Offshore Banking

[sadako]

Hi again to U all ,

I have a plan to invest 40,000 GBP ( Im in the UK now ) into a high interest tax free offshore savings account from which I can access the interest through a linked current account with debit card through hole in the wall in Thailand . Anyone out there doing this kind of thing ? Can you tell me what kinds of rates you get ? Just trying to figure if I can get a better rate somewhere else . Im looking at 5.1 % tax free at the moment with 30 GBP charge per cash transaction . ( TT transfer charge ) .

Much appreciated !

Confused Sadako . ( She never sleeps )

[grahamb]

Click here for a site that lists interest rates. You can select offshore accounts from there.

If you're planning to take the cash out via an ATM, why does the TT charge matter?

Also, if you're in the UK now with a UK address, you may not be able to open an offshore account directly but open an onshore one with the relevant bank and then sort out the offshore one when you're over here. It is much easier to open an offshore account when you already have a relationship with a bank rather than opening it from scratch from overseas. It is possible to do it from overseas but they need a lot of paperwork (in English) to meet the EU money laundering law requirements.

[GuestHouse]

The rules on offshore banking from the UK are changing - The latest change is that any offshore banking in/off Europe (and that includes the Channel Ilses) by UK residents is now reportable to the British tax authorities.

I believe, but I am not sure, that a flat rate 5% tax is now payable on offshore interest.

Money brought into the country is taxed unless it enters the coutry at the same time as youd od and you produce evidence of where it came from. If you have not been out of the UK for one full and complete tax year the money you bring into the UK will be taxed at full UK rates.

As a general rule, offshore banking is something that should be thought about very carefully - appart from very high account charges (in comparison with UK Highstreet) there are problems relating to the legal protection of funds and there are real problems with respect to taxation.

An offshore account is like a red flag to the tax bull - it screams come and look very closely at my financial afairs.

[sadako]

The charge is £ 30 every time you withdraw from ATM , regardless of the amount . I am thinking of taking interest every 3 months to minimise this charge , as £ 30 is a lot of money in Thailand ! Apparently the account I plan on opening is simple to open ( Abbey National Jersey ) , and there are no charges , provided you keep £ 5000 minimum in current account at all times ! ( Always a catch somewhere ) but apart form that , it seems like a good scheme . Life is always a risk I guess , one way or another .....I will open the account the moment I am no longer resident in the UK , this way avoiding tax . The problem with the onshore banks is that ###### 20 % tax ! May as well not bother ....

Click here for a site that lists interest rates. You can select offshore accounts from there.

If you're planning to take the cash out via an ATM, why does the TT charge matter?

Also, if you're in the UK now with a UK address, you may not be able to open an offshore account directly but open an onshore one with the relevant bank and then sort out the offshore one when you're over here. It is much easier to open an offshore account when you already have a relationship with a bank rather than opening it from scratch from overseas. It is possible to do it from overseas but they need a lot of paperwork (in English) to meet the EU money laundering law requirements.

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[Khun Bob]

Just been talking to HSBC offshore and apparently there are likely to be some new EU rules coming in soon that will require European based offshore banks to disclose information if asked for it by authorities. I dont have any details on this or know the extent of this, but will be looking...

Just makes me wonder are there any countries that pay good interest, outside of the EU and are safe to give your money to ?

[grahamb]

The  charge is £ 30 every time you withdraw from ATM , regardless of the amount .

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Sounds to me like that is not a current account and the 30quid charge is to discourage you from taking money out the ATM. A Telegraphic Transfer (TT) charge usually applies when you transfer money from one bank to another.

Check the link I posted earlier and investigate some of those accounts. We've got an offshore account with HSBC Jersey which has a current account and I can open deposit accounts within it. Haven't checked the interest rates for 40k but that sounds more like the type of thing you need - keep what you need access to in the current account and stash the rest in the deposit account.

The Abbey National account sounds like a deposit account where they don't really want you to withdraw the money.

