Let’s set the record straight on int’l accounts and banking
The findings revealed that 76 per cent of those surveyed believe people open bank accounts in Switzerland for “underhand reasons”, and just one in 10 consider it is done for “legitimate reasons.”
The UK’s The Times newspaper recently asked individuals for their thoughts as to why Britons might hold Swiss bank accounts.
The findings revealed that 76 per cent of those surveyed believe people open bank accounts in Switzerland for “underhand reasons”, and just one in 10 consider it is done for “legitimate reasons.”
The poll was undertaken following a previous BBC Panorama programme, amongst others reports, which generated explosive hostility towards HSBC due to claims that the bank assisted wealthy clients to evade tax by using concealed Swiss accounts.
However, whilst the groundswell of fury might be justified, there are also questions to be asked about the ‘balance’ of the high profile media reports.
The vast majority did very little, if anything, to highlight the fact that offshore accounts themselves are no way illegal. In fact, there were active implications suggesting that this wasn’t the case.
There is, of course, no doubt that there are a number of illegal motives as to why individuals choose to keep money in offshore accounts — which are simply an account in a nation other than the one in which the person currently lives — but there are also several, if not more, genuine reasons for doing so.
One of the primary motivations why expatriate clients choose offshore banking is purely for convenience. Indeed, they require a bank account to manage daily expenses, and an offshore account will allow them to have easy and global access to their funds from wherever they live in the world. With a typical expatriate lifestyle being relatively transient, this clearly makes good sense.
Another paramount reason for many individuals to hold an offshore account is due to the fact they offer an extensive selection of multicurrency savings and investment tools.
Additionally, international banking offers clients a far more tailored, efficient service. For instance, one of the biggest complaints against major banks in the UK is too much automation and the use of call centres, meaning they can rarely speak to the same person twice. Whereas in offshore banking locations like Switzerland, clients are assigned a client relationship manager to handle their account.
It is also the case that people choose offshore banking if they have lost confidence in their home country’s banking sector, perhaps during a recession or by those living in a politically volatile nation
Although, one of the key benefits of international banking is the likely tax efficiencies. Offshore accounts are usually based in somewhat lower-tax jurisdictions, therefore tax liabilities can often be legally mitigated. This allows clients to increase and capitalise on their wealth more successfully.
Despite these ways I’ve mentioned in which clients can reduce their tax obligations by banking offshore, it is absolutely essential that those who are required to declare assets and pay tax must do so. A lack of awareness regarding tax laws is no feasible excuse for non-payment of taxes.
Therefore, as long as these requirements are met, having an international account is completely within the law, and in the majority of cases, makes good financial sense.
Nevertheless, there are unquestionably those who will maintain that offshore accounts are immoral. Yet tax is not a moral issue. It is a legal impost, not a question of morality. If individuals pay the correct amount of tax as stipulated by law, they have fulfilled their duty and are not expected to pay any more. The international financial services sector plays a crucial role in the global economy and plays a fundamental and pivotal part of the financial lives of an ever-increasing number of individuals and corporations. As such, the purported underhand actions of the minority must not destroy the respectable, vital and legal work being undertaken by the majority.
The writer is a CEO and founder of deVere Group, one of the world’s largest independent financial advisory organisations. Views expressed by him are his own and do not reflect the newspaper’s policy.
