Unless you have disappeared from making investments and listening to news in the past 10 years, you are bound to know about FATCA! The IRS is extremely cautious about offshore bank accounts. And, this has become a serious issue for many offshore investors. Today, you will find hundreds of investors looking for offshore bank No FATCA options.
It is important for you to declare your money. And, the interest earned should also be accounted. However, not all banks are obligated to issue the Form 1099. When you have an offshore bank account in a country that is not serious about FATCA, you will not receive this form. And, that is the norm! So, what is the FATCA? How does it work? Will you be affected by this new regulation? Keep reading to know more.
The FATCA is nothing but the foreign Account Tax Compliance Act. The FATCA begins from the source. And, in this case it would be the offshore banker. The financial institution is expected to report back to the United States about any offshore account created by an America. The institution is also responsible for paying back to the IRS. When a bank decides to rat from this charge, they will be forced to pay stiff fines. And, the penalties are quite severe.
Many a times, people choose to engage in tax avoidance activities. There is a very thin line between tax avoidance and evasion. Technically, tax evasion is a legal procedure. And, offshore banking was designed to support tax evasion. But, tax avoidance is not acceptable. Most offshore banking jurisdictions don’t support tax avoidance at any cost. The role of FATCA is to identify people who are engaging in tax avoidance. Many investors have offshore bank accounts, hefty interests in trusts, and signature powers. But, they show no beneficial interest returns in their bank account.
The Current Scenario
If you are a resident or a citizen of the United States of America, and if you hold an offshore bank account – your funds will no longer be a secret. There are no clear cut statements to understand how banks will handle this change. Yet, the primary purpose of IRS is quite clear. Whenever you make some money, you are expected to report it! The monetary gain should be included as a part of your US tax return. And, if you have secured an interest from the offshore account, you should select “Yes” in Schedule B. Doesn’t this sound simple and straightforward?
Countries that have not signed the FATCA
With the FATCA coming into act, many offshore destinations have chosen not to take part in the regulation. Three important offshore banking destinations with No FATCA would be Belize, Marshall Islands and Andorra. Let’s understand more about the offshore banking scene in these countries.
For many years, Belize has been known as a perfect destination for offshore banking. This country is a true expert in offshore banking. It has helped businesses around the world to transfer and manage funds. A major reason behind this would be the country’s practical jurisdiction. There is a friendly way of managing funds in Belize. But, you need to ensure that all the operations are legal. This would be the only catch in Belize.
By the end of 2000, Belize had expanded its business environment. It became even friendly to companies. It broke barriers and created many offshore opportunities. For example, you can open a corporate offshore account in Belize with the help of a registered agent. You are not expected to visit the country in person. The kind of physical presence required for running your business depends on your need! In fact, many companies in Belize are managed through telephone and mailing services.
Moving on, Belize is known for its simplified trading regulations. You are allowed to engage in any kind of trade, provided it is legal. For trading activities, you need to be aware of the regional law. For example, all the trades should be carried out within acceptable international borders.
Finally, people choose this offshore bank No FATCA location for its tax benefits. By default, local taxes are waived in the country. And, offshore business owners are not expected to pay tax for any asset transfer. This could be personal or corporate, you are not expected to make expensive tax payments. This is why many investors consider Belize as a tax haven.
If you are interested in maintaining a low financial profile, Andorra is a great choice for you. This country is famous for its quiet, and composed nature. Once again, it is not a part of the FATCA agreement. The Andorran way of life is very different from traditional offshore locations. Here, you can enjoy very low tax rates. To operate an offshore business account in Andorra, at least one of the stakeholders in your company should be an Andorran.
Opening an offshore bank No FATCA account in Andorra is a simple task. Based on latest news, you have five different banks to choose from. This includes the Andorra Banc, Credit Andorra, Banc Sabadell d’ Andorra, Mora Banc and Banca Privada d’Andorra. Credit Andorra has received awards for being one of the best offshore banks in the world.
#3 Marshall Islands
Finally, you have Marshall Islands which is not a part of FATCA. There are numerous reasons to consider this as your next destination for offshore banking. According to experts, asset management, tax optimization, estate ownership and intellectual property management is easy in this offshore location. To open an offshore bank account for your company in Marshall Islands, you need only 1390 USD. This makes Marshall Islands one of the cheapest places for opening an account too!
On the whole, FATCA is a strict move that can change the way offshore banking works. In the upcoming years, no one clearly knows how FATCA would impact offshore banking. Yet, countries like Belize, Andorra and Marshall Islands are there to keep the industry running.