
Get exclusive money-saving offers and guides
Straight to your inbox
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
An offshore bank account is a personal or business account held in a country outside of Australia. The benefits of offshore banking can include more privacy, easier access to foreign currencies or financial products not available in Australia, and potential tax minimisation opportunities.
The downside is that managing it all can be complicated. Offshore accounts are not illegal, but failing to properly declare overseas income is. Tax specialists and other financial advisers can help you utilise your offshore account, and navigate tax law, but other tools are also useful.
max rate
standard variable rate
Introductory rate of 1.1% p.a. for 4 months, reverting to a rate of 0.35% p.a. p.a. Available on balances Up to $500,000.
Disclaimer: The products displayed on this page represent only Australian financial institutions that facilitate offshore banking.
Comparing offshore accounts requires that you take certain factors into consideration that you don’t need to consider with your standard bank account:
It can also be helpful to compare countries themselves when deciding on an overseas investment location. When you open a high interest savings account in Australia, you might be looking at interest rates of about 3% to 4%. You can get considerably higher returns overseas, but also additional risk. For example, you might open an account in Venezuela for interest rates of 16.00%, which sounds good until you consider the inflation (over 159% in December 2016) and general instability. You may be getting high interest rates, but your investment might still be losing value every day due to inflation, and whichever bank you deposit with might not exist a few years from now.
Getting a return on investment means looking at more than just interest rates. Consider the inflation, the country’s current political climate and what kind of risk level you’re interested in. Your overseas account will also be using the local currency there, and it’s also worth considering the foreign exchange fees which may apply when you want to convert your funds back into Australian dollars.
The information in the table below was taken from various sources and is intended to be used for comparison purposes. While care has been taken to keep information accurate, it may not be up to date at the time of reading and you should not base investment decisions on this alone. Note that interest rates, inflation and credit ratings will change over time, and can also change abruptly.
Compare interest rates, inflation and credit rating in Australia’s 20 most popular overseas investment destinations, and in Australia.
Country | Typical interest rates | Inflation in December 2016 | S&P credit rating |
---|---|---|---|
Australia | 3.20% | 3.4% | AAA |
United States | 1.05% | 1.5% | AA+ |
United Kingdom | 2.50% | 2% | AA+ |
New Zealand | 2.75% | 4.5% | AA |
Japan | 0.02% | 0.4% | A+ |
China | 0.385% | 5.4% | AA- |
Singapore | 0.8% | 4.6% | AAA |
Germany | 2.2% | 1.00% | AAA |
Hong Kong | 5% | 0.15% | AAA |
Cayman Islands | 6.30% | 0.50% | AA3 Moody’s Credit Rating |
France | 1.00% | 2.00% | AA |
Canada | 2.8% | 1.75% | AAA |
Netherlands | 0.50% | 2.3% | AAA |
Switzerland | 0.10% | 0.4% | AAA |
Papua New Guinea | 3.00% | 8.4% | B+ |
Luxembourg | 0.10% | 1.1% | AAA |
South Korea | 1.25% | 1.3% | AA |
Bermuda | 0.15% | 1.8% | A+ |
India | 6.00% | 6.8% | BBB- |
Ireland | 2.00% | 2.4% | A+ |
Philippines | 0.75% | 5.3% | BBB |
Your key consideration may be tax minimisation strategies, rather than straightforward interest earned. However, your interest can still be considerable, and it may be worth comparing the returns available from overseas term deposits and interest-earning savings accounts. Offshore accounts will often have different rates than what is available in Australia, and these will change over time.
Depending on your needs, you can also benefit greatly from easier access to foreign currencies. If you make a lot of overseas transactions, being able to avoid currency exchange fees is as good as money in your pocket, and holding an interest-earning offshore account, in a currency that suits your needs, may be preferable even if the interest is lower than what you might get in Australia.
Overseas term deposits in particular may deliver higher returns than anything you can get here at a given time. Planning ahead and taking advantage of an opportunity when available may be the most valuable way to invest your money. For example, a company with a 5-year plan to do business in South Africa might open a South African Rand (ZAR) 5-year term deposit account, to simultaneously earn interest and prepare their overseas finances.
Offshore account tax minimisation is often the result of having different tax rates in Australia and elsewhere. You will need to pay tax in line with the local laws in the country of your offshore account, and may need to pay tax on that income in Australia as well, including capital gains tax on investments, and tax on interest earned from overseas savings accounts. Differences in Australian and overseas tax laws mean it may not be a direct "translation", and you may experience effects such as ending up in a different tax bracket.
It's a good idea to use financial advisers, particularly tax specialists, to help you. In particular, an expert may be able to ensure that you aren't breaking any laws.What are the pros and cons to having an offshore account?
There are some risks to the investor who is keeping their money in offshore accounts. Be aware of the following before considering this type of account to handle your finances:
Each bank will have their own account opening process. With most you are going to need to provide the following documents" National ID, passport, a bank statement from which the funds will be withdrawn and a statement about the source of those funds and the purpose for setting up the account.
Direct investments should be one of the features for an offshore account. The types offered by each bank will differ, making that a good point of comparison for you to start with.
This will require an international money transfer. You can expect to pay transfer fees to send money and to receive money back into your Australian account.
Picture: Shutterstock
With bonus Qantas Points and a range of complimentary insurance covers, the Westpac Altitude Platinum - Qantas is worth considering if you want more frequent flyer points.
Earn Altitude rewards with Westpac’s Altitude Platinum credit card, while enjoying the benefits and privileges of platinum status.
Our experts crunch the numbers to help you work out the best place to park your money: is it your mortgage or your super fund?
Get $250 credit back when you meet the eligibility requirements and 55 days interest-free on purchases.
Find out what you need to know before starting an accounting business.
An annual land tax should replace the one-off financial sledgehammer of stamp duty on property purchases, say experts. All experts (40/40) participating in Finder's RBA cash rate survey are predicting a cash rate hold this December.
We compare the fees, investments and performance of AustralianSuper and LUCRF Super so you can see which super fund might be right for you.
A detailed explainer of the concept of home equity and how property owners can make use of it.
This low rate credit card has a $0 annual fee and is available to firefighters and other service workers or volunteers.
how do I open a non-resident corporate account in the Netherlands as an off shore account? Thx
Hi Glen W,
Thank you for your question.
Sorry for the delay. Basically, banks in Netherlands have their own account opening process, so I’m afraid I can’t really provide you with specific steps. However, if you’ve already chosen a bank in Netherlands, you might want to contact and check with the bank directly how it works and confirm the docs you need to provide. In the interim, you can prepare your ID, passport and bank statements where your funds are coming from. You might also be asked the purpose of why you’re opening a corporate account, so best be ready to provide that information as well.
Meanwhile, if you want to know which bank facilitates offshore accounts, please refer to the table above. Also, on this page, there are tips about offshore accounts that you may find useful and see how it really works.
I hope this has helped.
Cheers,
May
how do I open a non-resident corporate account in the Netherlands as an off shore account
Hi Phil, thanks for your inquiry.
Please refer to the link I have sent to your email for a company who specialises in this type of offshore account.
Best,
Jonathan
Where and how can I open an offshore account quickly and easily? I have good credit and money saved, however, I am a renter. I can provide proof of address, but not necessarily a utility bill.
Hi Angela,
Thanks for your inquiry. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.
For opening an offshore account, you may click on the name of the bank to see more details then you may click on the green ‘Go to Site’ button to submit an online application on their official site. You may inquire with them further on what will the process be and how long it will take.
Cheers,
Rench