Do you have a question about investing offshore in offshore mutual funds?

Q.    Isn't it illegal for me to invest offshore?

A.    Many countries, such as the US, Canada, Australia, the UK, some other EU countries, are very restrictive about  offshore investment providers advertising their products domestically. But it is not illegal for you to make offshore investments. These high-tax countries often actually make it illegal for investment providers to advertise their funds in that country.  Generally, it is illegal to not declare the gains and income from offshore investments in almost any jurisdiction to your local tax authorities.

Q.   What does 'domicile' mean?

A.    Your 'domicile' means the country which you consider as your permanent place of residence. It is established at birth and remains until you resettle with the intention of staying in the new location. As far as trusts and funds are concerned their domicile is where they are based and administered from.

Q.    What is a double taxation treaty?

A.    This is an agreement between two countries. The agreement is supposed to prevent an investor who would otherwise be subject to tax in both countries, from being taxed twice for the one thing. As most offshore jurisdictions do not have much local taxation they don't have double taxation treaties.

Q.    How much money is needed in order to invest offshore?

A.    There is no minimum amount but it is important to take into account the extra costs of investing offshore. Costs such as setting up trusts or an offshore company, the costs of getting advice, opening new bank accounts, perhaps long distance phone calls, and of course the costs of accounting at tax time.  If you were only going to get returns of 10-15% investing offshore would probably not likely to be worthwhile if you have much less than about $100,000 to invest. Simply because of the setup and maintenance costs of your structures. However, with the returns you can get from investing offshore being 30%+ it could be worthwhile with $50,000 or even less. Obviously the higher your setup costs the less you have to invest to start with. Costs are reducing all the time though, largely because of the internet and the fact that more and more small investors are getting involved.

Do you have a question about offshore mutual funds?  Ask it now in the questions form below.