If you are working but your money is not then you are on unsteady ground and taxes will always play a large part in undermining net returns after all is said and done.
Depending on a few criteria such as nationality or residency, your investments may grow free of all forms of taxation. This may allow you to defer any taxable event until the distant future, and then also have control over how the disbursements to yourself are made, potentially further reducing your tax liability.
Taxation planning is a cohesive part of investment and should be considered as such- not as an afterthought.
There are three key benefits to offshore investing. First off is portability: you will have seamless access to your money practically anywhere in the world. Secondly, you as an investor may have significant tax advantages to housing your investments offshore. Finally, offshore accounts give much greater access to investment options. For example, domestic accounts typically specialize in their own home country with laggardly “international options” here and there; whereas with offshore you will have practically the entire world of investment, the experts in each field, all under one roof.
Contrary to popular misconception, the top offshore financial centers are in fact some of the most well regulated and investor-protected jurisdictions in the world.
President Barack Obama has money invested in funds domiciled in the Cayman Islands in his Illinois pension account from when he was State Senator? [Obama, Barack 2001 IRS Tax Report Filing- holding: Advent Intnl.]
Investing of-shore as a concept is in fact decades old and rises out of British history, serviced by a wide variety of credulous financial institutions concentrated in jurisdictions such as Guernsey (an island between England and France), the Isle of Man (an island lying between England and Ireland), Jersey (like Guernsey, situated between England and France) and some other Anglophone locations.
These locations have very high degrees of statutory regulation, legal frameworks for Investor Protection and very stringent legislative requirements. These financial centers are dependent on investors and as such have created a framework to an attractive and safe environment for clients.
The risks inherent with retail banking are insidious and not immediately apparent.
Firstly, depending on what country you are in your accounts will only be guaranteed up until a point. If the bank becomes bankrupt then it is entirely possible that you will not receive all of your money back. In recent years (Cyprus) certain account-holders have had money forcefully taken by the government and interest rates are inherently lower than the rate of inflation resulting in a slow and continuous capital bleed.
Risk exists fundamentally at three levels:
Firstly, at the jurisdictional level. The major offshore jurisdictions we employ have the highest levels of investor protection available. In the Isle of Man, for example, in the unlikely event that a provider becomes insolvent, up to 90% of the investment made by you through that company is covered by the island’s worldwide investor protection scheme. A similar scheme operates in Guernsey, where the law states that a minimum of 90% of the value of the investment is covered. In essence, these systems ensures that if the financial institution through whom you have invested your money goes bust, you will get your money back.
Secondly, at the institutional level. Our partners are global names and world class providers of professional services many of whom you will already be familiar with. Some have been in continuous existence for more than one hundred years. Real risk is very low and their continued success is predicated on their continuing commitment to high-standards of customer service and safety.
Thirdly, at the asset level. This equates to exactly what asset classes you are invested in and what your money is purchasing. This relates largely to your individual “risk-profile” and is tailor-made for you by your Tyton Advisor.
Do not let inactivity and poor information stop you from taking the necessary measures to become tax-compliant and, wherever possible, reduce your tax liabilities in a fully-lawful and approved manner. Feel free to reach out to us via the Contact page if you’d like some more information on how to fine-tune your tax liability.
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