Offshore Savings Blog

Antigua: Offshore finance centre for 2010?

2012-01-12T16:10:00.000Z

As the global economy gradually continues to climb out of recession, foreign and offshore banks are proving an increasingly tempting option to prospective UK savers who are eager to get the most from their cash. Yet, an additional consequence of the economic crisis is the reformation of banking practices and management evident amongst a large number of respective countries worldwide.

Subsequently, 2010 is likely to be a year when financial centres change significantly, and others seem to emerge entirely. Antigua could certainly be seen as an example of the latter. Famed for its golden beaches, dramatic landscape and its tourism dependent economy, the West Indian island (referred as a country only when combined with Barbuda) has embarked upon an era of certified and committed financial transparency.

This change has been heralded by the decision of the Organisation for Economic Co-operation and Development (OECD) to move Antigua onto its white list, alongside other financial centres ranging from the United Kingdom and US, as well as other offshore centres including the Isle of Man and Jersey.

The OECD dates from post-war Europe, and was founded in France by Robert Marjolin in an attempt to aid the financial reconstruction of Europe. Today the OECD encompasses an international range of countries, with its own funding acquired from the combination of a portion of each respective member’s gross national product. The move for Antigua, therefore, represents the assurance from at least 12 members that it’s financial and tax – and co-operation standards – are in-line with rest of the world.

Caribbean islands including Barbados have been on the OECD white list for some time, whilst others, such as Anguilla and the Bahamas are waiting for further exchange agreements. It is now hoped that the Antigua’s new found position will see a much needed boost to the economy as the tourist industry has experienced less visitor numbers since 2008.

David Martin writes about foreign banking, from offshore savings to expat destinations.

Guide to Offshore Banking in 2010

2010-03-10T14:54:00.002Z

2010 is set to be significant year for the respective banking industries of many countries around the world. In the UK customers look set to find the best savings deals, and banks are predicted to make moves to re-establish trust with savers more eager to switch to new accounts and new providers. So how is the offshore banking sector likely to change?

For savers in the UK, the Bank of England base rate looks likely to remain at the historically low 0.5 percent for a good few months yet, with some even predicting that it’ll stick around for the entire year. Consequently, more and more savers looking to get the most from their savings may be enticed by offshore interest rates which are proving to be higher.

Yet it is not just promising rates which looks to benefit the offshore sector, 2010 is also seeing something of a new era of transparency demanded of those with offshore accounts. HM Revenue & Customs have called for offshore savers to notify them of their offshore accounts if they have not already done so in order to cut down on the number of UK residents expected to be using offshore accounts to evade tax illegally.

Those who have not notified the HMRC by 4th January now face the risk of investigation and penalties up to 100 percent – whilst those who have notified have until the 12th March to pay back any tax owed.

However, this new era of transparency is causing many offshore financial centres to make significant changes also. In order to ensure that certain countries are honest with their tax practices, in 2008 the Organisation for Economic Co-operation and Development (OECD) drew up a blacklist of potentially harmful havens. The most recent to leave the blacklist is Antigua in the Caribbean which now joins both onshore centres such as the US and UK, as well as other offshore centres.

In order to move from the OECD blacklist to the white list, financial centres need to be signed off from twelve members in order to be assured its practices are up to the standards of the organisations. Antigua’s move will be a positive sign for neighbouring centres such as Anguilla and the Bahamas to follow suit – while fewer countries hold on to the notion that policies on tax are merely a matter of sovereign entitlement.

The changing face of offshore saving in Gibraltar

2009-11-04T09:31:00.000Z

With the increasing popularity of the Isle of Man and the Channel Islands, the stereotype image of the offshore saver as wealthy retired expat has long been forgotten. That said, it is no secret that the sunny rock of Gibraltar just off the south coast of Spain is as popular with wealthy Brits as it ever has been – but its image is changing, and the island is more unique than one might expect.

Economic developments over the last year have caused much political focus on the on the operation of banks on the UK mainland and overseas. The G20 summit in April saw the decision made to enforce transparency and economic sustainability as a means to ensure that the world economy remains more stable in the future – and for the UK’s overseas territories (including Bermuda and Cayman) to comply, they had to sign 12 tax information exchange agreements (TIEAs).

