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The advantages of offshore investment

By August 16, 2017July 25th, 2020FinGlobal

The advantages of offshore investment

August 16, 2017

advantages-of-offshore-investment

Becoming an expat brings with it many financial advantages, and one the biggest ones, is that offshore investment becomes possible with your new international status.

Of course, if you are a South African living abroad in a new country – you might think that investing in your new home is an ‘offshore’ investment. But technically an offshore investment is placing your money in another country to the one that you’re currently residing in. Investing offshore can bring you many benefits – but before you do, consider your own personal tax residency status and whether the advantages that offshore investment can bring are realistic in terms of your funds and lifestyle.

The advantages of investing offshore

Offshore investment can provide security

If you are an expat working in a country that is politically or economically unstable, it makes sense not to invest your money onshore but to look abroad and invest your money offshore in a country that is more economically and politically sound.

Offshore investment can offer tax advantages

Investors can look at structuring their investments to be more tax efficient by using an offshore jurisdiction like Gibraltar and Malta. Before you invest in a so-called ‘tax haven’ it’s important to ensure your investment is secure and the financial firm through which you are investing is regulated.

Offshore investment offers the benefit of confidentiality

Many offshore jurisdictions have strict laws governing corporate and banking confidentiality. This is particularly appealing to wealth investors or high profile investors, who are involved in transactions where confidentiality can lead to a significant financial advantage.

Offshore investment can allow for increased diversification

The investment opportunities offered by your local bank may be limited and could prevent the establishment of a truly diversified investment portfolio. Offshore accounts are often far more flexible and give investors access to investing in currencies, assets, markets and sectors regardless of where they are currently living.

Offshore investment offers asset protection

Investing offshore can protect your assets if you transfer them to a legal entity outside your country of residence through structures like foundations, trusts and corporations. This acts as a type of insurance policy and ensures your assets remain secure for future generations.

Offshore investment can be a hedge against inflation

If the economic climate in the country you are residing in is unstable, then investing offshore in a more stable economy can provide a hedge against inflation or any devaluation in your local currency. The oldest and most common countries for offshore structures include The Cayman Islands, The Seychelles, the Cook Islands and The Bahamas.

Offshore investment is also open to South African residents

You don’t need to be an expat to invest offshore. As a South African resident, you have two major investment options:

  • Rand denominated foreign funds, which allow you to invest your money in offshore markets and get paid out in rands when you disinvest
  • Foreign-currency denominated foreign funds, which allow you to transfer funds out of the country and invest offshore using your Single Discretionary allowance and your Foreign Investment Allowance.

If you are looking to invest offshore, contact FinGlobal, we offer a preferential exchange rate, free consultations and take care of all SARS and SARB requirements for safe and secure foreign currency transactions.
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