1 Comment on "Offshore Company with Onshore Bank Account (and vice versa)"

  1. Interesting discussion.

    I can think of a variety of reasons for either scenario, the later is most useful from an asset protection standpoint where bank freezes are an issue or alternatively where you’re doing business in the other jurisdiction and want to make payments and settlements easier and more affordable (something as simple as avoiding a 2.5% cross border fee on foreign credit card transactions can add up if you’re doing a sufficient volume of transactions). In both cases you could set up foreign entities but the inconvenience of constantly making transfers as well as the potential for additional reporting requirements often undermine the advantages.

    Going the other way the reasons are more compelling, typically if you establish a local entity now you’re bringing in questions of local tax and if you’re structured in a tax efficient manner who wants such hassles? This often typically also brings with it withholding taxes, potential concerns of transfer pricing, CFC rules, etc., which could all be avoided if the company was just able to open an onshore bank account for the offshore company (I’m really speaking more in terms of setting up a bank account in a high tax jurisdiction for a low tax company obviously the tax specifics will vary).

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