According to wealth solutions and asset protection expert Puai Wichman, offshore investing has become an increasingly popular way for investors to capitalize on opportunities offered outside their home country. By taking advantage of reputable offshore companies, many investors are able to gain access to emerging opportunities, foreign currencies and strategic investments. Depending on individual circumstances, offshore investing can have significant advantages, such as tax benefits, asset protection, and privacy. However, it is important to consider the potential downsides of offshore investing as well, including increasing scrutiny from global regulators and the relatively high costs associated with offshore accounts. By carefully weighing the pros and cons, individuals can make informed decisions about whether or not offshore investing is right for them.
The Benefits of Offshore Investing
Asset Protection
So called “offshore financial centers” have become a popular choice for individuals looking to restructure ownership of their assets. Puai Wichman explains that the use of trusts, foundations, or existing corporations enables these individuals to transfer their wealth outside of their home country. The main reason behind this choice is to gain access to jurisdictions with laws that protect an individual from frivolous and commission based lawsuits, . Through ownership transfers, individuals can prevent their assets from being seized and their financial positions from being weakened.
Confidentiality
Many offshore jurisdictions offer the benefit of privacy to foreign investors. These laws have been put in place to establish strict corporate and banking confidentiality. If this confidentiality is breached, there are serious consequences for the parties involved. Divulging customer identities is a breach of banking confidentiality while disclosing shareholders is a breach of corporate confidentiality in some jurisdictions.
The Drawbacks of Offshore Investing
Increasing Regulatory Scrutiny
In recent years, the U.S. government has placed increasing regulatory scrutiny on offshore investing in order to close tax loopholes and reduce lost tax revenue. Puai Wichman says one such example is the U.S. Foreign Account Tax Compliance Act (FATCA), which requires U.S. citizens both at home and overseas to report any foreign account holdings annually. It’s important to note that U.S. citizens and residents are subject to taxation on their worldwide income. It means that investors who attempt to evade U.S. federal income tax by utilizing offshore entities can be prosecuted for tax evasion. While investing through offshore companies may offer lower corporate expenses and better gains, the IRS remains firm in its stance that taxpayers should not be allowed to shift their tax liability to a foreign entity or evade taxes altogether.
Cost
Offshore accounts serve as an attractive investment option for individuals seeking to diversify their wealth; however, they come at a cost. Depending on the individual’s investment goals and the jurisdiction they choose, setting up an offshore corporation may require considerable legal fees and corporate or account registration fees. Additionally, some countries may require investors to own a property in the country where they have an offshore account or operate a holding company. Moreover, minimum investments of between $100,000 and $1 million are often necessary for these accounts, making them only accessible to the wealthy.
Companies that facilitate these offshore investments know that their offerings are high in demand and, as such, charge accordingly.
Puai Wichman is a highly-respected leader in the financial services industry, bringing his passion and asset protection expertise to the forefront as the CEO and Founder of Ora Partners – an international trustee provider. This wealth solutions firm provides a safe haven for individuals and comprehensive services to help clients plan for a more secure financial future. With exceptional strategic insight and more than 30 years of experience in the asset protection business, Puai helps families future proof their hard-earned wealth. Puai’s dedication and commitment to excellence make him a true trailblazer in the offshore financial services sector.
