Offshore companies and offshore banking have long been surrounded by mystery, half-truths, and—unfortunately—a reputation that ranges from shady to downright illegal. But here’s the truth:
Going offshore is completely legal when done properly. In fact, it can be one of the smartest strategic moves a business owner, investor, or digital nomad can make.
At Global Wealth Protection, we help clients around the world set up legal, tax-efficient offshore structures to protect their assets, grow their businesses, and gain greater freedom. In this post, we’ll answer the 9 most frequently asked questions about offshore companies and offshore banking so you can separate fact from fiction.
1. Is it legal to set up an offshore company or bank account?
Yes. 100% legal. Offshore structures are used by countless legitimate businesses, investors, and even nonprofits. The key is compliance: disclosing accounts, reporting income, and following regulations like FATCA (for U.S. persons) or CRS (for most other countries).
There’s a world of difference between tax evasion (illegal) and tax avoidance or optimization (legal). The latter is what the world’s most successful individuals and businesses engage in.
For example, a U.S.-based digital nomad who operates a SaaS business could set up an offshore company in a low-tax jurisdiction, pay taxes where required, and still benefit from legally reducing their overall tax burden. That same entrepreneur could open a compliant offshore bank account, report it via an FBAR, and sleep well at night knowing they’re following the law.
Another real-world example: We had a Canadian software developer client who moved to Portugal, set up an offshore company in Anguilla, and used it to invoice clients in North America and Europe. With the right reporting and tax residency strategy, they dramatically lowered their taxes while remaining fully compliant.
U.S. taxpayers must file an FBAR (FinCEN Form 114) if they hold offshore accounts exceeding $10,000 in aggregate value. Source: FinCEN.gov
Most other countries adhere to the Common Reporting Standard (CRS), an automatic exchange of information initiative by the OECD to prevent global tax evasion.
When done correctly, offshore strategies are just smart business.
2. What is an offshore company?
An offshore company is simply a legal entity formed outside your country of residence or citizenship. These companies can serve various legitimate purposes across industries.
Common Uses:
- International trading: Dropshipping, import/export
- Consulting & professional services: Coaching, freelancing, remote agencies
- Holding intellectual property: Trademarks, patents, software
- Asset protection: Real estate, investment portfolios
- Tax optimization & legal deferral of income
Let’s take an example: A German crypto investor sets up an Anguilla LLC to legally distance personal liability from crypto trading activity. This LLC owns wallets and handles profits. It gives the investor a layer of protection and more flexibility in structuring gains.
Offshore companies also allow entrepreneurs to work internationally without being tied to the bureaucracy of their home country. For those with clients across multiple jurisdictions, it makes much more sense to operate from a neutral, efficient legal base.
Explore offshore company formation strategies here.
3. What is offshore banking and how does it work?
Offshore banking refers to opening a bank account in a country other than your country of residence. While this might sound exotic, it’s incredibly common—even mundane—in today’s global economy.
Many business owners and high-net-worth individuals use offshore banking for:
- Currency diversification: Hold funds in USD, EUR, CHF, etc.
- Hedging political and banking risk: Mitigate exposure to local capital controls or bank failures
- Confidentiality and asset privacy
- Ease of international transactions: Faster payments, access to multicurrency IBANs
- Access to stable financial institutions in countries with robust banking systems
Example: A South African entrepreneur uses a bank account in Mauritius to manage payments for clients in Asia and Europe. They benefit from multicurrency services and avoid South African exchange controls.
Offshore banks are regulated just like domestic banks and often require:
- Certified identification (passport)
- Proof of address
- Description of business activity
- Source of funds documentation
Learn more from Investopedia’s guide to Offshore Banking
At GWP, we help clients choose reputable institutions that provide excellent service and ensure their onboarding is smooth and compliant.
4. Why do people use offshore companies or bank accounts?
The reasons are many and not always about taxes. The modern global entrepreneur faces:
- Excessive regulation in their home country
- High tax burdens
- Unstable financial systems
- Threats of litigation
Using offshore structures offers:
1. Asset Protection
Offshore companies can shield your assets from frivolous lawsuits or creditor claims. When structured correctly, they put distance between you and your wealth.
2. Privacy and Confidentiality
In places like Anguilla or Belize, shareholder information is not made public. This isn’t secrecy; it’s privacy, and it’s perfectly legal.
3. Tax Efficiency
For non-U.S. citizens or those who can shift tax residency, offshore companies offer significant savings. Even for U.S. citizens, structures can allow tax deferral.
4. Operational Flexibility
Offshore entities make it easier to work globally, bill international clients, hold IP, or hire remote teams without dealing with foreign payroll or tax systems.
5. Diversification
Just like you diversify investments, you can diversify jurisdictional risk by not being financially tied to a single country.
We discuss these benefits in more detail on our offshore strategies page.
5. Do I still have to pay taxes with an offshore company?
Here’s where things get nuanced. The short answer is: Yes, but it depends.
- U.S. citizens are taxed on global income, no matter where it’s earned. However, with the right structure, they can:
- Defer some income
- Utilize the Foreign Earned Income Exclusion (FEIE)
- Reduce self-employment taxes via a foreign entity
- Other nationalities often pay tax based on residency. If they leave their high-tax country and establish tax residency elsewhere, they might owe little to nothing.
