Offshore Bank

A legal bank that holds office outside your own country or jurisdiction, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. While the term originates from the Channel Islands "offshore" from Britain, and most offshore banks are located in island nations to this day, the term is used figuratively to refer to such banks regardless of location (Luxembourg, Switzerland and Andorra in particular are landlocked).

The advantages of offshore banking typically include:

• less restrictive legal regulation
• greater privacy
• low or no taxation (i.e. tax havens)
• protection against local political or financial instability
• easy access to deposits (at least in terms of regulation)

Except for certain persons who meet fairly complex requirements, the personal income tax of many countries makes no distinction between interest earned in local banks and those earned abroad. Although offshore banks have no legal obligation to report income to other tax authorities, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal.