What is required to open an offshore account?

Offshore banking is viewed negatively by most because it is linked to money laundering, top secrecy and tax evasion. However, reality is that it is legal to set up an offshore account and anyone can do so as long as he/she meet certain requirements.

The majority of expats open offshore accounts in order to access their funds easily, receive higher returns on their funds as well as enjoy tax benefits while other individuals set up an offshore account in countries like Switzerland for privacy reasons.

Financial experts advise foreign workers residing in Dubai to set up offshore accounts outside Dubai in order facilitate them when transferring funds to their home country, where they support their families.

Those who have not set up an offshore account and wish to get informed on the subject may read further.

Offshore Bank Account

Basically, an offshore bank account is an account which the holder opens in another country than his/her country of residence. Therefore, foreigners residing and working within Dubai who open accounts outside the emirate, including their home country, is viewed as offshore accounts.

Some financial advisors advice their customers not to set up offshore accounts within their country of origin if their aim is to benefit from low taxes and receive more returns.

Are Dubai-based expats allowed to open offshore bank accounts wherever they want? Are their restrictions concerning the applicant’s nationality?

On a general note, it is up to each bank to decide what profile of customers they want to attract. However, certain nationalities do indeed have restrictions because of international requirements. Additionally, politically exposed individuals are vetted more thoroughly before being granted an offshore account.

Which countries are best suited for expats?

As aforementioned, offshore bank accounts can be set up anywhere an applicant wishes to open his/her account. Having said that, the most renowned offshore jurisdictions include the Bahamas, Switzerland and the Cayman Islands. For expats with large amounts of funds, financial advisors usually recommend setting up offshore bank accounts in the Channel Islands or the Isle of Man, which are both known for their tax-friendly environment and security.

What documentation do offshore banks ask for? Is there a standard set of documents required for expats residing in Dubai?

Every individual institute which offers offshore banking services has its own set of criteria and requirements. For this reason, it is not possible to outline the exact criteria needed for expats in Dubai to set up offshore bank accounts.

Nevertheless, each institution will need the following:

  • The Applicant’s National ID or Passport, including his/her picture and signature;
  • Proof of the applicant’s present residential address.

Are the Applicants required to submit original documentations?

Applicants can either send their original documents directly or, as most do, send copies of their documents which have been certified by their authorised advisor. These documents are submitted with their application.

In cases where the expat resides in lodgings of the company he/she is working for, or housing that is paid by the company he/she is working for-the bills which provide proof of residential address state the employer’s and not the applicant’s name. Therefore, several financial institutions require two forms of proof of address such as, a bank statement or Dewa Bill.

In both the above situations, applicants add a PO BOX and not their complete address. Thus, bank representatives or employees pay the applicant a visit to ascertain they physically reside at the given property. In other cases, institutions will accept the application or ask for an additionally letter whereby the employer confirms his employee is in fact dwelling in company lodgings.

Is the applicant required to be physically present to set up the offshore account, or can the procedure be done via the internet?

Accounts can be opened via the internet as long as the documents required are sent in order to be evaluated. Nevertheless, applicants prefer to seek advice from a professional advisor in order to assist them, or refer to an expert advisor at their current bank. The way applicants choose to open offshore accounts (online or through a professional) depends on what each applicant wishes to gain from his/her account. For instance, if an applicant merely wants to store his/her funds or whether they intend to ask for loans or trusts.

How are account holders able to deposit funds if their offshore account is not-based in Dubai? Are account holders required to personally deposit the funds if large sums are involved?

The answer to this question is based on the policies implemented by both the dispatching and receiving banks. Nowadays, people can transfer money all over the world with the push of a button. Nevertheless, banks do have internal policies on the amount they receive.

Additionally, applicants transferring funds via the internet might accidently make a mistake and for instance, transfer 20, 000 dirham instead of 2,000 dirham. Although online banking is convenient, face-to-face encounters are better especially when larger funds are involved.

What kind of benefits does a depositor enjoy from establishing his/her offshore account? Are offshore account earnings taxed?

Generally, it is advisable to consult a professional concerning taxation in regards of the applicants because different countries have different taxation frameworks. Having made that clear, all already established offshore locations are both secure and safe. Each jurisdiction practices varying confidentiality policies to protect the account holder, but tax evasion is not legal and those who break the law are sent to prison.

In occasions where the offshore bank account holder is married at the time it is set up, but later divorces, does the spouse have any hold over the funds in the account?

Generally, when a person divorces all his/her assets are required to be disclosed in order for the divorce settlement to take place. For this to happen, both parties need to disclose all their assets. Some choose not to if their spouse is not aware of for instance the offshore account. However, there have been cases where the spouse discovered the existence of the offshore account and the parties returned to the courts.

What happens to the funds, if the account holder dies?

Upon the death of an offshore account holder, the funds comprise part of their estate and as such are distributed based on their will. The process is sometimes time-consuming and complicated, so usually a financial advisor helps and guides the holder of the account and family with the procedures.