Although certain territories have already met the target of 12, Gibraltar is well on its way and began signing their TIEAs on the 31st March 2009. Since then, it has signed agreements with another eight, including Ireland, New Zealand and the United Kingdom. Not bad for an island that many had thought unlikely to be able to shrug off its label as ‘tax haven’, for the more positive: Offshore Financial Centre.

However, entrepreneurs and those with a high income can still benefit from favourable taxes in Gibraltar, and its nearby location to the Costa del Sol is great for those who’d prefer to spend sterling than euros. Conditions of residency sets it apart from other territories though, if you are willing to pay more than £250,000 for property you need only spend one day on the island before you are considered one of its 30,000 residents. Though this is rumoured to change in 2010.

Additionally, despite its EU membership and ties to UK and Spain, Gibraltar’s own economy has proved considerably stronger with a reported 6.6 percent growth rate. With this in mind the island (and others) is set to be subject of an HM Treasury report into the challenges faced as it adheres to more stringent rules – and it will be interesting to see what the future holds.

Top Offshore Savings Rates - October 2009

2009-10-05T12:08:00.001+01:00

Best rate at the time of writing for sterling balances in offshore banks comes from Halifax International, paying 3% for £2,500 or more deposited, with instant access.

If you have £10,000 to salt away for five years and make no withdrawals, Clydesdale Bank International offers 5.1% a year.

Anglo Irish Bank has the best rates for euros and dollars. 5,000 euros deposited pays 2.25%, with instant access; $5,000 on 90 days' notice pays 1.6%

The rates shown (c) are gross, i.e. with no tax deducted at source, and are ranked by the amount of notice of withdrawal (A) one has to give the bank without applying an interest penalty (or for the length of term, for fixed-rate accounts), and by the minimum ammount (B) left on deposit to qualify for that level of interest. Rates collated on 2 August are are subject to change. Rates on the no-notice and notice accounts are variable; those on fixed rate accoutns apply throughout the term shown.

Source: Moneyfacts

Bank	A	B	C

Sterling No Notice Accounts
Halifax International	None	£2,500	3.00%
Anglo Irish Bank Corp (Intl)	None	£5,000	2.80%
Alliance and Leicester (Intl)	None	£15,000	2.76%
Bradford and Bingley (Intl)	None	£1,000	2.50%

Sterling Notice Accounts
Alliance and Leicester (Intl)	50 Day	£25,000	3.00%
Alliance & Leicester (Intl)	60 Day	£25,000	2.97%
Anglo Irish Bank Corp (Intl)	30 Day	£5,000	2.75%
Bradford & Bingley (Intl)	60 Day	£5,000	2.75%

Sterling Fixed Rate Accounts
Clydesdale Bank International	5 Year	£10,000	5.10%
Clydesdale Bank International	3 Year	£10,000	4.25%
Halifax International	3 Year	£1,000	4.00%
Northern Rock (Guernsey)	01.08.12	£10,000	4.00%

Euro Accounts
Anglo Irish Bank Corp (Intl)	None	€5,000	2.25%
Irish Permanent (Intl)	30 Day	€10,000	2.25%
Anglo Irish Bank Corp (Intl)	90 Day	€5,000	2.00%
Skipton (Guernsey)	None	€25,000	1.75%

US Dollar Accounts
Anglo Irish Bank Corp (Intl)	90 Day	$5,000	1.60%
Investec Bank (Channel Islands)	90 Day	$50,000	1.60%
Anglo Irish Bank Corp (Intl)	None	$5,000	1.50%
Irish Permanent (Intl)	30 Day	$10,000	1.50%

Two new guaranteed bonds have benn issued by Britannia International. A six-year offer pays a fixed return of 5% for each year when FTSE 100 index of UK shares does not fall below 75% of its start value in October.

A three-year version pays 11% if the level of the FTSE index is equal or greater than the start value over the life of the bond. Intial captial, minimum £5,000, is guaranteed to be returned at the end of the term.

Economy Set to Grow While Offshore Interest Rates Look to Stay Low

2009-09-28T14:41:00.000+01:00

As was predicted in a recent Reuters poll, after a meeting on the 6th August the European Central Bank (ECB) have announced they will be keeping interest rates on hold at 1 percent. Holding the rates for the foreseeable future is seen to be good news for the European economy in general, but is also great for those with a keen eye on offshore interest rates currently.

