The term offshore is bandied about when it comes to saving and investing, but what exactly does it mean? Who is it for? Why you might want to consider this as an option.

Why offshore banking could be right for you

The term offshore used to evoke images of tax fugitives or money laundering, but in reality offshore banking is a very useful tool for money management. Offshore banks are usually highly regulated and the services on offer are very similar to those offered by standard retail banks, but could have added benefits.

Why is it called offshore?

The term ‘offshore’ originated from the Channel Islands being offshore from the United Kingdom. While many offshore banks are located on islands, this is by no mean compulsory. These days the term is used figuratively in respect of locations such as Luxembourg, Andorra or Switzerland. Technically it can be anywhere outside of a home country or where you are currently resident.

The Benefits

  • Interest calculations: The main difference between offshore and regular in country bank accounts is in the way that tax is payable on interest earned and thus become rather more relevant for expatriates, who frequently enjoy tax benefits from living overseas. Interest is generally paid without the deduction of tax, which can make matters easier for people who are not subject to tax on their worldwide income, or it can allow for tax planning.
  • Stability: These offshore havens are typically based in countries with political and financial stability, additional privacy and low or no taxation, hence the commonly used word, tax haven.
  • Most offshore banks offer accounts in numerous currencies, a service that is not usually available from the average high street bank.
  • For GCC residents, offshore accounts can be use where individuals do not wish savings or investments to be subject to local laws in the event of death

Does that mean my money is always protected from taxes?

In most countries, the tax authorities make little distinction between interests earned from local banks or ones based offshore, as personal tax liabilities are usually based on the residence and home country of the individual.

Where is the best place for me to bank offshore?

Each offshore centre offers a variety of banks, levels of regulation and different services, the best known centres are the Isle of Man and the Channel Islands which include Jersey and Guernsey, followed by Switzerland and the Cayman Islands.

There are several banks with branches in the UAE, both international and local ones that offer offshore bank accounts through subsidiaries in the various offshore jurisdictions. It can be easier to deal with a bank that has an office nearby as that may make opening an account easier.

Offshore centres are frequently home to insurance companies or investment houses, which like many banks, are the subsidiaries of internationally known companies and offer similar advantages to the banks.

Keren Bobker is an Independent Financial Adviser at Holborn Assets and writes at