Re: Guesthouse's comment about the 5% tax on interest... I think that only applies if you are resident in the EU and have an offshore account in the EU. I've not seen any tax on our interest yet. Not seen a lot of interest either though

[edh]

Have read the thread about offshore investment and my advise is to think it through carefully as there will be taxation of interest earned, starting on July 1 2005. according to the: EU Savings Tax Directive.

More info to be found here: Tax andTax

So i'm getting worried myself. Time to move the stash

EDH

[Khun Bob]

Have read the thread about offshore investment and my advise is to think it through carefully as there will be taxation of interest earned, starting on July 1 2005. according to the: EU Savings Tax Directive.

More info to be found here: Tax andTax

So i'm getting worried myself. Time to move the stash

EDH

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Thanks edh - the IOM pdf is very good. In it they talk about third countries - I assume Switzerland is one of those. I beleive that Switzerland are imposing a witholding tax ? Possible a way to get around this is to prove that you have an address outside of the EU and you are resident there...

Also makes me wonder if there are any high interest accounts outside of the EU, in a safeish country, that doesnt disclose information ?

[sadako]

HMMMMMMM ,

Interesting , I hear today of an LM savings plan in Australia , offering a seriously high rate of interest , anybody here ever come accross this ?

[Khun Bob]

After reading about the EU savings tax directorate it would seem that interest anywhere in Europe will be subject to some money being withhelp, unless you can prove your entitled to interest tax free.

Sadako - Nice to hear about high interest in austrailia - i would imagine Australia and UK are quite close friends tax disclosure wise though ? If you've got some more info on this be interested to know though

[Sunny Valentine]

Singapore might be another option for those with money to park.

Sunny

[taxexile]

THE EU DIRECTIVE RELEVANT TO ACCOUNTS IN JERSEY

inteWhat is the Savings Directive, Why does it Matter?October 2004

In part one of a two part feature, the Jersey Government explains What is the European Savings Tax Directive?

It is an agreement between the Member States of the European Union (EU) to automatically exchange information with each other about customers who earn savings income in one EU Member State but reside in another (the automatic exchange of information option).

Whilst automatic exchange of information is the ultimate objective of the DIRECTIVE, three EU Member States (Austria, Belgium and Luxembourg) have opted to apply alternative arrangements during a transitional period. Under these arrangements, tax will be deducted at source from income earned by EU resident individuals on savings held in other EU countries (the withholding tax option).

However, the Directive specifies that any jurisdiction implementing the withholding tax option will also need to provide one or both of the following procedures in order to ensure that a relevant payee may request that no tax be withheld:

a procedure which allows the relevant payee expressly to authorise a paying agent to report information to his Member State of residence; and/or

a procedure which ensures that withholding tax is not levied where a relevant payee presents to his paying agent a certificate drawn in the name of a competent authority of his Member State of residence.

When does the Directive take effect?

The requirements for exchange of information/deduction of withholding tax are currently expected to come into force on 1st July 2005. This is subject to certain preconditions having been met by that date, which are designed to ensure that a ‘level playing field’ is established for those countries and territories affected.

Which countries and territories are affected?

Once it comes into force, the Directive will apply to all EU Member States . Although the legal scope of the Directive cannot extend outside the EU, its implementation will also affect the UK Crown Dependencies (the Channel Islands and the Isle of Man) and UK Overseas Territories , the Dependent Territories of the Netherlands , and certain other ‘Third Countries’ , which have all voluntarily agreed to apply the same or equivalent measures to those contained in the Directive.

As noted above, Austria, Belgium and Luxembourg are the EU Member States which have elected for the withholding tax option; the other 22 EU States have elected for automatic exchange of information. It is currently expected that, with the exception of the Cayman Islands, Anguilla and Monserrat, all of the other countries and territories affected by the Directive will also elect for the withholding tax option.

The UK Crown Dependencies are meeting their commitment through the implementation of bilateral agreements with each of the 25 EU Member States.

So will it affect me?

If you are an individual (natural person) who is resident in an EU Member State and earn bank interest or other savings income (as defined for the purposes of the Directive) on deposits or investments held in your own name in another EU Member State, Third Country or territory identified above, then it is probable that you will be affected by the implementation of the DIRECTIVE.

