WHAT IS OFFSHORE BANKING?
Offshore banking is opening a bank account in a country that is outside of one’s home country. For example, if a U.S. citizen/resident opens a bank account at any bank outside of the U.S., that person is now engaged in “offshore banking”. If a citizen/resident of the United Kingdom opens a bank account in Germany or in the U.S. that person has opened an offshore bank account. However, the term “offshore banking” is normally used in a more specific manner than the broad definition given above. Opening an offshore bank account typically refers to opening a bank account in a tax haven (offshore jurisdiction, international financial center) country. A tax haven country will not levy any taxes on interest or capital gains earned by the account holder and also has secrecy/privacy laws that insure the confidentiality of the bank account owner and related transactions. For a more detailed explanation of a tax haven go to “What is a Tax Haven”.