A Brazilian entrepreneur who becomes a tax resident in Panama could pay zero income tax on profits from an offshore company.
Read our article on tax residency and relocation planning.
Offshore planning isn’t about dodging taxes; it’s about playing by a smarter set of rules.
6. What are the best countries to form an offshore company?
There is no “one size fits all.” The best jurisdiction depends on your:
- Nationality
- Business model
- Banking needs
- Privacy preferences
- Risk tolerance
Top Jurisdictions We Recommend:
Anguilla
- Zero corporate tax
- No public ownership registry
- Simple reporting
- Excellent for crypto and digital businesses
Estonia
- E-Residency program
- Digital-forward infrastructure
- Access to the EU market
- Transparent and compliant
UAE (RAK/DMCC)
- 0% corporate tax for most setups
- Strong banking network
- No personal income tax
- Good for high-income earners
Singapore
- Stable and respected
- Excellent banking access
- Tight KYC, but high credibility
Reference: OECD list of cooperative tax jurisdictions
Every jurisdiction has pros and cons. We help clients choose the best fit for their situation, not just the cheapest option.
7. How do I set up an offshore company legally?
Here’s a practical step-by-step overview:
- Define Your Goals: Tax savings? Asset protection? International clients?
- Pick a Jurisdiction: Based on needs, compliance burden, banking access.
- Choose a Structure: LLC, IBC, foundation, etc.
- Hire a Provider: We assist in formation, compliance, and planning.
- Submit Documents: ID, proof of address, business purpose.
- Appoint a Registered Agent: Required in most jurisdictions.
- Open a Bank Account: Domestic or offshore, depending on plan.
- Stay Compliant: File renewals, taxes, reports where needed.
We walk you through every step—from picking the right structure to maintaining it each year.
8. Can I open an offshore bank account remotely?
Yes, though requirements vary by bank and jurisdiction.
Some banks allow:
- Online onboarding via secure portals
- Video calls for KYC
- Electronic document submission
Others still require:
- In-person visits (especially for high-risk profiles)
- Notarized documents
Banks That Often Allow Remote Setup:
- TBC Bank (Georgia)
- Euro Pacific Bank (Puerto Rico)
- Global Bank of Commerce (Antigua)
- CIM Banque (Switzerland)
A strong application includes:
- Clear business model
- Clean source of funds
- Proper company documents
At GWP, we vet banks for remote-friendly onboarding and support clients with full preparation.
9. How much does it cost to form an offshore company and bank account?
Ballpark Costs:
- Company formation: $1,000 – $5,000+
- Bank setup: Free to $1,500 depending on bank
- Annual maintenance: $500 – $2,000
- Nominee services: Optional, ~$300 – $1,000
- Legal & tax consulting: Highly recommended
Example: An Anguilla LLC with a Belize bank account:
- Formation: $2,000
- Bank onboarding: $500
- Annual fees: $850
- Total first-year cost: ~$3,350
Compare that with what you’d pay in taxes without structuring—often tens of thousands of dollars.
Our team provides turnkey solutions and full cost transparency from day one.
Additional FAQ
Can I use my offshore company to buy real estate?
Yes. Many investors purchase foreign real estate through offshore companies to gain privacy, simplify inheritance planning, and protect assets. For instance, using an Anguilla LLC to buy property in Panama or Belize can shield ownership from public registries and avoid probate.
Can I use an offshore company to hold crypto?
Absolutely. Crypto investors commonly use offshore LLCs or IBCs to separate personal liability, establish better reporting structures, and potentially reduce taxes depending on their residency. Offshore entities are particularly popular in jurisdictions friendly to blockchain ventures.
What’s a common mistake people make when going offshore?
Failing to understand reporting requirements. A U.S. citizen who opens an offshore company but doesn’t file IRS Form 5471 could face significant penalties—even if they paid all their taxes. Working with professionals ensures you avoid these costly errors.
Can I open PayPal or Stripe under my offshore company?
Yes, depending on the jurisdiction and structure. Some payment processors support offshore companies, especially if you open a corresponding offshore bank account. Our team guides clients through compatible options.
Is it expensive to stay compliant year after year?
Not compared to the savings. Annual compliance, including registered agent fees, government renewals, and accounting, often costs between $750–$2,000 depending on the jurisdiction. When weighed against tax optimization, it’s usually a net gain.
Can I move my tax residency to another country?
Yes. Many countries allow you to become a tax resident by spending a certain number of days or establishing a home base. We assist with residency planning as part of our services.
Do I need a lawyer or consultant to go offshore?
Strongly recommended. Mistakes can be costly. Our team ensures your structure is optimized and compliant.
Final Thoughts: Offshore Isn’t Shady. It’s Smart.
Going offshore isn’t about secrecy. It’s about control. You control where your company is based, where your money lives, and how much you pay in tax.
The world has changed. Geography doesn’t matter like it used to. Your business can be borderless—and so can your structure.
We’ve helped thousands of entrepreneurs, investors, and nomads set up legal offshore entities that:
- Protect their assets
- Optimize their tax strategies
- Gain freedom from bureaucracy
Book a consultation with our team to map out your offshore plan.
