Offshore account - anyone please?

Stinicker

I have decided to open an offshore account, however I am unsure of exactly where to open an account. Switzerland was world famous for banking but everything I have read in recent times is negative with millions of Germans being pursued for tax on their savings there.

I have looked at Singapore and the Cayman Islands but am still undecided, I have some money on deposit in Irish banks but this matured recently and I have decided to shift some of it offshore. I was also heavily ripped off by the Bank of Ireland last year in overseas transaction whilst I was abroad and this is another reason why I have decided to shift the majority of my funds offshore.

I intend to open a small savings account deposit account with around €20k in it denominated in Euro and a second offshore current account which I would use for when I travel abroad. I would send maybe €25k offshore and keep the rest in Ireland.

I know offshore accounts have a dodgy reputation but I also want to know of the potential to cause problems with Revenue, tax has already been paid on this money but I think I would need to pay DIRT on the Interest earned while the money is offshore. I'm not sure about this but will pay it if I have to. The interest offshore would be far less than here anyway so any DIRT liability would be small as I'm not a millionaire and I'd rather comply than ending up on some defaulters list somewhere.

Basically I travel quite frequently and need a system where I can access my money without the Irish banks killing me each time, I recently paid €136 in Bank charges on a trip to Thailand just last summer.

srsly78

They will only be interested in you if you have lots of money, 25k is not enough from when I looked into it.

You will pay bank charges when accessing your money from outside the eurozone no matter what, this is not avoidable. What you should really do is use an fx broker (www.midpoint.com is very good) to change euros into whatever. Do not use your card abroad if possible, this just attracts fees (both fx and banking fees).

Example: I have a UK sterling account and an Irish euro account. I never ever use the euro card in the UK, or the sterling card in Ireland - this attracts fees.

Converting money from one currency to another will never be "free", but you can minimise the cost (and maybe even profit if the rate moves in your favour). Just never use a bank for conversion, they always give the worst rate.

JTMan

Stinicker wrote: »

I know offshore accounts have a dodgy reputation but I also want to know of the potential to cause problems with Revenue, tax has already been paid on this money but I think I would need to pay DIRT on the Interest earned while the money is offshore. I'm not sure about this but will pay it if I have to. The interest offshore would be far less than here anyway so any DIRT liability would be small as I'm not a millionaire and I'd rather comply than ending up on some defaulters list somewhere. .

You need to declare the deposit interest to the revenue and pay DIRT and possibly PRSI on it.

Stinicker

Fungus wrote: »

You need to declare the deposit interest to the revenue and pay DIRT and possibly PRSI on it.

This was what I was thinking, however didn't know about the PRSI on the interest thanks for that. My reason is for diversification and I don't want all my eggs in one basket anymore and I am actually quite pessimistic about the future of Irish banking and my main motivation is really just to protect what I already have. I am afraid of a Cyprus style expropriation and want to move a share of funds off-shore so as to ensure I would be ok should the worst happen.

I am considering Switzerland, Singapore and the Cayman Islands, obviously Switzerland would be the easiest but they recently roasted a lot of German savers there so I am not eager to go through something like that. I am currently examining Singapore as the best safe haven at the moment as the Cayman Islands just has dodgy dealings practically written all over it. I will probably be in Thailand or Singapore this year anyway so could setup an offshore account in Singapore whilst there. I wouldn't dream of putting money into Thailand because I'd not be surprised if the country doesn't descend into Civil War very soon.

murphaph

Are you just worried about Ireland or the entire Eurozone? If you intend staying in Ireland (if it doesn't implode etc.) then you should keep your money in Euro to avoid fx risk (you are not a currency speculator so fx fluctuations are not what you're after!). If the Eurozone implodes then so will every other currency IMO. The Euro is now "too big to fail" and no country bar maybe North Korea would wish for it to happen.

Given that, I would say you should try to open a deposit account in a more stable Eurozone country. Most German Sparkassen will open an account with a passport on a visit to Germany.

My bank, the DKB will in theory open an account from Ireland if you fulfill their criteria and can at least read German (you never ever have to actually speak with anyone and I have never had to so much as send an Email to them). They have a free current account and you can open a savings account with them online once you're set up, though the rates for savings are poor compared to the likes of Rabo, but you're not looking for great rates, just security and the DKB is owned by the German state of Bavaria and its deposits are guaranteed without limit by the federal government, i.e by Germany itself.

srsly78

From next year you will be able to open a bank account anywhere in europe (without any restriction about your country etc). The SEPA thing you have been hearing about is supposed to liberalise the whole market across europe. So if you can just hang on for a bit longer....

JTMan

srsly78 wrote: »

From next year you will be able to open a bank account anywhere in europe (without any restriction about your country etc).

Link? Are you referring to the proposed EU legislation? This is not set in stone yet. It will take much more than 1 year IMO.

SEPA does not allow you open an account anywhere in Europe.

srsly78

That's right, SEPA is rather supposed to harmonise the payments methods. This is why they are getting everyone used to IBAN numbers etc. The plan in future is to allow open up the market in all countries. 2014 is the deadline for the phasing out of the old system, it has been ongoing since 2008. So you are right it takes a lot longer than 1 year.

