If you mention offshore investments to many people, you’ll see their eyebrows raise or their head start to subtly move back-and-forth in a “no” movement. People have many unfounded fears and doubts about investing overseas. Some of them can’t even explain what their fears are. To most people however, you say “offshore investments” and they hear “tax evasion,” no matter how many times they are told differently. Even the words “offshore investment” seem to have a stigma to some people, who feel safer keeping their investments in their own country in mutual funds or other fairly conservative choices.
According to Richard Cayne, people mistakenly think that “offshore” means they are placing their money overseas in order to not report it to their government, thus illegally avoiding taxes. This isn’t necessarily true, he said, though that’s not to say it’s never been done.
“Why is this the common misconception?” you might ask. That’s a good question. The likely answer is that it’s a rarely mentioned topic, since high net worth individuals are often tight-lipped about their investments. It’s also because, the few times that offshore investing does comes up in the news, it’s usually because someone has abused the system and used it to do something illegal.
What we don’t hear the media tell us about offshore investing is the story of all the people legally using international investments to accrue more profit faster than they would using onshore investments. To hear many success stories about legal offshore investments, just ask Richard Cayne or any of the experts at Meyer International.
The truth of the matter is that “offshore investment” refers to any investment made in a country other than your own. Most people purposely choose to invest in low-tax jurisdictions such as the Cayman Islands, Switzerland, Hong Kong or Singapore to save tax dollars but that does not make it illegal or immoral. It also doesn’t mean that they will never pay tax on that money.
The laws vary depending on where you live. For example, Meyer International often works with clients Japan, Canada and the Netherlands. For these clients, we advise that when they are living in their home countries, they need to report their worldwide investments each
year. However, they don’t need to pay capital gains taxes on money for the years that those investments are offshore.
When they bring the funds back home is when they will need to pay capital gains tax on it. This is because the countries mentioned construe tax on a global basis. In Thailand, however, as long as money is made by interest dividend or capital gains abroad and doesn’t come into Thailand the same year the gain is made, it is not taxable as far as the Thai tax law is concerned.
Instead, it means that they will pay little or no taxes during the years when the money sits, accruing gains in those foreign jurisdictions. In most cases, when the investor is ready to use the money and needs to bring it back to his or her home country, they will need to pay taxes on it.
The more you learn about offshore investing, the more it may start to sound like a viable solution for you.
Do you have more questions about beginning your journey into offshore investing? Get in touch with Richard Cayne and his team of experts at Meyer International to find out how you can start investing offshore today!
