Investing in foreign countries is gaining in popularity. In its true sense, offshore investing is investing outside the home country of the investor. This is mainly done by investors for gaining higher returns on investment or for tax planning.
There are many offshore companies that offer equity assets and bonds which are financially sound. The investment policies offered by these companies are generally time tested and they are legal. Many investors have a strategy of investing twenty five to thirty percent of their income in other countries. This is basically done to avoid taxes and to get high returns on their investment.
The main advantage of this is tax reduction. Many small countries which have very limited resources allow individuals or corporations to set up a company. Normally, these companies will not have any operational facilities in the country where it is hosted. This way the individual or the corporation has to pay little tax or no tax for the investment made in a foreign land. As this is more profitable from an investor’s point of view, most of them prefer to invest in foreign countries.
The next advantage in offshore investing is that it is one of the best ways to diversify an investment portfolio. There are good chances to get bigger returns from these types of investment as investors get a chance to access potentially profitable markets. The most popular methods followed by investors in making investments in foreign countries are through incorporating a company.
Investment in foreign countries offers investors complete security for their assets. However, it is necessary to choose a profitable country to make an investment in. This will help in protecting the investment as well as the assets. By investing in a legal entity, the investor surely benefits from the intrinsic protection of both international and domestic laws. Apart from setting up a company in a foreign country for tax benefits and higher returns on investment, one more option available is establishing a foundation or a fund. Offshore investing can be done through establishing a trust in the investors name or in any other name.
The investment on the offshore banking activity will provide services to all international customers of the institution with low tax rates. The law does permit financial holding companies to open up offices in foreign lands. They are eligible to do business that manages an international investment portfolio and provides job opportunities to the local population and creates economic growth.
Low tax rates prevailing in small countries is an important factor that helps financial institutions to make profits on foreign investment. However, effort has to be taken in identifying the right place for foreign investment where the returns on investment are high and at the same time the investments are secured.