Consider the advantages of offshore banking as an expat or company located in Belgium. This guide explains the benefits of offshore banking.
Offshore banking is a niche service, often for those requiring international financial services. This overview of offshore banking offers guidance to expats and companies in Belgium for understanding and choosing international financial services.
Introduction to offshore banking
Essentially, an offshore bank is outside the account holder’s country of residence, typically in a low-tax jurisdiction. These banks tend to offer financial and legal advantages over domestic banking arrangements. Estimates place the value of capital at these institutions at 26% of the world’s wealth.
Reasons for offshore banking
People opt for banking offshore in Belgium for several reasons. Those living abroad may find that international bank accounts make it easier to manage their finances outside the country.
Accounts are often available in multiple currencies. This can be more convenient for someone making or receiving payments in different currencies. In addition, more complex foreign exchange features may be available, such as being able to fix currency prices in advance. This removes the uncertainty that can be a feature of dealing internationally.
Clients with operations in several countries may find it more convenient and more economical to direct all of their business through one bank, rather than dealing with separate institutions in a range of countries.
Individuals in countries that are less politically or financially stable than Belgium may be worried about the security of funds held in a domestic account. An offshore banking facility offers peace of mind.
Advantages and disadvantages of offshore banking
International banking facilities tend to offer great flexibility; those who need access to their money or to international financing can do so more quickly and easily than would be possible with domestic arrangements.
Offshore banking in Belgium may also offer services that are unavailable from domestic banks, such as anonymous bank accounts.
Deposits held abroad tend to be larger as a rule; this is one of the reasons banks often offer higher rates to deposit holders. Also, interest is generally paid gross, without tax being deducted. This can of benefit to individuals who do not pay tax until filing a tax return.
Offshore banking services usually require greater financial assets than other types of accounts. It isn’t unusual for balances of €5,700 or more to be maintained in order to run an account. In addition, facilities are usually more expensive than their domestic equivalents.
All European Union (EU) member states must have deposit guarantee schemes that protect deposit holders up to the value of €100,000 in the event of something going wrong. In Belgium, the National Bank of Belgium oversees the deposit protection scheme. However, accounts held offshore often do not benefit from this protection.
General perception of offshore banking
Offshore banking in Belgium has a somewhat unsavory reputation among the general public due to its secrecy. There is a perception that offshore customers hide their income and wealth from tax authorities and that banks facilitate this. This has included tax evasion as well as money laundering.
In 2009, Belgium was on an OECD list of ‘grey’ countries, indicating that progress was necessary on taxation transparency. The list also included Switzerland, Austria, and Luxembourg. Since then, these countries have moved from ‘grey’ to ‘white’.
Along with the other EU member states, Belgium signed the EU Savings Tax Directive 2005. This automatically exchanges information about EU citizens with accounts who are living in another EU country.
Belgium is also a member of the international Financial Action Task Force on Money Laundering (FATF), also known as the Group d’Action Finacière sur le Blanchiment de Capitaux (GAFI).
Famous offshore banks
Some well-known Belgian banks that provide offshore banking services include: