COVID-19 has dramatically changed markets and investments around the world, and many have eyed ways to protect their assets now and as the pandemic comes to a close. One trend that has remained strong throughout the pandemic is that high net worth individuals (HNWIs) are moving assets offshore.
Post-Pandemic Planning: Go Offshore
At a rapid pace, offshore jurisdictions are reporting that HNWIs are moving their assets into tax havens. This is all part of post-pandemic planning, in which individuals are preparing their assets for what’s to come after the initial effects of the COVID-19 pandemic have been felt.
In years past, we all knew about the famous “Swiss bank account” and how people would move assets there to hide their finances and avoid taxes. Swiss bank accounts aren’t what they once were, and they had lost a bit of popularity. Now, however the “Swiss bank account” seems to be back in style, making a comeback as investors seek to stow away their assets somewhere away from home. In fact, one Swiss bank, UBS, announced 40% profit gains in the first quarter of 2020, a clear indicator that COVID-19 is pushing people to use offshore banking as an investment strategy as part of their post-pandemic planning.
How can You Ride the Trend?
Now that we’ve seen what high net worth individuals are doing with their finances right now, you might be wondering how everyday individuals can reap the benefits of offshore in terms of post-pandemic planning.
Let us take a closer look.
1. Open an Offshore Bank Account
First, anyone can open an offshore bank account. While some offshore banks have higher minimum deposit requirements, there are some with lower thresholds. In a time when it’s difficult to travel internationally, you can use technology to your benefit. Most offshore banks offer online banking options that make it possible to set up an account without being physically present.
Opening an offshore bank account can help you stow away your assets while diversifying your investments during and after the COVID-19 pandemic. Offshore banking can also help you save on taxes while offering a layer of privacy.
2. Setup an Offshore Company
Another thing HNWIs are doing that everyday people can do is to create an offshore company. This is a great way to reduce taxes and, in some cases, reduce liability by creating a layer of padding between you and your company. An offshore company can give your company a professional ambiance while providing investment protection.
Thanks to the digital age, you can likely set up your offshore corporation online in less than 20 minutes. The key, however, is to be prepared. You will want to research to choose the jurisdiction you’re interested in, choose your corporation’s structure (such as partnership, trust, or limited liability), and set up a bank account to associate with your corporation. The paperwork side of things includes listing your directors and/or shareholders or using nominee services to act on your behalf and then officially registering your business name.
3. Acquiring Foreign Citizenship
The third thing HNWIs are doing that everyday people can also do is acquiring foreign citizenship. Citizenship by investment involves investing money in exchange for a passport. Some of the most desirable jurisdictions in which HNWIs commonly do this include Portugal, Belgium, Panama, Argentina, Spain, and Brazil.
The impact on the offshore jurisdictions is very noticeable; since COVID-19 reared its head, Cyprus has seen a 250% increase in citizenship activity, and Portugal has seen their numbers rise by 50%.
Getting a second citizenship and passport gives you more options for investments, such as delving into real estate and diversifying your portfolio.
Takeaway
Post-pandemic planning is something that HNWIs are taking quite seriously, not only as a way to ensure that their assets are safe through the COVID-19 pandemic, but also to be sure that their assets will be safe in the future. There are many uncertainties about where the economy will go in the next few years, and it’s important to be prepared.
Fortunately, there are plenty of things that everyday people can do to prepare their finances and diversify their assets.
If you’ve never considered offshore, or if you’ve thought about it but not yet felt compelled to pull the trigger, then now is the time to act. Although offshore isn’t the same as it once was, due to tightening regulations, it still poses an amazing opportunity to keep your assets safe.
When researching jurisdictions, it’s critical to find the right offshore area, one that is reliable, reputable, and stable. It’s also important to be sure that you are always in compliance with your government. For instance, the U.S. requires that offshore holdings be reported to the IRS. Even with stringent requirements in place, you only stand to gain by implementing offshore in your post-pandemic planning strategy.
If you need more info on how to go about with your post-pandemic plan, you can consult with us.
MAY
2020
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