Why do people expatriate?

For various reasons. Some people expatriate purely for financial reasons, or because of displeasure with government policies, while others are obliged to leave their country of residence by the nature of their job, or the service that they provide. The duration of the overseas stay, the destination(s) and surrounding circumstances can differ greatly, but the uniting factor is that in the majority of cases being an expat can be financially advantageous as well as culturally enriching.

What are the banking/investment options open to me as an expatriate?

As an expatriate, you really have your pick of the investment arena.

A lot depends on the tax regime in your home country, but assuming that you are going to be non-resident for the duration of your absence, then nationals of most countries are in an ideal position, as expatriates, to take advantage of offshore financial services in a tax-efficient way.

In addition, many high tax countries offer attractive investment opportunities and tax breaks for non-resident individuals and entities.

There are many different structures and services of especial interest to expatriates, so the determining factors need only be the size of your pocket and your inclinations!

What should I do about banking while I am overseas?

Whatever your financial circumstances, as an expat you would be advised to examine the possibility of opening an offshore bank account, in order to take advantage of the tax efficiency and relatively enhanced confidentiality that this provides. No tax is payable on interest arising from money held in an offshore bank account (unless the EU Savings Tax Directive applies), so even if you are just looking for somewhere to receive funds remitted from home, or have your salary paid into, this has to be a plus.

There are various types of account available to suit your means and needs. These include instant access accounts with credit/debit card facilities, fixed term deposit accounts with tiered rates of interest, and fixed and variable rate accounts.

In most cases it would also be useful to set up a bank account in your destination country (where you will be living or working most of the time), from the point of view of conducting day-to-day transactions more easily. You could arrange with your employer to have part of your salary or expenses paid into your offshore account, and part into the local account.

Offshore accounts can usually be in a range of hard currencies, but the local account may have to be in the local currency: having two accounts means that if the value of the local currency fluctuates greatly, or if you are taxed locally on money received, then you are protected to a certain extent.

Would offshore fund investment be suitable for me as an expatriate?

It would be ideal! Fund investment means that you can choose to invest in a particular class of assets without having to examine the characteristics of each asset individually, and if you choose to invest in an offshore mutual fund, the responsibility for the management, maintenance and administration is taken by the promoter, manager and custodian of the fund.

There are various options, ranging from the ultra safe to the very aggressive, but the two main categories that offshore funds can be divided into are private funds (longer term investment, usually requiring more capital, but hopefully generating greater returns) and public funds (usually open-ended, so more flexible, and requiring less capital). Always depending on your original home tax regime, many expatriates will be able to receive dividends and capital returns from an offshore fund without paying tax while they remain non-resident.

I'm not interested in investing, I just want somewhere to keep my money safe. What type of structure would suit me?

If you have substantial liquid net worth that you would like to protect during your expatriation, and afterwards, then an offshore trust may be the way to go, along with offshore bank accounts. This type of structure is more used for asset protection purposes than for tax efficiency during your lifetime, as many high tax countries (for example the US) now have legislation designed to make offshore trusts at best tax neutral. However, the asset protection advantages, and the enhanced privacy afforded by an offshore trust are useful features. Trusts are still effective as a defence against inheritance tax.

An offshore trust basically works by transferring control of your assets away from you (the settlor) to a custodian or trustee, who will manage the trust in the best interests of the beneficiary/ies (This can also be you, or any other person, group of people, or entity that you specify). It is normal for trustees to operate the trust in accordance with the wishes of the settlor.

There are different types of trusts for different purposes, and you need professional assistance in selecting the right type in the right jurisdiction. If your home tax regime does not yet have anti-avoidance legislation, and you hope to gain tax benefits from setting up a trust, then you will probably use a discretionary trust, in which the trustees have full control over the disposition of the trust income and assets. You can still be named as a beneficiary, however, and the trustees will still follow your wishes.

What is an offshore company, and do I need one?

If you are going to work in a country which wants to tax your world-wide income, or if you are going to return to your home country to a world-wide taxation regime (quite likely) then an offshore company may be worth considering.

This is another complex area in which professional help is needed, but the interpolation of a company can sometimes distance you from your income sufficiently to reduce or avoid taxation. In some countries there are plenty of rules to prevent this; but not in all, by any means.

An offshore company can take many different forms, some of which are not of interest to the individual expatriate investor. However, if you have a large and diverse investment portfolio, or provide a professional service (for example consultancy in the engineering or finance industry), then this type of structure may be of interest to you.

If you are engaged in providing a personal or professional service, you may be able to achieve considerable tax savings by setting up a 'personal service company'. You can contract to supply the service regardless of residence, and the fees earned can accumulate offshore while you work for a low salary in the country where you are taxed. It only works in some countries, and you may have to do something more complicated than just owning the company yourself, if it is not to be 'looked through' by the taxman.

There are, of course, many other types of offshore company that can be formed to deal with the needs of large corporations, or expats with very specific needs, i.e. globetrotting entertainers or sportsmen.

I move around fairly regularly - Can I use the Internet to manage my portfolio/conduct banking business?

Of course you can! Increasing globalisation and advances in encryption techniques have meant that many offshore banks offer online banking services, which are ideally suited to expatriates. There are also an increasing number of exchanges and online brokers that allow you to manage your portfolio wherever you are in the world.

I work abroad and move around a lot, but would like to choose an offshore base for investment with a view to possibly working and retiring there at some point in the future. How do I decide on a jurisdiction?

Choosing a jurisdiction that you would be happy to invest, bank, reside and work in, and possibly retire to means taking into account a lot of factors, and you will need to do your homework. However, the following information may help you to decide which jurisdictions interest you initially. First of all, the following questions must be asked of any potential investment or banking base:

1) Is the jurisdiction politically and economically stable?
2) Is the tax regime benign for investments?
3) Are there any changes in prospect which may impact on your investment/savings either now, or in the future?
4) Are the professional support services up to a good standard?
5) Is there a good communications network in place?
6) Is the geographical location convenient for you during your expatriation, and will it still be so when you return home, or move on to a different country? If you are expatriated to Australia, for example, you will have no problems dealing with an organisation based in Hong Kong, but tremendous problems accessing an offshore structure in the Isle of Man during business hours.

The increasing use of the internet means that this is less of a problem than it perhaps would have been a few years ago, but unless you particularly want to conduct your business dealings in pyjamas, you would be wise to take this into account!

So - you have found a jurisdiction that fulfils all of the above criteria. That's the decision made, then, isn't it? Not quite. Although a particular jurisdiction may be ideal for the type of investment or banking that you have chosen, if you are planning to work there in the future, or spend your twilight years there, you will need to consider many other factors, for example the tax liabilities of resident foreign nationals there, how easy it is to obtain a work or residence permit, the standard of infrastructure and services, and the general lifestyle.

Below are summaries of much of this information for some of the main offshore jurisdictions, in order to make your life just that little bit easier…

Bahamas .	Bermuda .	Cayman Islands	Cyprus .	Dubai .
Gibraltar .	Guernsey .	Hong Kong .	Ireland .	The Isle Of Man
Jersey .	Liechtenstein .	Luxembourg .	Malta .	Mauritius .
Monaco .	Netherlands Antilles	Panama .	Seychelles .	Switzerland .