skip to main content

Offshore Investments for Expats

If you live away from your home country and meet their non-residency requirements, you may be able to benefit from investing your money offshore.

Last updated 6 October 2020 at 11:26

If you live away from your home country and meet their non-residency requirements, you may be able to benefit from investing your money offshore. But what exactly are the benefits to investing offshore?

Offshore Investment Bonds

An offshore investment bond is a tax wrapper that can provide tax benefits for expats and non-residents. While they can be complex investment products and normally only available to sophisticated investors, they are regularly sold by offshore financial advisers as part of a pension wrapper such as a QROPS or a SIPP.

Offshore bonds are normally life insurance products, provided by global insurance companies and made available through financial advisers and/or wealth managers. The offshore bond is so called because it is held in an offshore jurisdiction, such as the Isle of Man, Jersey, and Gibraltar, among others and is subject to the tax rules of that specific jurisdiction, rather than the country of residence of the investor. It is possible for offshore bonds to increase capital free of tax, while the investor may only be subject to income tax when they withdraw funds from the bond itself.

Within an offshore investment bond there are be a a variety of underlying investment options, including stocks, shares, mutual funds as well as other financial products.

Offshore bonds maybe either highly personalised (where the investor can invest in almost any kind of financial product within the bond) or a collective offshore bond (where the underlying investment options are limited to financial products approved by the bond provider).

Offshore bonds have been traditionally misused by unscrupulous offshore advisers using them to hide fees and commissions to make the investments look more lucrative for expats and non-residents, but as long as the investor is provided with full details of the investment and the adviser is operating on a fee only basis, with charges clearly detailed in advance, offshore bonds can offer expats a highly beneficial, tax efficient investment option.

For more information about offshore bonds, including the benefits they offer and guidance on how to spot if you are being ripped off, please read our Offshore Investment Bonds article.

Investing offshore: Choosing a bank accounts

When you save in standard bank accounts in the UK, you are liable to pay tax on your interest payments. Offshore banks are often situated in tax havens and come in a variety of shapes and sizes and it's important to understand the full range of products and services they offer along with levels of service, terms and charges. Below is a brief overview of the different types of the two key types of offshore banks: standard and private.

Standard Offshore Banks

If you are a British Expat, any bank located outside the UK is classed as an offshore bank and will normally be located in a jurisdiction with minimal tax, or a tax haven. Find out which offshore banks are best for expats >

Private Banks

Private banks are typically the preserve of high net wealth individuals with considerable financial assets to their name. Private banks offer a range of services over and above a typical high street bank including wealth and investment management services. Whilst they also offer the same services as high street banks, they also maintain extremely high levels of client confidentiality at all times.

Investing offshore: Confidentiality

Typically when you have significant wealth, everybody wants a piece from governments in the form of tax to corporations and individuals who wish you to spend. It's possible that, as an expat, multiple governments may try to tax you. The laws on confidentiality and privacy are constantly being evolved as people seek new an innovative ways to keep their wealth secret.

Historically there was a stigma attached with offshore investments from ensuring privacy to encourage dubious investment. Today, however any illegal or fraudulent activity will be reported and investigated.

Investing offshore: Offshore Funds

In principle, there is very little difference between offshore and onshore funds where investors' money is pooled enabling investments to be diversified and well managed. The major difference is that an offshore fund is located offshore and intended for use by non-residents of that country.

As with most offshore investments, the major advantages revolve around tax reduction although the other consideration is that typically offshore funds may only be available to non-residents.

The benefits of investing offshore

Tax Efficiency

As already discussed, the primary benefit of investing and saving offshore is the tax benefit. Offshore jurisdictions are typically ultra-low or zero tax areas and the institutions that exist there are specialists in structuring your financial map to drastically reduce your total tax liability, wherever you live.

Diversification of assets and risk management

Diversification of your portfolio is critical to minimising your risk as it means you're not committing to investment opportunities in any one sector or country. Offshore instruments generally give access to all the products in the world, enabling you to make a true choice rather than simply choose from a selection that one particular government thinks is best for you.

International access and currency management

All offshore products typically have an expat or international focal point. They offer a variety of expat-focused services like multi-currency accounts and offshore mortgages. Keeping your finances administered offshore means that an international relocation needn’t mean a financial headache.

Request a Free Financial Review with a British Independent Financial Adviser

Request a Free Financial Review with a British Independent Financial Adviser >

Testimonials from people who have used our specialist IFA introduction service

I found the expert I was looking for and received excellent service.

Patrick N. United States, Investment Advice

Timely, professional and humane, from the emails to the phone call, could tell the organization runs on empathy and really has a heart to help people

Cynthia K. United Kingdom, Investments

Knowledgeable in all the areas I had questions on, spent the time to go through all my questions which gave me a lot to think about and what options I should consider. Followed up with email outlining what we had discussed. Very professional.

Belinda B. United States, Investment Advice

Experts for Expats has been featured in...

BBC Breakfast - Expats in Cyprus having issues with UK bank accounts - click to see article
The Telegraph - The surprising places British expats can earn the most - click to see article
The Observer - How to relocate overseas - click to see article
Saga - Want to retire in the EU? What could the future hold for you? - click to see article
We Checked And, Yes, Harry And Meghan Will Have To Pay Tax - We Checked And, Yes, Harry And Meghan Will Have To Pay Tax - click to see article
MailOnline - A third of British expats would like to move back to the UK and 40% admit they are homesick... but they will stay abroad for a better quality of life - click to see article

What expats say about our experts

All I can say is, so far so good, still much to do to transfer my pensions, but everything is going OK. The consultant has been very helpful and professional

David M.

Pension Transfer introduction in Thailand

Easy to use website, fast response, excellent consultation. Expecting to use consultant to assist with preparing SA100 whilst I'm abroad.

Paul S.

Statutory Residence Test introduction in United Kingdom

The service was excellent. The work I needed done was complicated and beyond me. It was completed over the weekend before Christmas, and I received the first rebate from HMRC on Jan 2nd. I cannot recommend the consultant too highly!

Peter B.

UK Tax Return introduction in Spain

Great Service! I was worried that I would be opening myself up to endless marketing emails and calls. This was not the case at all. A thoroughly professional service.

Paul E.

US/UK dual tax matters introduction in United States

There is lots of really useful information with real-life examples on the website. When you need specific advice from an expert the process is simple and very quick. My consultant dealt with my unusual situation well and it was reassuring to know that my tax return was being dealt with by an expert. Follow ups were done to ensure I was happy with the consultant. Everything was handled very professionally.

Rosie M.

UK Tax Return introduction in Botswana

I was positively surprised at how easy and honest the whole process was. There wasn't any pressure to pay for anything I didn't want to, or sign up for an ongoing relationship - just straightforward, honest advice. If only all advisory services were as smooth as this! 

Alexander C.

Irish Tax introduction in United Kingdom

I would just like to say a great big thank you for putting me in touch with Laurence, he has sorted out my issues efficiently and with better results than I had hoped for.

I am so glad to have found Experts for Expats, and shall be recommending your services.

Fiona G.

UK Tax Return, Capital Gains Tax introduction in South Africa

Quick response, and follow up from the connection that was made - which was professional and trustworthy 

Sarah B.

Uk Tax Return introduction in Netherlands