The Directive does not apply to persons (including EU Nationals) who are resident outside the EU.

What is the withholding tax option and how will it work?

Under the withholding tax option, banks and other paying agents will automatically deduct tax from interest and other savings income earned and pass it to their local tax authority, indicating how much of the total amount relates to customers in each Member State. The local tax authority will then keep 25% of the total amount collected and remit 75% to the various tax authorities within the Member States. The receiving Member State receives a bulk payment but does not receive personal details in respect of individual customers.

The rate of withholding tax will be 15% from 1st July 2005, 20% from 1st July 2008 rising to 35% from 1st July 2011.

What is the automatic exchange of information option and how will it work?

If a customer chooses the exchange of information option instead of withholding tax, details of the customer’s identity and residence, their paying agent, the level of savings income received and the period to which it relates will be reported to the local tax authority in the country which the account is held and then forwarded to the tax authority of the country in which the customer is resident.

What exactly is the position in Jersey?

Jersey has elected to implement the withholding tax option. However, the bilateral agreements entered into by Jersey with the EU Member States also provide for both of the alternative procedures described at point 1 above.

In practice, banks and other paying agents in Jersey have therefore been given the option to offer customers the choice between the deduction of withholding tax or exchange of information. The position is therefore more flexible than in many EU Member States, where no choice will be offered.

The withholding tax option referred to above will be known as the “retention tax option” within the UK Crown Dependencies (see point 10 below for explanation). References to “withholding” and “retention” in this guide are interchangeable and may be taken to have the same meaning.

It should be noted that whilst banks and paying agents in Jersey have the ability to offer a choice to customers, in practice individual organisations may elect not to do so. In this case the retention tax option will be applied by default. If in doubt, you should clarify the position directly with your relevant financial services provider.

If a financial institution does elect to offer the exchange of information option to its customers, information exchange will only take place at the specific request of individual customers (see also 8 below).

How do the reporting obligations created by the bilateral agreements between Jersey and the EU Member States fit with Jersey’s data protection legislation and customer confidentiality rules?

Jersey has comprehensive data protection legislation and well-established common law principles concerning customer confidentiality. These will not be affected by the introduction of the bilateral agreements the Island has entered into because the ‘default’ position in Jersey is the retention tax option, under which customer confidentiality is fully maintained.

Automatic exchange of information can only be provided at the express request of individual customers.

B. KEY TERMS

What is the EU Tax Package?

The EU Tax Package comprises of three measures relating to taxation which have been agreed by the European Union. The three measures are the European Savings Tax Directive, which relates to the taxation of private individuals and which is the subject of this guide, the European Directiveon Interest and Royalties, and the Code of Conduct. The latter two measures both relate to business taxation and are outside the scope of this guide.

I have read about Jersey applying a ‘retention tax’ – what is this?

The withholding tax described above will be known in Jersey, Guernsey and the Isle of Man as a ‘retention tax’ rather than withholding tax. This is to distinguish the Islands from the Member States to reflect the fact that they are not a part of the European Union and are not subject to the Directive.

As noted above, the Islands are meeting their political commitment to introduce “same measures” as those contained in the Diredtive through the implementation of bilateral agreements with each of the 25 EU Member States. For the purposes of these agreements the two terms “withholding” and “retention” are interchangeable and may be taken to have the same meaning.

Who is a ‘relevant payee’?

The precise definition of ‘relevant payee’ will in fact vary according to whether the impact of the Directive is being considered from the perspective of an EU Member State, a Third Country, or an Overseas or Dependent Territory (including the Crown Dependencies). This is essentially because the agreements between the EU and the Third Countries do not provide for reciprocity whereas those between the EU and the Crown Dependencies do.

From Jersey’s perspective, a relevant payee may be considered to be an individual resident in an EU Member State who receives a savings income payment from, or for whom a savings income payment is secured by, a paying agent located in the Island. It should also be noted that, because the bilateral agreements between Jersey and the EU Member States provide for reciprocity, a Jersey resident individual who earns savings income on deposits and investments held in an EU Member State may also fall within the definition of relevant payee.

