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Offshore investment platforms

Offshore investment platforms enable people to manage their investments through an online service based in an offshore jurisdiction.

Last updated 1 April 2019

Investment platforms are becoming increasingly popular for both experienced and amateur investors and while expats have traditionally had extremely limited options, trustworthy offshore investment platforms now exist specifically designed for people living abroad, or those who wish to invest in a different country.

What is an investment platform?

They first began entering the market in the late 90s, early 00s and enabled investors (and advisors) to access a wide range of different financial products and investments through a single location.

Primarily online, investment platforms can ultimately increase the investment options for investors as well as potentially reducing the costs and complexities of investing.

The investment platform itself is not a financial product but a service that enables people to invest in financial products (such as funds, structured notes or cash), that are held within investment wrappers (such as ISAs or bonds).

In their early years, investment platforms have been limited to investors by location with many firms either reluctant or simply unable to offer their platforms outside of their particular jurisdiction.

This has been particularly problematic for expats and non-residents who either began using the platforms before they moved abroad or have moved abroad and then wished to start investing.

Offshore investment platforms

Offshore investment platforms are no different to standard investment platforms, except that they are based in offshore jurisdictions, such as the Isle of Man, Gibraltar, Malta, Cayman Islands, amongst others.

This enables them to offer greater tax efficiency around their use, as well as providing access to a wider range of investment options available through the platform.

Who offers offshore investment platforms?

Offshore investment platforms are available through a plethora of financial institutions, including international banks, wealth management firms, independent financial organisations. Every platform will have its own rules, fee structure and access criteria – and some will charge/penalise investors from particular jurisdictions while others may not even allow accounts to be opened unless specific criteria are met.

Each platform will offer different investment products and options, so it is essential to do your research to find the best offshore platform for your investment plans.

While most people seeking to use an offshore investment platform to manage their own investments and assets, it is always sensible to request the advice of an independent wealth manager who can help you find the correct platform based on your location, your experience as well as the size and type of investments you are looking to make.

Specific issues expats often face with offshore investment platforms

The primary issue regarding offshore investment advice in general has been the limited regulatory security surrounding them, making it easier for investors to be ripped off through unregulated advisors using opaque charging structures. The same issue applies for offshore investment platforms.

However, this has changed in recent years and, while the risks are there, there are increasing numbers of offshore investment platforms that provide excellent opportunities for expats, however there can also be risks that some fees and charges can be hidden.

Expats and non-residents are also faced with far greater complexities surrounding tax in multiple jurisdictions. While some countries will operate tax efficient investment wrappers (for example ISAs in the UK) these wrappers are not necessarily tax efficient in other jurisdictions – and that’s if they’re even allowed.

With the introduction of The Common Reporting Standard and the requirement of financial firms to share information about non-residents financial accounts to governing bodes (such as the HMRC or the IRS), it is not possible to plead ignorance. Ultimately incorrectly managed or declared investments can lead to severe fines and penalties, and intentional tax evasion can lead to criminal proceedings.

Just these two highlighted issues can create a significant barrier for any individual wishing to use an offshore investment platform, especially if they wish to undertake their own investment strategy.

How your longer-term plans should affect your platform decision

The key element of offshore investment platforms is that they are based in tax-efficient jurisdictions. However, if you move to a country or jurisdiction that has specific rules covering the use of such platforms, you may discover that you will be penalised if you attempt to access any of the funds held within the platform.

While the future is very difficult to predict, if you are planning to relocate or you have retirement plans the involve you relocating to a different country, it is important that these plans are taken into consideration when opening or using an offshore investment platform.

For this reason, it is always recommended that before making any decisions about which platform to use, the jurisdiction of the platform or relocating, you seek advice from either a tax consultant or an independent wealth manager – both of whom should be able to provide guidance around the tax implications of using offshore investment platforms while you are resident in specific jurisdictions.

An independent wealth manager or financial advisor may also be able to offer advice on alternative investment platforms that you may wish to consider that provides the flexibility desired as well as future proofing against your plans. For example, you may wish to consider a UK investment platform if you intend to return to the UK and do not wish to have to switch platform or advisory firm.

Request a free consultation with an independent advisor

Even if you plan to manage your own investments, due to the complex nature and rules of offshore investment platforms it is always sensible to get independent advice before making any decision.

To request a free consultation with an independent advisor from our network, simply submit your details using the form. Once we have received your details, we will select the most suitable advisor and ask them to contact you to arrange your consultation.

The consultation itself lasts between 15 and 30 minutes and is designed to answer your questions about investment platforms and wealth management in general. If you decide you would then like to engage the consultant on a professional basis, they will be able to provide an explanation about what services they can offer and detail any fees or charges that may apply.

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