone call, or even just the click of your mouse, an offshore bank account will allow you to:

1. Privately trade stocks, bonds, mutual funds, CDs, precious metals and currencies on markets everywhere (including CDs that pay up to 16% after currency gains and emerging market stocks and funds traded on exchanges that have soared 496%…407%… and 232% in the past few years).
   
   
2. Diversify your assets out of American dollars and convert them into currencies set to soar against the dollar in the volatile times ahead, like the rock-solid Swiss franc, the euro and many more commodity currencies upon which we’ve already seen staggering gains of 1,794% and 797% by recommending select little known currency investment techniques.
   
   
3. Buy into special types of mutual funds, which are managed by legendary, award-winning financial analysts, who rank among the world’s best. These offshore fund managers have consistently proven to outperform their American counterparts, as they are able to trade markets and asset classes far more freely than American fund managers, and they’re allowed to employ far more flexible and powerful investment techniques. You will able to profit from some of the world’s top funds and advisors…from Luxembourg to Thailand…from Korea to the Caribbean…some of which have boasted returns of as much as 867% in a 5-year period. Compare that to the average American mutual fund that, at best, has provided anaemic single-digit returns over the last 5 years.

   The articles below originally appeared in our montly newsletter, The Sovereign Individual  and will help you more fully understand the benefits of offshore banking and using an offshore bank account. You can learn more about offshore banks, tax havens and asset protection in The Sovereign Individual each month by becoming a member of The Sovereign Society. Click here for details on membership.

• The “New” Offshore Bank—No Longer Just for Millionaires - by Kathlyn Von Rohr
  
• Your Quick Fix to Total Wealth - by Robert E. Bauman, JD
• Fun With Numbers  - by The Sovereign Society Research Team
  
• What You Need to Know Before Investing or Doing Business Offshore - by The Sovereign Society Research Team
  

Years ago, you had to be very wealthy to meet the minimum balances and afford the banking fees for an offshore bank account. Not anymore. After dramatic changes in international banking and Internet communications, you can secure a relatively modest offshore account, as your quick, inexpensive entry into the world of foreign investments. And while some nations, like Switzerland, may ask for high minimum deposits, others are relatively low.

An offshore bank account in the right jurisdiction provides layers of asset protection, as well as better investment opportunities. An offshore account shields your assets from greedy settlement-seeking lawyers or determined creditors who want to seize your wealth (in most offshore jurisdictions, they won’t get past the local courts).

Better Investments, Less Taxes

Yes, your cash will be safer offshore, but one of the big pluses of an offshore account is your power to trade freely and invest widely in foreign-issued stocks, bonds, mutual funds and national currencies. You can diversify with instant access to the world’s best investments without being hindered by U.S. laws or SEC rules. You can buy attractive life insurance and annuity products unavailable in the U.S. and Canada. Tax savings may result from deferred investment earnings, capital gains or appreciation, rather than being immediately hit with taxable ordinary income.

Choosing the right jurisdiction for your offshore bank account makes all these investment opportunities possible. Here’s a quick look at two top jurisdictions where you can secure an affordable offshore account.

Denmark: Double-Digit Investment Opportunities

Denmark is not only one of the best nations to shop for international investments, but it’s continually ranked the “safest place to bank” by Moody’s. Plus, Danish banking fees are also significantly lower than Austria and Switzerland.

Denmark’s second largest bank, Jyske Bank, is internationally known for their unequaled investments and the management of those investments. Just this spring, Global Investor magazine named Jyske Bank the best performing European Equity Fund Manager in Europe. And it’s no wonder. Just in 2005, Jyske Bank had five equity funds yield more than 40% (with returns of 42%, 41%, 51%, 44%, and 60%).

But Denmark doesn’t offer the same level of banking privacy as Austria or Switzerland because there’s no bank secrecy law. And at the end of each year, under the EU tax directive, all Danish banks must turn over clients’ information to the Danish tax office, which is free to share that data with foreign tax authorities.

Liechtenstein: Iron-clad Asset Protection with Safe-Haven Currency Options

Liechtenstein, a tiny independent enclave nestled between Switzerland and Austria, is a banking haven in its own right. This Swiss neighbor uses one of the safest currencies in the world: the Swiss franc. Plus, Liechtenstein has a reputation of having even more bank secrecy than Switzerland. Bank secrecy may only be lifted by a local court order and Liechtenstein rarely recognizes other countries’ mandates. The Liechtenstein government also insures all bank accounts—no matter how large.

However, this level of sophisticated asset protection doesn’t come cheap. Liechtenstein’s banks have no official minimum, but they try to attract high net-worth individuals—which means fees are high.

So as you can see, even with higher fees, banking offshore can definitely pay off in the end (sometimes in double-digit returns). You can bank in regions where your bankers are bound by law to keep your assets safe. You can maintain a level of complete financial privacy where no one—from ex-spouses to creditors to settlement-seeking lawyers can discover your assets. Plus, you can keep your wealth in a host of currencies to protect yourself should your native currency ever plummet. Everyone should have some money outside their home country’s banking system. Even if it’s just as a safety net. You never know when you might need it.

Kathlyn Von Rohr is the new managing editor of The Sovereign Society. She manages the content of both The Sovereign Individual and the daily Offshore A-Letter.

By Robert E. Bauman, JD

One of the greatest threats to your wealth may be lurking deep inside your subconscious. It’s called xenophobia. “Xenophobia” describes “a person unduly fearful or contemptuous of that which is foreign, especially of strangers or foreign peoples.”
 
And tragically, this fear stops individuals from seeking the whole world of wealth opportunities available in other nations. These well-intentioned, but not very savvy, folks store every last cent of their wealth in U.S. banks and only invest in the U.S. investments their brokers suggest.

