Tax efficiency vital to preserve offshore wealth
Investing offshore has tax implications that can erode your wealth, writes Pedro van Gaalen
Investors commit considerable resources to construct offshore portfolios that yield the best returns but neglect to consider how the tax implications of their investment can erode their wealth. The most important consideration is the jurisdiction to invest in as countries differ in their tax laws and incentives. A key concern should be tax and death duties, says Galileo Capital’s Warren Ingram. "Many SA banks now offer convenient ways to open offshore bank accounts. However, holding funds in the UK or US will attract a 40% estate duty on assets held by nonresidents. That means an investor who owns US shares via an American-domiciled broker could lose nearly half their assets following their death." Ingram recommends jurisdictions that don’t tax nonresident investors, such as Switzerland, the Channel Islands or Mauritius, or unit trusts domiciled in Ireland or Luxembourg. "Investors would carry tax liabilities in SA but would escape double taxation." Investors can also consider an in...