Are Tax Havens For You Also?

by : Ramapati Singhania

When you think of a tax haven what springs to mind?

Men smoking cigars on a gorgeous tropical island while sexy women wait on them with cocktails. Suitcases filled with large amounts of laundered money. Plush hotels with large swimming pools. Glamorous women wearing skimpy bikinis flaunting their toned bodies and swarming over the men?

If this is the image that springs to mind when you think of tax havens then you have been reading too many John Grisham novels. Literature and movies are the cause of people's misconceptions of what a tax haven actually is. It is not in fact an island with laundered money, nor is it a place filled with criminals. Tax havens are countries where the government has little or no tax rates and therefore attracts foreign investors. The countries most renowned as tax havens are The Bahamas and The Cayman Islands.

The common assumption is that people with offshore accounts have obtained their money from illegal means and they deposit in offshore havens where they are free from tax. However there is no evidence to suggest that the money in offshore accounts is acquired illegally. Criminals avoid putting their money in tax havens as it is a sure way of giving themselves away. Large sums of unaccounted for money are naturally going to arouse suspicion.

Another term often associated with tax havens is expatriates. For various reasons, expatriates chose to live or retire in tax havens because the tax benefits can be enormous.

Once your misconceptions are out of your mind, there are various options for setting up an offshore account. If you are thinking about investing your money it is well advised to seek financial assistance to discuss your options and what is best for you.

The benefit of tax havens is not tax avoidance. Depositing money in tax havens are a legal way of investing your money, however you are required to tell your own country that you are setting up an offshore account.

Why are tax havens so appealing?

There is a broad spectrum of services available in tax havens. There are options for international investors, expatriates and retirees all with different rates of return and different conditions applied to the account. Most offer checking, savings and credit account, and some offer debit and credit cards. Some banks can also provide mortgages and other financial advice or assistance. Offshore banks recognize that in order to attract foreign investors, online facilities are needed. Many banks now offer 24 hour account access via internet or phone.

Be aware that while offshore banks offer attractive investment opportunities, they may charge set up fees and monthly account service fees. Services and fees can vary from bank to bank, it is well advised to thoroughly research your chosen institute before making any investments.

Things to take into consideration if you want to invest and live off shore.

Thinking about relocating to the offshore haven? There are some things to take into consideration before choosing your destination.

*Retiring? If so, what are the health care services like? When choosing your destination it is wise to investigate medical services and be sure they are in, or close by to the area you have chosen to live.

*Relocating with your family? If so, is the education system appropriate for your children? Do they have classes in the language you desire? Are the class sizes appropriate? What are the school fees?

*Is your new country going to suit your lifestyle? Are there leisure activities available for you and your family enjoy?

*Government - A stable government is a good government. In order to live happily offshore it is wise to make sure that the government is stable and you can comply with the laws of the country. Living in a volatile area is not conducive to a happy lifestyle. Not only is political stability important, but also economic stability.

How do I open an offshore bank account?

The first step to this process should be enlisting the services of a financial advisor. They can advise you on the risks and benefits of investing in your chosen destination. Choosing a destination in your time zone is a good idea to avoid conversations with your bank manager at a late hour of the night.

Different banks can have different requirements for opening an account. Proof of identification with supporting documents is crucial. Here are some of the things that may be needed for setting up an account;

*Letter of recommendation from your bank stating that you are a reliable customer
*Utilities bill with your name on it
*Character reference from your doctor, lawyer and accountant for your country of residence
*A letter stating your reasons for wanting the account
*The bank's minimum deposit for starting the account

Each bank will have its own requirements for starting the account, and the minimum deposit can also vary from bank to bank.

Lifestyles of the rich and famous:

Imagine waking up in the morning and not having a financial concern. That is certainly one common element to those of the rich and famous. Spending money on luxury items, eating at expensive restaurants, owning mansions and posh cars, yet the downfall is having your life in tabloids and continually being subject to public criticism.

A recent case in the tabloids is the life of Anna Nicole Smith. For years she has made headlines. Controversy has surrounded her marriage to oil tycoon J. Howard Marshall, mystery surrounded the death of her 20 year old son, questions were raised as to the real father to her baby Dannielynn Hope and now her recent death is being investigated. Her life has certainly been splashed over the news and yet what was her claim to fame? Being a playboy bunny? Or marrying an 89 year old billionaire when she was just 26 years old?

Some of the other recent events of the rich and famous:

*Lindsay Lohan: rehab stint
*Jen Aniston: did she have a nose job?
*Becks and Post move to the USA to seek medical treatment for their epileptic son
*Kylie Minogue: recent split with Olivier Martinez

Fortune and fame link the lives of the rich and famous, yet having their personal lives splashed in the news isnt always a positive thing.

If you do come into fortune then maybe investing in tax havens is the sensible decision for you. And if fame comes with your fortune, maybe living in the tax haven is also beneficial so you can enjoy your life without media attention.