What is an offshore equity?

An offshore equity is one that is listed on a stock exchange in an offshore (= low-tax) jurisdiction. Usually there are no withholding taxes on dividends paid out, and very low local taxation of corporate profits. An offshore equity brokerage is simply one that is based offshore, and allows you to buy regular 'onshore' equities from an offshore base. This won't directly help you to escape withholding taxes, but it may help with national stamp duties and capital gains tax, as well as preserving confidentiality.

What is a 'recognised' exchange?

If a stock exchange has a regulatory and supervisory regime which is up to the standards of established stock exchanges in high-tax (OECD) countries, then it may be 'recognised' by the authorities in some or all OECD countries. This means that securities listed on it can be offered for sale in the high-tax countries concerned, and in particular can be bought by mutual funds within high-tax country regimes.

How do offshore equity brokers' rates compare with other discount brokers?

Rates are usually competitive against both broker-assisted and Internet brokers, and extremely attractive compared to traditional full service brokers.

How do I deposit securities into an offshore brokerage account?

The procedure is usually as follows: endorse your securities certificate exactly as it appears on the face of the certificate. Write the number of your offshore brokerage account account number on the upper left face of the certificate. On the back of the certificate between "appoint and attorney" write the name of your offshore brokerage's settlement agent (obtainable from the brokerage) which ensures that the certificate can be negotiated only by the agent. Then send the certificate to your brokerage by a secure route, along with your written instructions.

What type of accounts can I open with an offshore equity brokerage?

Individual and Joint Accounts (cash or margin)
Corporate and Partnership accounts.
Estate and Trust accounts.
Investment Club accounts.

An individual account is appropriate for investors who will be the sole owner and authorized manager of their investments.

If your account will be owned by two or more persons, you may want to open a joint account. A joint account will enable each owner to trade in the account and to receive income, proceeds, or securities from the account.

To open a Corporate or Partnership account you must complete a paper application and provide a corporate or partnership resolution.

Trust or Estate accounts require legal documentation in addition to account applications before they can be established.

To establish an investment club account, for a group of individuals trading under one entity name, you must fill out a paper application and provide an investment club agreement.

Can I use the Internet to buy offshore equities?

The Internet is becoming an excellent tool for international and offshore investors. If the online investment site is properly structured (with adequate encryption technology and digital certificates, which are common features), it should be both safe and efficient. More and more brokerage firms and exchanges are moving to Internet-based clearing services and online financial services. The Internet allows you to manage your offshore portfolio with the click of a button, from the comfort of your home.

This has substantially reduced physical barriers to international investing and allows investors to stay informed and make profitable investment decisions. Offshore investors can also use the Internet to develop their knowledge and understanding of foreign jurisdictions, investment products, and the investing process.