When can we open up foreign bank accounts easily? Hard to find exact dates on it, but by 2014 the barriers are supposed to be removed.

http://www.centralbank.ie/paycurr/sepa/Pages/SEPAforConsumers.aspx

" In summary, SEPA will allow consumers to bank wherever it suits them best and wherever they can obtain the best terms – they should no longer be constrained in this regard by national borders."

But the question remains, what will the criteria for opening an account be? In theory you could open up a french bank account using your Irish address. Does this need a change in legislation? Maybe not, the normal AML rules apply - proof of ID and address. Just that an Irish address will be good enough for a German bank etc.

Right now in some countries you need to be resident to open an account. But once the account is open you can just change your address back to Ireland! This is true in the UK, but not in Germany or others I think.

edit: I was wrong about Germany, read this http://www.askaboutmoney.com/showthread.php?p=1119882
Some German banks will let you open an account with an Irish address, but most do not. It's down to the individual banks policy. In the future an eu ruling might make them stop discriminating on country of residence.

Similarly: http://preparefordefault.ie/?page_id=118 Some french banks will let you use an Irish address.

So, in summary - you can open a foreign euro bank account with your Irish address, but it's difficult. In the future it will probably get a lot easier. Right now you would not be able to use your foreign account to pay your Irish bills by direct debit etc, this is what is changing. From next year you could close all your Irish accounts and solely use your German one for example.

murphaph

srsly78 wrote: »

So, in summary - you can open a foreign euro bank account with your Irish address, but it's difficult. In the future it will probably get a lot easier. Right now you would not be able to use your foreign account to pay your Irish bills by direct debit etc, this is what is changing. From next year you could close all your Irish accounts and solely use your German one for example.

Actually depending on the bills you pay it's already possible. I pay an AIB credit card by SEPA direct debit from a German current account, for example. From next month at the latest any decent sized company should be SEPA ready and be able to provide SDD mandates.

hfallada

Stinicker wrote: »

My reason is for diversification and I don't want all my eggs in one basket anymore and I am actually quite pessimistic about the future of Irish banking and my main motivation is really just to protect what I already have. I am afraid of a Cyprus style expropriation and want to move a share of funds off-shore so as to ensure I would be ok should the worst happen.

If Irish banks were going to burn deposit holders it would have happened at the bailout. Why would the government have pumped tens of billions into the banks years ago. to destroy confident again in 2014? Your expensive banking fees are due to not having a correct bank account. BOI are the most expensive and IMO the worst to bank with. I dont have anything positive to say about BOI and I use several branches of theirs. AIB is pretty decent but also has charges. But you are not going to find "free banking anymore".

You should have not used your card in Thailand and instead either brought Bhat in Ireland or exchanged your Euros there. I imagine most of your banking fees were actually Thai bank charges or Visas 3.5% visa debit non-euro cash charge.

Regardless of whether you want an offshore account. You need an irish bank account because if you lose your ATM card, do you really want to have to wait 2 weeks for a replacement to come from abroad?

murphaph

It takes about 3 days for a letter to get to Ireland from Germany. If you can wait 2 days for an Irish bank then another day or two makes no difference. If you are clever you'll have at least one other card with which you can pay for things. A few euro in cash at home will tide most people over for the couple of days.

hfallada

murphaph wrote: »

It takes about 3 days for a letter to get to Ireland from Germany. If you can wait 2 days for an Irish bank then another day or two makes no difference. If you are clever you'll have at least one other card with which you can pay for things. A few euro in cash at home will tide most people over for the couple of days.

I tried opening a back account with DKB as I was going to move to Germany for work last summer. I had my application form filled out perfectly as my German is pretty good and denied my request as they only open accounts for residents

murphaph

hfallada wrote: »

I tried opening a back account with DKB as I was going to move to Germany for work last summer. I had my application form filled out perfectly as my German is pretty good and denied my request as they only open accounts for residents

Strange. They actively encourage applications from German speakers from several specific countries and their application process takes non-residence in Germany into account (in Germany they use the PostIdent system (you prove your identity to a Postal worker at a nearby postoffice and they confirm this to the bank. This satisfies anti money laundering legislation etc. and is used widely.

But DKB also allows identity verification by attorney or foreign bank. They have specific forms for this. If they didn't want non-resident customers at all, then they'd only take customers verified by PostIdent.

I know of people who have successfully opened DKB accounts from abroad and from countries not on the list above. I can't explain why they gave you the reason they gave you but it clearly contradicts their own website.

The OP could always make a long weekend city break in Munich or Berlin or whatever and open a non-free Sparkasse savings account. He doesn't appear to want a non-Irish current account, which is where the discussion has wandered alright, but a savings account should really be no problem. He just won't get great interest because a) German deposit rates are lower than Irish ones and b) the best rates in Germany are available from banks that won't open accounts to non-residents (eg Rabo direct).