It should be noted however, that there is a big difference between legal tax avoidance and illegal tax evasion. You can read more about this topic here, “Legal Tax Avoidance vs Criminal Tax Evasion”.

While taxation is one reason why many individuals may decide to go offshore, other individuals and businesses find the following advantages as important reasons why having accounts offshore as a part of their wealth protection strategy.

• Privacy
• Tax Efficiency
• Asset Protection
• Regulatory Advantages

Below is the explanation for each of the advantages of “going offshore”. (Source: www.offshore-library.com)

Privacy
To protect the free flow of your personal information and dealings. An offshore entity has no obligation to release your personal or business information, affording you with a great deal of privacy & confidentiality.

In general terms your personal information will not be divulged to any governing body or tax authority unless suitable evidence can be shown to prove that you have been involved in criminal activities, such as money laundering or drug trafficking.

Financial privacy is becoming a thing of the past. Almost every single transaction made at a bank or ATM, by law, must be recorded and filed. Consumer credit agencies maintain databases full of sensitive information that is used and shared by other organizations and agencies. Asset collectors routinely advertise their ability to locate bank accounts, brokerage accounts, and real estate and business holdings. Should asset collectors find substantial wealth, the individual or corporation becomes an easy target for a lawsuit.

Unless ethical and legal steps are taken to insure privacy, sensitive and confidential information could easily get into the wrong hands. Placing your assets, investments, savings bank and brokerage accounts offshore will keep them off the asset collector’s radar screen. Consumer credit agencies and government departments do not have access to foreign account records or transactions. Domestic property may be held in the name of a foreign corporation (IBC) or trust. This insures that asset collectors and agencies cannot locate it. By taking advantage of these methods an individual or corporation becomes a smaller target and the likelihood of being sued is reduced. Utilizing offshore tools to protect privacy could mean the difference between keeping and losing what is rightfully yours.

Tax Efficiency
As stated above, your savings, investments, assets or business profits can grow almost free of any form of taxation. This does not mean tax avoidance, it simply means whilst your assets are held offshore they will benefit from very favourable tax advantages. There will for many however, be a potential tax liability when you look to repatriate your assets to your home country. This will depend on your nationality and your country of residence at the time of repatriation.

Asset Protection
There are many methods in which to protect your assets using an offshore structure, in the form of an investment product, an IBC (International Business Company) or a offshore trust, or even a simple offshore bank account.

These will protect your assets from:

• Protection from invasive bureaucracy
• Protection against lawsuits
• Protect your assets from seizure

The simplest form of protection offshore is the nature of the offshore privacy rules. What isn’t known can’t be attacked. The basic form of offshore privacy combined with a IBC or Trust is a very secure method to legally protect your assets from prying eyes.

Lawsuits are filed every week. Ex-spouses, ex-business partners, disgruntled employees or predatory lawyers may file a suit if they believe a potential defendant is an attractive target. Losing such a lawsuit could cause a lifetime’s worth of savings, investments and real estate holdings to be lost. In light of this, placing assets offshore is a wise and effective means of protection from frivolous lawsuits.

Once your assets are held offshore they are unreachable by domestic courts. In the event of a lawsuit, a defendant may be forced to forfeit domestic assets, but offshore assets will remain untouched. Offshore courts do not recognize or carry out domestic judgments. This insures that assets sent offshore will remain confidential, secure, and permanently in the hands of their rightful owners. Moving assets offshore will create peace of mind that what’s yours will always be yours.

Regulatory Advantages
The regulations in force within most high tax countries, are there to protect investors, and rightly so. However, due to the very strict nature of these regulations, fund managers feel as if they are wearing a financial straight Jacket. It is difficult for them to compete with the returns of their offshore-based partners who enjoy less restrictive regulation. Many offshore jurisdictions have very mature regulatory systems in place, often based on those present within the US or the UK, yet they allow fund managers great freedom to add value for their investors. This is why offshore funds nearly always outperform their onshore equivalents.

