For many Britons a bank account is a bank account – i.e., it’s just a basic, current account where wages go in and bills come out. It’s nothing fancy or expensive and it just works month-in, month-out. However, as expats know, once you move abroad bank accounts can become much more complicated!
Few expats manage all their financial affairs through their UK bank account once they move abroad – because apart from anything else it’s often inconvenient to do so. And it’s at this point that terms such as offshore bank account, international account or non-resident bank account become bandied about.
If you’re thinking of relocating and you were wondering whether you needed any or all of the above, read on to discover the differences between international, non-resident and offshore bank accounts, and to learn how you can manage your money in the best way once you move abroad.
An Offshore Bank Account
Generally speaking, an offshore account is an account at a bank in a tax attractive jurisdiction. Whilst ‘offshore’ can relate to any nation other than the one in which the account holder is living, it is generally attached to an account or investment or savings product housed or hosted in a tax haven.
An International Account
Because the term ‘offshore’ is so closely associated with all things ‘tax’ (from avoidance to evasion for example!) many banking institutions prefer to prefix their offshore offerings with the word ‘international’ instead.
So for example, banks such as HSBC and Lloyds TSB have international divisions rather than offshore divisions, but really the difference is only name-deep.
There is broader scope with the term international however, because where ‘offshore’ generally relates to any jurisdiction other than the one in which the account holder is living, ‘international’ is more akin to flexibility when it comes to a financial product, service or solution such as a bank account.
Non-Resident Bank Account
Just one more description for a bank account hosted in a nation other than the one in which you’re living is non-resident account…however, it’s a term more often used by Americans than Britons for example. Additionally, those who perhaps have a second home overseas and who have a bank account hosted in the same nation as their overseas property sometimes refer to such an account as a non-resident account.
Have You Noticed a Pattern?
You may have been able to deduce from the above that whether you call an account an offshore bank account, an international or non-resident account there is one common denominator…and that’s that the account is held in a jurisdiction (country) other than the one in which you’re living…
What’s the Point of Going Offshore with a Bank Account?
There are many reasons for having an offshore/international/non-resident bank account…
For example, if you’re an expatriate and you require a certain degree of banking flexibility – e.g., you need to earn a salary in one currency in your new nation yet pay bills in your new nation and your old nation (which uses a different currency) – or if you need to access funds or account data as you travel internationally with your work – these are all reasons to have a more international (and flexible) bank account.
If you operate a business that transacts internationally or across borders, currencies or tax regimes you may require an offshore account for your business so that you can centralise the financial aspects of the company in a secure country where you can also access and achieve tax benefits.
Also, as touched upon above, someone with a second home abroad may require an account as a non-resident in the same country as their second property in order to pay bills associated with having that home in that nation.
So – anyone who requires maximum account flexibility (such as an expat with obligations in more than one country or currency) can potentially benefit from an offshore (read ‘international’) bank account.
The Story Doesn’t End There for Expats Though…
Some expats actually end up running two or even three bank accounts – which is a far cry from their days as resident Brits in the UK when one current account was much like any other, so why have more than one!
For example…an expat resident overseas will have local requirements for a basic current account. They will have bills to pay and living costs to manage – and for that reason it’s usual for the majority of expats to have a local bank account.
Where allowed, it can be advantageous for expats to also retain their current account in the UK, (note some banks disallow this because of their ‘know your customer’ due diligence requirements),…this is so that they maintain some sort of basic credit presence and rating in the UK should they ever want to return to ‘Blighty’ and get a mortgage/credit card/mobile phone for example.
Other expats retain a UK bank account to meet British based financial obligations such as child maintenance or school fees, or mortgage and utility bill payments.
Finally, many expats really do find that an international account located offshore gives them the flexibility they need to handle the majority of their money with the maximum amount of flexibility.
So, once you become an expat you are faced with many options and opportunities, but also a lot of decision too when it comes to managing your money. There is no one single correct way – it’s a case of assessing your own position, considering your own circumstances and needs, and making a decision accordingly.