Your Offshore Guide

Why Go Offshore

Investing offshore is often associated with millionaire status and powerful institutions. But increasingly, there are opportunities open to a wider variety of investors.

According to fund performance analysts,  retail investors now hold about 90% of total offshore fund assets compared to only 4% held by institutions. The reasons for the large number of retail investors can be attributed to a number of factors.

  1. One factor is global mobility of the workforce. Take the example of a British expatriate couple working in the Middle East or a Dutch scientist working in a war zone - different sets of nationalities, different types of employment - the common factor being that they are often outside their normal country of residence and need a central home for their finances. A further factor is the vast number of domestic investors who invest in offshore funds to legally avoid withholding tax This is a common feature in Europe, where, say, German banks will set up an operation in low tax Luxembourg simply to target investors back in Germany.
  2. It is this desire to protect and preserve assets which is the catalyst to explore the investment opportunities offshore.

By investing offshore you can protect your assets from high taxes or economic instability which can severely erode their value. In countries where political instability generally puts assets at risk, investing in a `neutral' or safe haven is one way of protecting your assets. Most offshore activities could be described as tax planning, using legal mechanisms to reduce or eliminate taxes on income, wealth, profits and inheritance.

While minimising current and future taxes remains an attractive incentive, the growth in popularity of offshore centres is also due to the lack of investment restrictions that exist there.

This lack of restrictions allows companies to offer more innovative investment products and services. This is particularly true of offshore funds whose numbers have grown rapidly due in part to the investment freedom they have compared with onshore funds.

There are now more than 6,000 offshore-based funds to choose from. It is the ability to offer solutions for an ever-changing investment audience that has seen offshore centre use becoming more mainstream. Offshore centres are now at the cutting edge of new corporate, investment, trust, insurance, partnership and banking legislation and are among the first jurisdictions to offer unique structures such as limited partnerships, asset protection trusts, purpose trusts and limited duration companies.

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