Offshore Investment

Offshore investment is the keeping of money in a jurisdiction other than one's country of residence. Offshore jurisdictions are a commonly accepted solution to reducing tax burdens levied in most countries to both large and small scale investors alike. Poorly regulated offshore domiciles have served historically as havens for tax evasion, money laundering, or to conceal or protect illegally acquired money from law enforcement in the investor's country. However, the modern, well-regulated offshore centres allow legitimate investors to take advantage of higher rates of return or lower rates of tax on that return offered by operating via such domiciles. The advantage to offshore investment is that such operations are both legal and less costly than the solutions offered in the investor's country - or "onshore". Locations favored by investors for low rates of tax are known as offshore financial centers or (sometimes) tax havens.

Offshore solutions are accessible to anyone who can meet the minimum investment amount or pay the obligatory fees required to open such an entity and are widely used. Investopedia indicates that, "More than half of the world's assets and investments are held in offshore jurisdictions and many well-recognized companies have investment opportunities in offshore locales."

Tax is the driving force behind most 'offshore' activity. Due to offshore solutions investors are able to conduct investment activities in a more profitable fashion. Often, taxes levied by an investor's home country are critical to the profitability of any given investment. Using offshore domiciled special purpose vehicles an investor may reduce this burden, allowing the investor to achieve greater profitability overall.

Another reason why 'offshore' investment is considered superior to 'onshore' investment is because it is less regulated, and the behavior of the offshore investment provider, whether he be a banker, fund manager, trustee or stock-broker, is freer than it could be in a more regulated environment.