I spoke to my bank there (hbos international) and i was told that in order to become exempt from this rule , i have to have a residence address out of the eu.

(at the moment both my residence address and correspondance address are in the uk even though i have no residence in the uk.)

if i change my residence address to an address here in thailand then i will not be taxed on the interest. which obviously is what i propose to do.

as these rules come into effect in less than two months , anyone with offshore accounts in jersey or the isle of man should contact their banks if they wish to find out if they are eligible for tax free interest.

i dont know if guernsey accounts are subject to the same rules or not.

.

[Nignoy]

After reading about the EU savings tax directorate it would seem that interest anywhere in Europe will be subject to some money being withhelp, unless you can prove your entitled to interest tax free.

Sadako - Nice to hear about high interest in austrailia - i would imagine Australia and UK are quite close friends tax disclosure wise though ?  If you've got some more info on this be interested to know though 

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High interest schemes here in sunny Oz are mostly short term the longest we could find is 14months at between 10.4 and 11.6 %, but!! to qualify you must have a place of residence in oz and a tax number, funds from UK coming into oz for investment purposes only get hammered on management fees , we have been trying to find a painless way of investing my Uk army pension for years!! Nignoy

[edh]

Taxexile: What if the bank have your adress in Thailand? Do they count that as place of residency or do they use the adress I provided when the account was opened? I previously had my adress in Spain but chaged it about a year ago to Thailand.

Anyone?

[taxexile]

hbos international told me i can have a residence address wherever i want (thailand) and a correspondance address in the uk and then i will be exempt from the eu tax directive.

its just a matter of informing them of the address change by letter.

[Sunny Valentine]

Do they want to see prove of residency in Thailand? Are they asking for Visa, or other residency documents? Or is it enough for them to just receive the adress? (In the latter case I guess every british or EU resident could just give them a foreign adress, as long as he makes sure that he receives letters there, and they are forwarded to his "real" home adress in Europe, he should be able to get the exemtion. This looks too easy to get by in my eyes, so I doubt that there is no more check on the subject?

Sunny

[taxexile]

the bank certainly didnt mention that they want proof of residency, all they want is notification that you dont reside in the eu, and then they will not withold tax on your interest.

the banks will certainly be informing the inland revenue of why they are not taxing the interest and then the inland revenue might want proof of residency.

[Khun Bob]

For details of the ESD see the following :

http://www.offshore.hsbc.com/public/offsho...aimer_esd.jhtml

if this doesnt work yo can get to it via :

http://www.offshore.hsbc.com/hsbc/main/tax...vings-directive

This is good for jersey, iom and geurnsey

[sadako]

I have found a bank in Southern Cyprus now which which gives 5.5 % tax free apparently not affected by new July 2005 E.U tax introductions . I can also release all funds anytime , direct from savings account , no charge , direct withdrawals with debit card from Thailand . No need to link to current account either . Sounds pretty good for my circumstances , will keep you informed when I read smallprint .....

[edh]

Sounds interesting Sadako, please do.

I'm in the process of changing adress of residency right now..

Better be on the safe side - prior to 1st of July...

[kreon]

hsbc in hong kong always a good bet!

[sadako]

Try calling these guys www.turnerlittle.com phone no. there , they will give you details of this and other accounts to suit your circumstances ..........

Sounds interesting Sadako, please do.

I'm in the process of changing adress of residency right now..

Better be on the safe side - prior to 1st of July...

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[ace]

Sadako, if I were you I would invest £7k p/a in an ISA in the UK through an online account each year for the next 5 years.

The remaining £5k will be equivalent to 2.5 years interest approx.

After 5 years, I would mature and take 1 ISA per period, transfering the money into my chosen account.

You should beat any other available interest rate (especially if you invest in equity) over the period. And of course is tax free over the period.