The ECB lowered its interest rate to 1 percent (its lowest rate in 11 years) in May this year, after moving it to 2.00 percent in January, 1.50 percent in March and 1.25 percent in April. By comparison, its highest rate of 4.25 percent came into effect way back in June, 2000.

In a press conference following the announcements, ECB president Jean Claude Trichet said: "Economic activity over the remainder of this year is likely to remain weak, although the pace of contraction is clearly slowing down. While uncertainty is still high... and we have to be prepared for ongoing volatility in incoming data, there are increasing signs the global recession is bottoming out. Looking ahead into next year, after a phase of stabilisation, a gradual recovery with positive growth rates is expected,"

The ECB's decision to hold interest rates at 1 percent will also be of interest to those with or considering offshore bank accounts. In a recent Reuters poll of economists and experts, all 75 of those asked predicted that rates would be kept at one percent, with many estimating that they will not be set to rise again until the fourth quarter of 2010.

Of course, if the predictions of those in the Reuters poll turn out to be correct, offshore accounts will begin to look very tempting again especially if UK banks begin to push up rates despite the Bank of England's seemingly comfortable 0.5 percent. However, expats may also be more inclined to consider an offshore account after Sterling's fall when the Bank of England announced quantitative easing on the 6th August, as the Euro stood firm when the ECB said it was holding its rates.

Guernsey - Offshore Banking Centre 2009

2009-09-15T16:33:00.002+01:00

Despite their reputation ten, maybe twenty years ago, stringent rules and the emergence of the Organisation for Economic Co-operation and Development means offshore banks are now considered an accessible and viable option for savers whether they are expats or not. For those looking for the best savings accounts in Europe, offshore finance has long been connected to areas such as the Isle of Man and Switzerland - but more recently, Guernsey has also established itself as a contender.

While the financial sector may not yet contribute to the Guernsey economy as much as it does in Switzerland and on the Isle of Man, banks have been beneficial to the development of the Channel Islands since the 60s. Today there are around 55 banks on the island, due as much to its desirable and convenient location, as its low taxes - a statistic that is all the more impressive when one considers its size of 25 square miles. That's an average of more than two banks per mile.

Most recently, Guernsey has been fondly portrayed as something of a retirement destination by Ann Treneman in The Times. It seems that despite there being 'no capital gains tax, no inheritance tax and no VAT,' as well as a low-level income tax of 20 percent (a level supposedly set when the Germans occupied the island from 1940 to 1945), islanders are keen to move away from the term 'tax haven' and toward the decidedly more positive: 'international finance centre'.

The reason for this identity realignment? Well, during recent years Guernsey has striven to get onto the 'white' list of the Organisation for Economic Co-Operation and Development - and now it seems they have done so. The OECD originated in the post-war years, but was officially established as it looks today in 1961. The organisation aims to bring together the governments of countries (it currently includes the UK, the United States, France, and more recent members: Poland and Slovakia) in order to ensure and maintain financial stability, to contribute to growth in world trade, and to coordinate economic development.

On the island as a whole, of course the credit crunch and following recession has had some effect on the island - with a slowdown in growth and a proportion of redundancies. But the political and financial stability of the island are testament to the benefits many find in offshore banking centres - and if one can afford to live there (house prices are comparable to London) there looks to be much going for Guernsey. And other islands like it.

Written by Paul Roberts, freelance finance writer who specalises in offshore banking

Expat Offshore Savings - Funds for Retirement

2009-09-15T16:21:00.003+01:00

As an expat (expatriate) you are in a privileged savings and investing position. Make the most of the options available to you while you can, consider investing offshore for your retirement. While you reside overseas you are legally entitled to make use of any tax savings in the country in which you reside, furthermore you are most likely in a position to save and invest offshore to fund and fuel your retirement.

Not enough expatriates make use of their offshore advantage when living and working abroad. Don’t make the same mistake! Do you already have a domestic pension plan in place from your home country that you established prior to working abroad? Have you found that this policy is not as mobile as you are? Does it make sense to continue with the savings policy?
Have you been considering switching from retirement savings plan to savings plan as you change from country to country? Did you know that by doing this the income you end up with in later life will be fragmented and may be whittled away by foreign exchange costs, charges or even a cash-strapped government?

Or are you one of the lucky few who need read no further – one of the lucky few working for an international company who offer a pension plan to expatriate employees as part of their benefits package?

