You might think that offshore investing is something only really wealthy people do. It's often misconstrued as something you might do if you're trying to hide your wealth from the tax office.
That's far from the truth. Offshore investment simply means taking advantage of investment opportunities outside the country or region in which you live.
If you have a pension, you're likely to have offshore investments already. It's a lot more common than you might think.
If you're an expat, you may have an offshore bank account, whether that's in your home country or elsewhere in the world you may have lived. Offshore investing takes this one step further.
Rather than just holding your money in an offshore account, you invest it in property, a business or offshore investment funds.
If you're looking to make your money work harder, offshore investment platforms may be similar to those you find at home - typically offering a mix of stocks, assets or offshore funds.
These may be more tax-efficient or offer better exchange rates compared to investing in your own country.
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Much like traditional investment, where your investments are done in your home or host country, investing offshore depends on your appetite for risk.
Offshore investment may offer advantages on top of traditional investing, such as potential tax advantages, asset protection, and more privacy.
All this could create higher returns. But it could also expose you to higher risks - with increasing regulatory scrutiny on a global scale and higher costs associated with offshore accounts.
Typical features of offshore investment funds include:
Remember, there are no guarantees with investing, and you may get back less than you put in. Before investing offshore, you may want to seek independent financial advice.
Investing offshore could make sense if:
It could help you avoid big dips in the local currency – particularly if you're looking to buy another asset, such as a house or business, in the country or region you're investing in.
If you already own assets outside your home country or you support family members living away from home (for example, with school fees), keeping your investments local to them can make it easier to manage your financial commitments.
On the other hand, if the country where you're based has poor financial regulation, you might wish to invest somewhere with better regulation.
With many offshore funds offering tax benefits, you could improve rates of return simply by re-investing growth.
It's your responsibility to disclose your income to any relevant tax authorities and declare any interest earned on offshore accounts and investments. However, if the investment company has a favourable tax status, your investments may benefit indirectly if the company passes on some of its savings.
Offshore investment can provide a tax-efficient way to invest. But you'll still need to pay any applicable taxes on any growth in the country or region where you're based. It's your responsibility to disclose any income to any relevant tax authority.
Some offshore investment accounts may charge a fixed fee or a percentage of the amount you're looking to invest. Other fees and charges may apply, so you should always read the terms and conditions before investing.
The amount you'll need to deposit, or earn, to open an offshore investment account will vary.
To start investing with HSBC Expat, you'll need to have an HSBC Expat Bank Account.
You'll also need to be looking to invest a minimum of:
You must also be 18 or over, and reside, or be situated in an eligible country or region.
HSBC Expat bank accounts are covered by the Jersey Bank Depositor Compensation Scheme, which offers protection for eligible deposits of up to £50,000. Full details of the scheme and banking groups covered are available on the states of Jersey website.
HSBC Bank plc, Jersey Branch is regulated by the Jersey Financial Services Commission for Banking, General Insurance Mediation, Fund Services, and Investment Business.
An offshore investment is simply one that is based in a country or region where you aren't a resident. It's perfectly legal to invest money in offshore funds provided any income or gains are appropriately reported and taxed in your country or region of residence.
How much you can invest offshore depends on the country or region where you want to invest, and the fund you wish to invest in.
There may be eligibility requirements you'll need to meet, depending on the fund you wish to invest in.
Offshore investments are taxed in the same way as other income tax - on your dividends from foreign shares, and capital gains on any growth. However, there may be rules in place where you're based to avoid 'double taxation'. Always check the rules in the country or region where you live. Tax benefits are based on the status of the investment company, who may then choose to pass on any potential savings to investors.
The funds we offer are based in Luxembourg - which offers a favourable tax status that we pass on to you. They aren't based offshore in the traditional sense, but as HSBC Expat is an offshore bank, they're still classed as offshore investments.
There's never a better time to start investing than now. Find out if you can benefit from offshore investing by speaking to one of our wealth advisers today.
Find out more about our investment options and the benefits of joining HSBC Expat.
Already banking with us? Explore the different ways to invest.
HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information.
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