Ace

[Khun Bob]

Sadako - can you say what the bank in cypris is - then we can go direct to them

[samuiDarbs]

offsure cyprus

turnalittle wont tell you the name they have a deal with the banks

they say you can open an account from where ever .address dont matter uk / thailand who cares

ask for james turner , nice bloke helped me alot

and was quick to reply .

the price to open the account is about 195gbp

i will be going with this firm

or iam told if its along term thing try a bond the abbey do them UK

good interest rate providing you dont touch your money

if you need to withdraw regular in thailand go for a nationwide flexy account good interest and free to withdraw from ATMS all over the world

good luck fellas

samuidarbs

[sadako]

He he , I know it sounds &lt;deleted&gt; , but I aint got the name yet , just the basics , sounds good but , will keep u informed when I read the entire terms.... still waiting through the post ....but u should get the basics by phoning turnerlittle , just question them clowns , thats what theyre there for........

Sadako - can you say what the bank in cypris is - then we can go direct to them 

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[edh]

Try calling these guys www.turnerlittle.com  phone no.  there ,  they will give you details of this and other accounts to suit your circumstances ..........

Thanks Sadako, will check it out.

samuiDarbs - valuable info as well. Thanks a million.

EDH

Sounds interesting Sadako, please do.

I'm in the process of changing adress of residency right now..

Better be on the safe side - prior to 1st of July...

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[Khun Bob]

offsure cyprus

turnalittle wont tell you the name they have a deal with the banks

they say you can open an account from where ever .address dont matter uk / thailand who cares

ask for james turner , nice bloke helped me alot

and was quick to reply .

the price to open the account is about 195gbp

i will be going with this firm

or iam told if its along term thing try a bond  the abbey do them UK

good interest rate providing you dont touch your money

if you need to withdraw regular in thailand go for a nationwide flexy account good interest and free to withdraw from ATMS all over the world

good luck fellas

samuidarbs

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samuidarbs - just did a google for offsure cyprus and not much came up - or did you mean offshore (google actually suggested that ) and your not telling/dont know on the name ?

[Sunny Valentine]

I really wonder why people with sound mind consider investing larger amounts of money in banks unknown to them, in areas of the world they have no information about legal situation or customer pretection, or whatsoever, JUST BECAUSE someone (usually a "nice bloke") working in some otherwise unknown internet company proposes a much higher than usual interest rate .... Is it greed, or stupidity?

Mind you: Any interest higher than the official repo rate means you are at potential high risk. Why would a sound bank offer you more interest than they have to pay to government instituations? It could be a shady bank (Some ten Years ago I could have jumped on the offer I got somewhere and openend a Bank at one of the lesser known Carribian States with just 50000 $ Capital, and maybe 10000 $ for fees and expenses), or it could be a risky investment scheme that is used to (hopefully) genrate the income for the interest payments. Or a switch to a different (say: weaker) currency, like the Rand or some Southern American one; or just an outright attempt to screw you. Of course there is the small chance that a nice, benevolent millionaire is just giving you the money for fun .......

Sunny

[sadako]

No , actually its neither , the interest helps me while I set up a life in Thailand . All I want to do is live , not greedily , or stupidly , in a country I love . There is also the chance that it is a legitimate way of earning good interest . Why loose out ? And life is ALWAYS a risk.....

I really wonder why people with sound mind consider investing larger amounts of money in banks unknown to them, in areas of the world they have no information about legal situation or customer pretection, or whatsoever, JUST BECAUSE someone (usually a "nice bloke") working in some otherwise unknown internet company proposes a much higher than usual interest rate .... Is it greed, or stupidity?

Mind you: Any interest higher than the official repo rate means you are at potential high risk. Why would a sound bank offer you more interest than they have to pay to government instituations? It could be a shady bank (Some ten Years ago I could have jumped on the offer I got somewhere and openend a Bank at one of the lesser known Carribian States with just 50000 $ Capital, and maybe 10000 $ for fees and expenses), or it could be a risky investment scheme that is used to (hopefully) genrate the income for the interest payments. Or a switch to a different (say: weaker) currency, like the Rand or some Southern American one; or just an outright attempt to screw you. Of course there is the small chance that a nice, benevolent millionaire is just giving you the money for fun .......

Sunny

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