Are you missing investment opportunities? The world is a big place, yet many investors concentrate their portfolios on their home markets. By broadening your view of the landscape, what else could you achieve with your investment goals?
In this guide, we will explain the nature of offshore investing, how it works, and how it could be used to enhance an investor’s strategy.
What is offshore investing?
Offshore investing still has a bit of a negative reputation. The image that often comes to mind is a wealthy individual hiding their money in a “shell company” on an obscure tropical island. Yet, the majority of offshore investing is perfectly legal and legitimate.
In simple terms, offshore investing refers to strategies investors use to access investment opportunities outside their home country. If you are a British expat, you are likely already doing this (e.g. if you have a pension back in the UK whilst living in Europe).
An offshore bank account can be a form of offshore investing. However, this is typically used to hold savings in a secure and tax-efficient manner. Offshore investing goes beyond preserving wealth and seeks to grow it – e.g. via offshore property or investment funds.
Offshore vs traditional investing
If you live in the UK, offshore investing is typically less of a consideration. As a UK tax resident, your income and wealth are largely subject to UK taxes This hinders your ability to access the tax benefits of overseas investments.
However, if you are a “digital nomad” with no tax residency in a particular country or if you live somewhere with a unique tax regime (e.g. a territorial tax system), then offshore investments may have greater potential for your portfolio planning.
A UK-based investor is subject to local taxes on capital gains, dividends, and income. Moreover, investments are typically made in the home country (e.g. companies listed on the London Stock Exchange). By contrast, offshore investments are located in financial institutions, companies, or assets outside the investor’s home country – often in jurisdictions with lower taxes or tax exemptions (tax havens).
A case study
A huge advantage of offshore investing is potential tax savings. If you can save tax on your hard-earned returns, it could rapidly accelerate your growth using the power of compounding.
For instance, in the UK in 2024-25, the headline rate of capital gains tax (CGT) is 28% on a higher rate taxpayer (a UK tax resident earning over £50,270 per year). However, if you live in Malaysia as an expat, capital gains made outside the country are not generally subject to local tax. As such, this investor has some options for tax and investment planning.
Perhaps they could hold an offshore investment account in another low-tax country (e.g. the Isle of Man), enjoying the asset protection, confidentiality and diversification opportunities offered by that jurisdiction. If the expat eventually relocates, there may also be less need to change/close the offshore investment account.
Risks to mind
It is important to stress that offshore investing is subject to increasing regulatory scrutiny in 2025. For instance, the Common Reporting Standard (CRS) requires all countries in the OECD (Organisation for Economic Development) to prevent tax evasion by automatically exchanging financial account information. Therefore, consider seeking financial advice before opening an account to ensure you are compliant and do not inadvertently break any rules.
Offshore investments can also be more costly than traditional ones. There may be requirements for the account depending on the host country (e.g. investing in local property or opening and operating a holding company). Again, seek advice to get a clear view of all steps involved with the process before making a decision.
Minimum investments or contributions might be required. For instance, certain banks ask for at least GBP/USD/EUR 100 per month or 1,000 as a single lump sum. Your eligibility may also be limited depending on your age and country of residence.
Invitation
Offshore investing holds some powerful opportunities for expats, helping them to diversify their holdings, increase asset protection, and possibly minimise taxes.
However, complexities are involved – especially when navigating international tax and compliance. Here, a specialist financial adviser can be very helpful to guide you.
If you’d like to make sure you’re taking the right steps to safeguard your financial future, please get in touch.