Consider the benefits offshore banking while living in France, which provide expats and companies international financial services while living abroad.
Offshore banking is a niche service, often utilised by those requiring international financial services. This overview of offshore banking offers guidance to expats and companies in France for understanding and choosing international financial services.
Introduction to offshore banking
Essentially, an offshore bank is a bank located outside the account holder’s country of residence, typically in a low tax jurisdiction. Due to the lack of transparency that is a feature of offshore banking, it is difficult to identify how much capital is banked with these institutions, but estimates have placed it at 26 percent of the world’s wealth.
Where offshore banking is concerned, France tends to see outflows of capital rather than vice versa. The international low-tax havens of Andorra, Guernsey, Jersey, Luxembourg, Monaco and Switzerland are all on its borders and have attracted much private wealth. In recent years, however, France has become increasingly proactive about tackling the issue of French citizens failing to declare holdings abroad.
Reasons for offshore banking
People choose to bank offshore for several reasons. Those living or working abroad may find that holding an international bank account makes it easier for them to manage their finances when they are outside the country.
Accounts are often available in multiple currencies, which can be more convenient for someone making or receiving payments in different currencies. In addition, more complex foreign exchange features may be available e.g. being able to fix currency prices for up to a year 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 based in countries that are less politically or financially stable than France 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 so that 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.
Deposits held abroad tend to be larger as a rule – 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 banks may also offer services that are unavailable from domestic banks, such as anonymous bank accounts.
These types of banking services usually require greater financial assets than other types of account – it is not unusual for balances of EUR 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 are required to have deposit guarantee schemes that protect deposit holders up to the value of EUR 100,000 in the event of something going wrong. In France, the deposit insurance scheme is known as Fonds de Garantie des Dépôts. However, accounts held offshore often do not benefit from this protection.
General perception of offshore banking
International banking has developed a somewhat unsavoury reputation among the general public, due to its secrecy. There is a common perception that offshore customers hide their income and wealth from tax authorities – including tax evasion and money laundering and that banks facilitate the process.
France has been proactive in tackling tax evasion via offshore banking centres. In 2009, it signed Tax Information Exchange Agreements with Switzerland, Jersey, Guernsey and the Isle of Man, allowing for greater transparency between countries, including obtaining information about French residents suspected of evading tax. In 2009 the French government announced that it had obtained a list of 3,000 suspected tax evaders holding around EUR 3 billion in Swiss bank accounts. That year France also implemented an Offshore Voluntary Disclosure Initiative that resulted in declarations from more than 4,700 French taxpayers and yielded EUR 1.2 billion in revenue.
Famous offshore banks
The major French banks all provide international banking services, including the following:
Another niche provider is Blom Bank.