But it’s not too late to purge these xenophobic tendencies and move your assets offshore. Here are just a few of the major opportunities waiting for you.

1. Asset protection. Lawsuits long ago reached epidemic proportions in the U.S. If a creditor gets a judgment against you where you live, you could lose all your assets, your business, home, or bank accounts. In contrast, create a trust or family foundation or invest in a suitable offshore jurisdiction and your finances are essentially judgment-proof.

At the very least, the long distance between a U.S. plaintiff’s lawsuit and your offshore assets is likely to encourage a favorable settlement. And keeping assets offshore avoids the U.S. asset-tracking network, which permits lawyers and their investigators to easily identify and target the assets of a potential defendant. (Revealing your offshore assets may be the best way to discourage a lawsuit. Just tell that greedy lawyer, “try and get ‘em!”)
 
Thus, prudently using offshore havens can protect you from the threat of lawsuits, civil forfeiture, bank account freezes, business failure, divorce, foreign exchange controls, restrictive laws, or political instability.

2. Financial privacy. It’s only natural to want protection from the prying eyes of government bureaucrats, business partners, estranged family members, or identity thieves surfing the Internet. Financial privacy can also be the best protection against frivolous lawsuits that could end with big judgments against you (and no telling what cost). If you don’t appear to have sufficient funds to justify a lawsuit in an attorney’s mind, he’ll probably drop you as a target. Simply put, assets you place “offshore” are off the domestic asset tracking “radar screen.”

The U.S. is one of the few nations lacking a federal law that protects bank or securities accounts from disclosure, except under narrowly defined circumstances. Many disclosures are illegal in other countries, either under international agreements, or under national laws guaranteeing financial secrecy, as in Switzerland. Privacy is especially strong if you place assets in a nation with strong privacy laws.

There is also greater privacy when you use an international business corporation (IBC) or a foreign-based asset protection trust (APT). Offshore financial centers protect the identity of trust and IBC owners. While these legal entities take a bit more time and effort, they can greatly enhance your financial privacy.

3. Investment diversification. Many of the world’s best investments and money managers will not do business with U.S. citizens or residents directly. It’s easier for them to do business with the rest of the world than comply with the complicated and costly U.S. SEC rules.

4. Higher returns. There are opportunities in the traditional financial markets, such as offshore mutual funds and London-traded investment trusts with much higher returns than are generally available in U.S. markets. In spite of a recent downturn, offshore and emerging stock markets have done far better than those in America over many recent years.

5. Currency diversification. You can stabilize your portfolios and protect against the falling U.S. dollar by simply holding or trading other currencies. Example: earning nearly 20% on the declining dollar by trading it for the euro. For decades, the U.S. dollar has been losing value in relation to stronger currencies. In 1970, a U.S. dollar would purchase 4.5 Swiss francs. Since 1971, the franc has appreciated nearly 300% against the U.S. dollar. Now the dollar purchases only 1.2 Swiss francs. While U.S. investors can purchase foreign currencies through a few U.S. banks, offshore banks generally offer higher yields, lower fees, and lower minimums.

6. Safety and security. Twenty years ago, the United States experienced a wave of bank and savings and loans failures at a rate unmatched since the Great Depression. In contrast, offshore banks aren’t exposed to risky investments such as third-world debt and highly leveraged derivative investments. Further, these banks are located in politically neutral countries which do not conduct offensive interventionist foreign policies (and thus are less likely to face a terrorist attack than other nations).

7. “Insurance” against closure of U.S. securities markets. We all learned the need to have part of our assets outside of the U.S. when our markets were shut down for five full trading days following September 11, 2001. But, although U.S. markets were closed, individuals with foreign accounts were able to trade securities on foreign exchanges.

8. Deferred taxes. In spite of the fraudulent offshore hucksters trying to sell offshore tax savings, for Americans, there are not a lot of tax savings to be had by going offshore. American citizens and resident aliens are liable for annual income taxes, no matter where that income is earned or where the person lives.

But it is legal to purchase offshore annuities and life insurance which, if properly created, can defer current U.S. taxes until the time when the annuity or insurance actually is paid out. And these devices may be able to save on estate taxes as well, giving your heirs a bigger share.

 Modern day life is filled with numbers, and some apply to the offshore world more than others. Here are some interesting numbers to think about…

* 20%. Estimated number of the 285 million American citizens who have passports.

* 1.4 million. The estimated number of Americans who left to live offshore since 2000.

* 600,000. Estimated number of British citizens who leave to live offshore annually.

* 800. Average number of U.S. citizens annually who relinquished citizenship in recent years.

* 33.9%. The amount the top-earning 1% of U.S. taxpayers pay of all U.S. individual income taxes collected.

* Zero. The amount of income taxes paid on offshore income by a resident foreigner in Panama, Andorra, Campione, or Monaco.

* 25%. Estimated amount of U.S. pension funds invested offshore.

* 300%. The amount the Swiss franc has appreciated against the U.S. dollar since 1971.

* US$750,000. Minimum amount usually needed to open an investment account in Liechtenstein—though The Sovereign Society offers one for US$70,000.

While investing or doing business offshore is perfectly legal for U.S. citizens and residents, there are a few legal formalities you should keep in mind.

The most important of these is that you are responsible for paying taxes on your worldwide income. In addition, many types of offshore investments are subject to separate reporting requirements. Also, transfers of US$10,000 or more in cash or cash equivalents across U.S. borders must be reported, as well as the formation and funding of a foreign corporation, trust or partnership.

While it’s easy to comply with some of these requirements—such as the annual filing of the “foreign bank account reporting” (FBAR) Form TD F 90-22.1, other forms (such as those necessary to report a foreign trust relationship) are more complex. To assist you in complying with these more complex reporting requirements, we recommend the services of a qualified tax attorney.