South Africans – The Benefits of Offshore Bank Accounts
Given the volatility of the rand, political uncertainty and a worsening economic outlook, South Africans could be forgiven for getting increasingly jittery about the likely impact on their financial health. It is no surprise then that Sovereign Trust (SA) has seen increased client interest in offshore bank accounts as a means to secure and protect capital.
There is no prohibition on South Africans opening a bank account offshore. Many South Africans have international transactional needs – both for business and personal reasons – but some are only aware of standard foreign currency banks accounts that simply allow the account holder to make and receive foreign currency payments.
An offshore bank account, in comparison, offers multiple benefits – the ability to receive payment for work done outside South Africa, to make international payments, to access international funds and, most importantly, to diversify assets and hedge against the volatile rand.
South African taxpayers are required to declare any offshore bank accounts. Any interest and income earned will need to be reported to the South African Revenue Service (SARS) and the relevant tax must be paid. The financial institution will itself be reporting your account automatically to SARS under the OECD’s Common Reporting Standard.
However, by using an offshore bank that is based in a highly regulated, transparent jurisdiction, you can feel secure that your money is safe and with multi-currency accounts usually coming as standard, transferring money between accounts should be fast and free.
A good offshore bank account should provide a highly personalised service, giving you round-the-clock access to your money through online and telephone banking and the highest service levels. It may also provide you with a wide choice of funds and investments that are not available in your home country, as well as more flexible lending and credit facilities.
“The upside is that, although your details may not be confidential, your money will remain outside South Africa and you’ll never have to bring it back,” says Rone Silke, a consultant at Sovereign Trust (SA). “In terms of de-risking wealth, it is a completely legal and acceptable solution to escape the volatility of the rand.”
“When exploring the benefits of opening an offshore bank account, the key is to choose your preferred offshore banking institution by taking into consideration the minimum balance requirements, fees, reputation and tax jurisdiction.”
To open an offshore bank account, some banks will require face-to-face meetings with the account holder, whereas others are comfortable to work through a licensed service provider such as Sovereign. If you would like more information, please contact Rone Silke at Sovereign Trust (SA) on +27 21 418 2170 or by email.