Within the high regulation onshore countries, excessive rules and bureaucracy often plague domestic businesses and operations. Valuable resources are diverted away from the productive process in order to monitor compliance as a result of the restrictions imposed. Curing this problem is as simple as moving to friendlier shores. Offshore jurisdictions are intentionally business-friendly and have regulations that are straightforward, simple to understand and inexpensive to comply with. Moving a business offshore and enjoying a more pleasant business climate may require nothing more than forming an offshore corporation and transferring assets from the domestic corporation to the foreign one.

Is all of this legal?
Do you trust your current bank or investment provider? Chances are that they too have an offshore operation; most of the world’s major banks and investment companies have an offshore present. Do you honestly believe that a triple A credited rated investment company or bank would operate in an illegal activity?

Companies such as Merrill Lynch, HSBC, ING Barings, UBS, Barclays, Deustche bank, ABN Amro all have offshore operations. It is not the offshore industry itself that is illegal, it is only the devious activities of certain individuals who may give the offshore industry a poor reputation. It is also true that the due diligence, and money laundering checks performed by offshore companies is increasing, especially after the 911 terrorist attacks. Which will ensure that it becomes difficult for criminals to abuse the offshore industry

In fact the offshore industry is probably one of the fastest growing sectors within the financial services industry. Many of the worlds most talented fund managers and analysts are leaving their well paid positions as onshore fund managers, to set up their own offshore funds, due to the greater flexibility and choice they can offer to their clients.

As a result of all of this, the offshore market place is no longer the exclusive territory of the rich and famous. Nowadays due to the reduced costs and entry levels, almost anyone can own a offshore fund, investment, bank account or company. Most people are still unaware of the opportunities open to them within the offshore marketplace, which is mainly due to the lack of information available.

For more information on the above topic and other financial matters, visit and the Financial Bookshop which contains over 4000 financial books and CD ROMS.

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In simple terms, the currency sandwich is a strategy where one borrows a low interest currency and then investing the loan in multiple currencies with higher returns than the cost of the loan. This difference in interests has returned many investors profits in the double to triple digits range, however, this strategy is highly speculative and is not without risks.

The cost of repaying the loan together with interest will go up should the exchange rate on the loan currency goes up, thus the net profits will decline. As long as the interest differential is larger than a possible negative development in prices and exchange rates, a potential gain on the investment is made.

Here is an example of how a multi-currency portfolio yielding 30.35% was executed based on current bonds and interest rates at the time.

1. Invested $100,000 in 6.5% Euro Baa2 rated Ford Motor Credit bonds that matures January 2008 yielding 5.10%
2. Used the bonds as collateral for a loan at four times gearing/leverage for $400,000.
3. $200,000 borrowed in Yen (YEN) @ 1.75%
4. $200,000 borrowed in Swiss Francs (CHF) @ 2.25%
5. $100,000 invested in AA+ rated Hungarian bonds (HUF) due in 2008 yielding 7.25%
6. $100,000 invested in AAA rated Landesbank HES bonds (NZD) due in 2007 yielding 7.00%
7. $100,000 invested in AAA rated Icelandic government T notes (ISK) due in 2007 yielding 9.00%
8. $100,000 invested in Baa1 rated Mexican bonds (MXN) due in 2008 yielding 9.75%

This multi-currency portfolio takes advantage of both leverage and positive carry. Leverage is accomplished from the use of the original investment in the Ford bonds as collateral for a loan. The 25.25% above the 5.10% yield of the original Ford bond investment is pure profit. Positive carry is accomplished from borrowing at 2% and getting an average return of 8.31%.

While this example was a success, as mentioned above there are risks in this strategy. One could lose the entire $100,000 investment because bond values can drop, foreign currencies can change and interest rates can rise or fall.

Investors interested in the currency sandwich should visit Jyske Bank for more info. They are Denmark’s 2nd largest bank that specializes in the multi-currency strategy and have created several model portfolios like the example above as investments. Private banking services including currency investments with Jyske can be found here, https://www.jbpb.com.

For additional information and training on this currency trading method, you can visit Gary A. Scott’s website. One of the foremost authority on “The Currency Sandwich”, international investing and the source for the above story and example.

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