In a global economy it is no surprise that individuals and companies look to international markets to find the most beneficial environment for their money. Tax havens exist for this very reason, providing a legitimate and secure means for people to improve their tax position and maximize the return from their investments. Many billions of pounds are now invested offshore, with the owners of these funds reaping the very substantial financial benefits this arrangement can offer.
Once thought of as a rather clandestine club reserved for the super rich, offshore tax havens have now come into their own as a vital part of the world economy. They benefit both the people who invest in them and the countries in which the offshore funds invest their money. These days the offshore financial centers are among the most tightly regulated in the world and, because they are generally not as heavily leveraged as High Street banks, their banks can offer a level of security unmatched by many of the mainland investment institutions.
Moving money offshore:
For individuals there are many positive reasons for moving their investments offshore. Chief among these are the expatriate tax benefits. Tax havens invariably have very low or even zero taxation rates, a major advantage for the expats who have taken up residence there. However it is not necessary to live in a tax haven to benefit from banking there.
The flexibility and financial freedom afforded by an offshore fund means expats can choose to live in a country with favorable tax rates and receive income in their local currency. If the fund is chosen carefully any income should be untaxed at source. In the best funds investments such as Qrops pensions can also grow without incurring capital gains tax or withholding tax.
Privacy is another major attraction for investors in tax havens. Most have rigorous privacy legislation in place which ensures no third party can gain access to information about accounts held there, leaving the investment free of the many regulations tied up with mainland banking.
Offshore investment is also very flexible thanks to the access it provides to international markets, an essential consideration for investors who want to react quickly to capitalize on changing economic trends. And security is outstanding – most tax havens have a long history of stability gained by safely looking after large portions of the world’s wealth.
Positive effects on business:
Businesses also benefit from the offshore investment industry, especially those based in corporate tax havens that are able to operate while paying little or no tax. Although critics say this undermines the world’s economy, several studies have said it actually has the opposite effect by boosting growth and expansion in neighboring countries.
This is especially true for the UK, one of the major recipients of the billions of pounds that flow out from tax havens in the form of investment capital. In today’s banking world tax havens have shaken off their shady reputation and become respected contributors to the international economy.
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