Small countries and islands are often tax havens because their favorable tax laws attract international investment and boost small economies.
Foreign investors who want to avoid high tax set up a corporation in their chosen tax haven that protects their investments from a higher tax burden than that in the investor's home country.
The corporation only exists as a tax shield, and because the company doesn't engage in business in that country, very little tax is imposed.
Popular tax havens for the UK are the Caribbean islands, Ireland and the Isle of Man.
Although tax agencies are more aware of tax avoidance strategies these days, and while these are technically legal, the agencies are on the lookout for loopholes.
The IRS in USA estimated that the US lost 40 billion dollars in tax in 2008 as a result of offshore accounts.
Offshoring can also be valuable for those who have incurred debts and lawsuits and are worried about assets being seized.
Individuals can transfer their personal assets to a legal entity outside their country of residence, which will protect the assets.
Offshore investments boost investment diversity which is recommended for investment portfolios and they allow individuals to get a hand in emerging markets where there is a high growth rate and an increase in privatisation, for example as is the case with China.
Confidentiality is also a big factor for offshore investments.
Confidential offshore investments are not necessarily beneficial for people with shady dealings, but instead for business magnates who want to keep their investments quiet for strategic reasons.
Offshore countries will only break the non-disclosure agreement if there is suspicion of criminal activity.
Offshore accounts are, however, not for everyone, they are expensive to set up and often the tax havens only accept millionaire investors.
Countries that are popular for offshore investment are usually fairly secure; however, you still need to research the country before you throw away your money on unsafe investments.
It's highly recommended that you consult a financial advisor, because they are in a better position to tell you what offshore investments are viable and safe and can advise you on the best approach to your offshore investments.
As a result of globalisation even large companies are spreading their financial resources across several countries.
Generally speaking, offshoring is a good idea if you have large assets and capital but every individual's experience is unique, and as with any successful investment, a lot of preplanning is involved.
Foreign investors who want to avoid high tax set up a corporation in their chosen tax haven that protects their investments from a higher tax burden than that in the investor's home country.
The corporation only exists as a tax shield, and because the company doesn't engage in business in that country, very little tax is imposed.
Popular tax havens for the UK are the Caribbean islands, Ireland and the Isle of Man.
Although tax agencies are more aware of tax avoidance strategies these days, and while these are technically legal, the agencies are on the lookout for loopholes.
The IRS in USA estimated that the US lost 40 billion dollars in tax in 2008 as a result of offshore accounts.
Offshoring can also be valuable for those who have incurred debts and lawsuits and are worried about assets being seized.
Individuals can transfer their personal assets to a legal entity outside their country of residence, which will protect the assets.
Offshore investments boost investment diversity which is recommended for investment portfolios and they allow individuals to get a hand in emerging markets where there is a high growth rate and an increase in privatisation, for example as is the case with China.
Confidentiality is also a big factor for offshore investments.
Confidential offshore investments are not necessarily beneficial for people with shady dealings, but instead for business magnates who want to keep their investments quiet for strategic reasons.
Offshore countries will only break the non-disclosure agreement if there is suspicion of criminal activity.
Offshore accounts are, however, not for everyone, they are expensive to set up and often the tax havens only accept millionaire investors.
Countries that are popular for offshore investment are usually fairly secure; however, you still need to research the country before you throw away your money on unsafe investments.
It's highly recommended that you consult a financial advisor, because they are in a better position to tell you what offshore investments are viable and safe and can advise you on the best approach to your offshore investments.
As a result of globalisation even large companies are spreading their financial resources across several countries.
Generally speaking, offshoring is a good idea if you have large assets and capital but every individual's experience is unique, and as with any successful investment, a lot of preplanning is involved.