Participating in an offshore investment can prove to be highly profitable. An offshore investment is any strategy that helps make and save money by utilizing any form of foreign based investment programs. Offshore investing has taken on a negative stigma in recent years, in reality, it is a very legal approach to tax reduction, asset protection and portfolio diversification.
Because of increasing scrutiny from the IRS, it is imperative to seek the offshore services of law firms or tax attorneys that specialize in this area. The IRS changed the landscape of offshore investing in 2004 by amending the tax code to encompass foreign sources of income earned by U.S. citizens and companies. This could pose a threat to any offshore company that was set up for the sole purpose of avoiding higher taxes.
Privatization of industries in emerging markets like China, Brazil and India are creating tremendous offshore investment opportunities for global investors. Nevertheless, in order to take advantage of these potential offshore investment situations, you must have access to reliable and secure offshore banking. The nature of offshore investing requires a high level of due diligence when selecting an offshore bank.
Depending on where you decide to arrange your offshore affairs, the host country is generally not obligated to recognize the laws of any foreign nation. A country will normally only have jurisdiction over only those assets that are held within it’s borders. This should be taken into consideration when diversifying and allocating your assets.
The ability to take advantage of an offshore investment can be highly rewarding, however, setting up any type of offshore entity can become costly. Offshore services may require a certain amount of individual net worth or funding in order to establish your offshore presence. There are typically fees associated with offshore company formation, banking and regulatory compliance. It is recommended that you have your offshore arrangements reviewed by professionals experienced in these matters.