If you are not one of the lucky few and you understand that the onus is on you to provide for your own retirement this article may be able to help you.

If you are looking for the most sensible offshore investment solution for your retirement savings planning you need to consider finding a safe harbour where you can anchor your retirement investments so that you can move from country to country as necessary without this having any negative impact on your assets. If you decide to do this, you need to find out exactly which safe harbour or tax haven is the best for you.

Offshore financial centres present a viable solution - especially if you are undecided as to your eventual retirement destination. Basing your pension investment offshore should mean that future movements of capital or income are not impeded. However you should remember that any retirement income you take could be liable for taxation depending on where you are living at that time.

When it comes to offshore retirement planning what do you need to be aware of?

Your own personal circumstances are unique.
Be realistic about how much you should be contributing.
Consider the charges the bonuses and the flexibility of any investment plan - generally the more flexible the plan the more charges will be.
Know that a good offshore retirement plan should allow you to do the following without penalty:

Reduce contributions without penalty (normally after an initial period of one to two years).
Switch investments between different funds to respond to changes in the market. Preferably including funds managed by other people outside of the institution zone.
Have the option of retiring when you want to without penalty.
Allow certain access to monies invested (again, after an initial period).

How to Find the RIGHT Offshore Savings Solution

Finding out what each provider's best products are currently, and then hand picking the best to suit your own personal needs and current circumstances is the best idea. But how impractical! Do you have the time to do this? Would you consider yourself an expert in offshore investments and pension planning? Where would you start? Obviously professional advice will get you the right solution and save you time and money and reduce your cost of delay significantly!

Pension Surrender
Cashing in an onshore pension is rarely the best option available to you. If you have taken out an offshore pension policy and you are unhappy with it or want to take a break from paying into it, consider all the options that are available to you before you decide on your path of action.

Generally with an offshore pension up to the first 2 years of contributions are committed to being invested until maturity – meaning that if you cash in your policy early you will potentially be wiping hundreds or thousands off your potential returns.

This is money you would be literally throwing away!

Instead of encashment could you take a payment holiday or change your investment focus? Instead of encashment you have to speak to a brokerage to find out what options are available to you and which options are best for you. You do not have to speak to the adviser or brokerage who set up the initial policy for advice - a good independent financial adviser will be happy to assist you with any previous policies.

Get Informed!
Simply put, if you haven't started your retirement planning or you want to check whether you need to do more or you want to find out what you can do with policies already in existence – from company pensions, personal pensions and offshore pensions - you need to act now!

Find the right person to advise you about exactly what is available in the market place today.
Find the right person to get the best solution in place for you sooner rather than later!

Short Guide to Offshore Banking in 2009

2009-09-14T16:23:00.005+01:00

As we continue through recessionary times, 2009 seems a very unlikely year for many of us to consider depositing our savings into an offshore bank account. However, with speculations abound that a brighter financial future may already be in sight, offshore financial centres are earning a cleaner reputation than they ever have done - and deservedly so. With the continued work of the OECD and other developments in the sector, offshore banking could be argued to be more necessary today than it ever has been.

The OECD (or to give it its full title: The Organisation for Economic Co-operation and Development) is made up of a 30 country membership including the UK, the US and more recently South Korea and Slovakia. Amongst other things, the organisation seeks to maintain financial stability, to coordinate domestic and international policies, and to contribute to growth in world trade.
In May this year, the OECD checked off the final countries on its target blacklist of so-called 'uncooperative' tax havens. This means that Andorra, Lichtenstein, Monaco, and subsequently the world (according to an article by Richard C. Morais, Forbes) is now committed to 'a new era of tax "transparency and exchange of information"'. This followed proposed 'pressure on a macro level on offshore centres and large international banks' by those meeting at April's G-20 Summit in order to cut down on tax evasion and the other negative side actions that are often connected with offshore banking.
But if all offshore banks are brought in line with the OECD, won't the whole point of saving offshore gradually become eroded? Not if one takes into account perhaps one of the most well-known tax havens. Switzerland is said to be home to around one quarter of the world's offshore money - and despite pressure from the OECD and investigation by the IRS, the positive aspects of offshore banking still shine through. And, of course, it is often about far more than tax.

