Offshore investment: What are the pros and cons?
That’s right, offshore investment is accessible to anyone, be it for a mechanic or for a conglomerate owned by shipping companies. Of course, when it comes to investing, the more you have, the better. However, the “entry barrier” is not as high as the general public might think.
Unfortunately, the media continues to thwart offshore investment, as well as everything related to offshore jurisdictions, such as offshore banking and the formation of offshore companies, telling people that it is an almost blasphemous act to invest in financial centers. Offshore
Even some lawmakers and economists are trying to suggest that world governments should ban offshore investment, including offshore jurisdictions, because offshore advantages, such as bank secrecy, are the cause of highly destructive activities for society.
They are not wrong, per se, but they do not show the situation as a whole either. We believe that it is immoral to evade taxes and launder capital; however, it is perfectly legal and sensible, from a financial point of view, to go where they treat us best.
So, Offshore Investments and Management is perfectly legal, and taking advantage of it will be advantageous for you. But how?
As an investor, you know perfectly well that to maximize your cash inflow and/or capital gain, you need to find assets with lower prices than you should have, buy them and use them to create a healthy flow of capital inflows or to maximize your profit when you sell them.
We mentioned earlier that traditional markets are highly overvalued, which means that your ROI (return on investment) is not as attractive. However, astute investors know that opportunities are found in places where they are not exposed to many people.
Perhaps due to geographic barriers or lack of information, markets in some offshore jurisdictions are extraordinarily undervalued, rewarding smart investors with a healthy ROI.
This is possible through offshore investment, using the available offshore instruments, such as offshore companies and offshore banks.
But before proceeding with the technical aspects of offshore investment, it is necessary to reflect on several aspects in order to decide if investing offshore is exactly what you want to do. Let’s start with the pros and cons of offshore investment.
Offshore Investment: Pros
1. Access to undervalued markets
Recently privatized sectors, the growing housing market, and new emerging industries are some of the reasons why offshore markets are attractive.
However, abroad, there are rules and regulations that must be followed, which basically limits your ability to invest in certain countries. Although it is possible to do it with your onshore company, it is much easier and more flexible to use offshore accounts.
2. Tax incentives
Taxes are one of the favorite topics of the offshore world. We can not deny the fact that some offshore jurisdictions, in an effort to increase the local economy, offer attractive tax incentives for those who want to invest in local assets, incentives such as exemption or reduction of taxes for non-local commercial activities.
3. Confidentiality of the investment
If you have important assets to invest in foreign markets, the best practice is to make use of the secrecy law offered by offshore jurisdictions. In this way, your investment activities will not be controlled by your competitors, imitators, and even your own government.
4. Asset protection
We can not stress enough the importance of asset protection in offshore jurisdictions. Establishing a trust to pass on your assets to the next generation, avoiding the consequences of a lawsuit, etc., is what you should consider first.
Offshore Investment: Cons
1. The laws are against you
We all know the chant; Due to the “unfair” advantages enjoyed by those who are creative when planning their finances (either legally or illegally), governments and international organizations want to recover what is lost, usually in the form of income lost in taxes about the rent. This results in the tightening of laws related to the offshore world, which makes financial and fiscal planning more difficult.
2. Considerable costs
Although offshore accounts are affordable, it is still necessary for you to spend hundreds, if not thousands of dollars in the form of configuration fees, incorporation fees and other fees. There are fees that are periodic, such as company registration fees, so make sure you have a budget not only to establish but also to keep records of your accounts.
And not only for the establishment and maintenance of your offshore account, but you also need a budget for your investment activities. While some offshore jurisdictions allow you to trade with only $ 10,000 (or even less than that), real opportunities are only available when you have a considerable amount to invest, typically $ 100,000 or more.
3. Investment security / reputation issues
Unfortunately, quality has a price; There are “cheap” offshore bank accounts, but banks are generally not financially sound, that is, there are insolvency risks. Not only that, the registration of your company in a “dark” offshore jurisdiction will not do your business image any favors.
The gateway to opportunities abroad is presented in the form of offshore structure. Since most foreign markets do not allow foreign individuals and companies to invest in local markets, the creation of an offshore structure for this purpose is the best way to go.
The next step would be to consider the pros and cons, and determine if the benefits are attractive enough to decide to go through the legal hoops.