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What is offshore investing?

Discover why offshore investing may make sense for you...

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 – and it's totally legal.

If you're already an expat, you're likely to 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 overseas, you invest it there, be it in property, a business or in offshore investment funds.

What types of offshore investments can I invest in?

We've already mentioned a few things you might invest in overseas.  If you're looking to make your money work harder, offshore investment platforms are similar to those you might find at home, typically offering a mix of stocks, assets or offshore funds. Depending on your personal circumstances, these may be more tax or exchange-rate efficient than investing in your own country.

What's the difference between an offshore investment and traditional investment?

Much like traditional investment, investing offshore depends on your appetite for risk. Offshore investment may also offer advantages on top of traditional investing. As well as potential tax advantages, you may also benefit from asset protection and more privacy.

All this can create opportunities to generate 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. It's worth remembering that you may get back less than you put in, and you may wish to seek financial advice before investing offshore.

Typical benefits of offshore investment funds include:

  • tax-efficient investments in various currencies, depending on your circumstances

  • the ability to hold money, make and receive payments in multiple currencies

  • foreign exchange management

  • access to international expertise and investment advice

  • money management in a secure and central location, connected to your local accounts

Why invest offshore?

If you're already living or working abroad, you're planning a move or get paid in a foreign currency, investing offshore could make sense. It could help you avoid big dips in the local currency – particularly if you're investing with a view to buy another asset – such as a house, or a business in the country or region where your cash is invested.

If you already own assets abroad, or you support family members living away from home – school fees, for example – keeping your investments local to them can make managing your financial commitment overseas easier. Alternatively, if the country where you're based has poor financial regulation, you may wish to invest somewhere with better regulation.

With many offshore funds offering tax benefits, you can 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.

Explore more about the benefits of investing with HSBC Expat

What else do you need to consider

Tax

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 / region where you're based. It's your responsibility to disclose any income to any relevant tax authority.

Costs

Some offshore investment accounts may charge a fixed fee, or a percentage of the amount you are looking to invest. Other fees and charges may apply so you should always read the terms and conditions thoroughly before investing.

Eligibility

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 first need to open an HSBC Expat Bank Account, and be looking to invest a minimum of GBP/USD/EUR 100 per month or GBP/USD/EUR 1000 lump sum without advice, or GBP 250/USD 350/EUR 300 per month or GBP 25,000/USD 35,000/EUR 25,000 with advice.

You must also be 18 or over, and reside, or be situated in an eligible country or region.

Security

Offshore investment funds aren't protected by the Financial Services Compensation Scheme (FSCS), which protects savings held with authorised UK banks and building societies, up to £85,000 per person.

However, some offshore accounts are covered by other schemes. For example, the HSBC Expat Bank Account is covered by the Jersey Bank Depositor Compensation Scheme, which offers protection for eligible deposits of up to £50,000.

Offshore Investment FAQs

Is offshore investment legal?

An offshore investment is simply one which is based in a country / 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 money can you invest offshore?

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 minimum eligibility requirements depending on the fund you wish to invest in.

How are offshore investments taxed?

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 savings to investors.

Where are HSBC Expat offshore investments funds based?

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 are an offshore bank, they are still classed as offshore investments.

Ready to start investing?

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

Disclaimer

Please remember that the value of investments, and any income received from them, can fall as well as rise, is not guaranteed and you may not get back the amount you invested. This could also happen as a result of changes in currency exchange rates, particularly where overseas securities are held or where investments are converted from one currency to another. We always recommend that any Investments held should be viewed as a medium to long-term investment, at least five years.

The HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, Jersey Branch and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article. 

This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article does not constitute an invitation, or a solicitation, to make an investment in any way to any person to whom it is unlawful. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for such use or reliance by you. 

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. Any opinions expressed are given in good faith but no liability is accepted for any direct or consequential loss arising from the use of this information. The opinion quoted is for information only and does not constitute investment advice or a recommendation to any reader to buy or sell investments.

Any market information shown refers to the past and should not be seen as an indication of future market performance. 

You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this article.

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