According to economist.com, political stability and the efficient running of Swiss banks are one of the reasons they are so popular - a fact proven by the third of accounts held by those who live in low tax countries anyway. Following the troubles felt by UBS, it is worth noting that the majority of account holders did not leave Switzerland, they simply moved banks - and will no doubt move to another offshore centre before moving to a mainland bank. Yet, to further complicate the notion of where they may move to should Switzerland fall from its pedestal - in a recent Forbes list of surprising tax havens, London was listed and consequently described as 'a state within a state'.

France - Expat destination for 2009

2009-09-14T16:17:00.004+01:00

The phrase ‘expat destination’ tends to conjure up images of one way plane tickets to sub-equatorial paradise islands, or at the very least somewhere where the sun shines every day and an afternoon nap is obligatory. Yet, in the latest poll by halifax-international.com, the most popular destination for British expats is France (with 16 percent of Brits deciding to move there) – a destination that, without deeming it unexciting, is perhaps a little more predictable than I expected.

Yet, of course, this is precisely the reason it is so popular. Once the small matters of the language barrier and driving on the other side of the road are overcome, France is something of a home from home for the British. This is best realised when one visits Brittany, a region that is just a touch more than one hundred miles from the South Devon coast. You don’t even have to be aware of the Celtic heritage of the region to gaze with familiarity at the green rolling countryside and the market towns nestled therein.

Although, whilst there is little difference between the latitudinal positioning of France and Britain, the country’s northern regions are noticeably more temperate than Britain’s southern area – especially during the summer. The country becomes more continental as you move in land and southwards, with the south east of the country boasting a more Mediterranean climate that is rich in the production of wine, olives and lavender. By comparison, the northwest is famed for its apples and its cider!

I have already mentioned the easy proximity of France to the UK, but travel between the two countries deserves further discussion. Not only are there numerous ferry services from ports as far west as Plymouth (to Roscoff) and as far east as Dover (to Calais), since the opening of the Channel Tunnel in 1994, travelling to France by train has become ever more efficient and affordable. In 2008 more than 16 million users travelled across the channel by train.

However, accessibility and similarity to Britain are of course not the only reason expats like to move to France. The country is diverse, varied and culturally rich – and boasts many unique attractions for those with new time to explore during retirement. The southwest coast consists of glorious long golden beaches, huge expanses of pine forest, and the impressive Dune de Pila, whilst the south is famed for the Pyranees mountain range and the Mediterranean waters around Marseille. Of course, there is little room to go into more depth here – but its safe to say that France’s popularity is certainly deserved.

Paul Roberts writes about expats, finance and offshore banking.

Isle of Man Economy Set to Improve by the End of 2009

2009-09-12T16:40:00.003+01:00

As around 700 students collect their A-Level results on the Isle of Man, many will be considering their next step - either to apply for university on the mainland or to remain on the island and look for a job. Although the recession is not drawing many youngsters to the prospect of looking for work in the UK, recent developments within the unique Manx economy is causing some commentators to speak quite optimistically about the coming year.

Of course much of the Isle of Man economy is centred around its financial sector, and its offshore interest rates and savings accounts are some of the best to be found in Europe. Its establishment as a major financial centre is due to the island's government proposed incentive to bring business to the island via lower taxes, a proposition that has continued from the mid-sixties to this day.

Lower taxes did not only bring new business to the island (that lies just a short distance from both England and Ireland), many wealthier residents also began to arrive in order to benefit - leading to a great number of banks establishing themselves on the island also.

For an island that is so dependent on its banking sector, it is no surprise that along with the recession, rumours of a 'Great Depression' scenario began to circulate - which was probably not helped by the almighty collapse of the Iceland economy as well as the near failure of Switzerland's biggest bank UBS. This month, however, according to finance specialist and MD of Barclays Private Clients International, Greg Ellison, the island's economy is set to improve within the year.

According to Isle of Man Today, Barclays are the biggest employer on the island with over 800 staff. Ellison commented: "While the economic climate has made the last 12 months the most challenging in recent history, at Barclays Wealth we've weathered the storm very well."

The words will be a welcome breath of fresh air to those living on the island, as well as those considering that they could benefit from an offshore savings account with an Isle of Man bank. Students who may choose to stay on the island after their A-Level results will no doubt be a little more optimistic now too, and if Ellison is right then the stability of the Manx government during such a tough time will be something for all islanders to be proud of also.

By Paul Roberts, professional finance writer and expert in offshore banking