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What Is An Offshore Banking Unit?

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When a person says that they have an offshore banking account or are doing their banking in an offshore jurisdiction they are merely referring to the financial dealings that they have with an offshore banking unit.

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As the name suggests an offshore banking unit is off the shore or not in the native country of your residence. In other words it is simply a branch of a foreign bank that is located in another country. Such places are often also referred to as an offshore financial center. For example it could be an American bank that has a branch in Cayman Islands or a British Bank with a branch in Switzerland.

How does an offshore banking unit operate?
First off all lets get it out of the way that an offshore banking unit is a completely legally run financial operation and no matter what the people say in the after math of the Panama Papers leak, majority of offshore banking operations and accounts are legitimate, run by successful people who wanted to choose the most secure option for their income.

Offshore banking units can be found all over the world, from South America to the Caribbean to Asia and Europe. These banking units in most of the cases will not accept deposits from residents of the country in which they are actually located, instead choosing solely to restrict their area of operation for foreigners.

For example, an offshore banking unit operating in Belize may only accept deposits from foreign bank accounts and give out loans to only foreign individuals and entities. Their entire purpose is to enable residents of other countries to safeguard their money in a location that offers better perks and opportunities than their native country.

Advantages of an offshore banking unit
If there were no obvious advantage of dealing with an offshore banking unit then all the rich and the famous would not be running to do so. Since these units are run in location that is foreign to their original country, they are not subjected to many of the regulations that are otherwise prevalent in the country in which they are located.

How does this help? Consider this for instance. Many people who have offshore banking accounts do so as they are able to earn a better rate of interest from an offshore banking unit. Similarly they are able to get a lower rate of taxation and in some cases completely avoid being taxed in certain instances. Can you begin to imagine how much your money would earn for itself (so to say) if you didn’t have to pay super high rates of tax and if you could earn back more money in interest rates?

These tax advantages are only allowed to an offshore banking unit, as they are not required to operate under many of the monetary control regulations of the country in which they are based. A great example of such a taxation advantage if that of withholding tax. When you earn interest on the savings that you have made in a bank account, those gains are charged a tax as well. That amount is withheld before the dividend is passed on to you.

With an offshore banking unite however, no such withholding tax applies. For example, lets sat that on a deposit amount of $50 million, you earned an interest amount of $2.5 million. Now if there were a withholding tax in play here (let’s say of 10%) you would have to forfeit $250,000 out of that sum to the authorities. With an offshore banking unit however, there is no need to do so and as a result you are $250,000 richer than you otherwise would have been. Now do you see why so many successful and rich people choose to do their banking offshore?

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Privacy guaranteed
In case of a crisis you want your information to be protected and this is one of the salient features of an offshore banking unit. Operating in favorable jurisdictions, these banks will rarely ever reveal your information even to the authorities and will protect it to the utmost of their abilities and rarely are such details ever divulged unless there is a major international criminal conspiracy that requires it.

For many people out there an offshore banking unit is a breath of fresh air, a hope of financial freedom and pretty much a fool proof way to safeguard their financial future. After all when you have worked so hard to make that money, you do not want to lose it all.
 

mert

Offshore Agent
Business Angel
Totally Agree with all the other comments. It is a branch - so if you call it a unit or branch it may be the same!
 
Offshore Bank Accounts

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