PAM Guide to Wealth Management

Offshore jurisdictions

There is no legal definition of an offshore financial centre, but offshore tends to mean somewhere other than the jurisdiction in which you normally reside, or are domiciled. There are at least 35 countries which have developed an offshore financial services industry. It has been suggested that the UK is a major offshore centre, given the favourable tax treatment of non-domiciled individuals. Offshore centres developed, by offering a low-tax or no-tax environment to individuals and companies located in other countries. As tax planning opportunities for individuals have been reduced since the start of the financial crisis in 2008, so offshore centres have sought to develop themselves as attractive jurisdictions for funds and corporate structures, while continuing to remain centres for asset protection and succession planning.

There is not enough room here to compare the merits of offshore centres in detail. Your adviser, however, may have preferred centres, depending on the structures and investments you are making. Popular jurisdictions for trusts and companies include Jersey, Guernsey, the British Virgin Islands, Bermuda, Cayman and the Bahamas, Luxembourg, Cayman and Dublin are major centres for domiciling and administering funds. The Isle of Man, Luxembourg and Bermuda are popular for offshore and captive insurance.

There can be significant differences between centres, as illustrated by the exclusion of foreign law legislation discussed above. Some centres are regarded as being more stringently regulated than others. Among the other factors to consider when choosing an offshore trust jurisdiction is the strength of the local courts and local law firms, as well as the depth of expertise among the relevant trust and other advisory professionals. You may also choose a centre close to the UK for ease of communication.

Regulatory problems do occur in offshore centres, as they do in the UK and anywhere else. The key to success is the relationship you have with your wealth manager, their experience, qualifications, service offering, insurance cover and regulatory protection.

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