What is the point of offshore securities brokerages?

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This topic contains 8 replies, has 4 voices, and was last updated by Profile photo of tomas tomas 2 months, 2 weeks ago.

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  • #4302
    Profile photo of Dagobert Duckson
    Dagobert Duckson
    Participant

    Given that all brokerages listed by Streber are either already participating in CRS or will shortly be doing so, I don’t understand what advantages these have to offer vs, say, regular US brokers such as Schwab or Interactive Brokers. US brokers will open accounts for non-US individuals, companies and trusts, and will not automatically report to other countries (although they may on demand where they have bilateral tax treaties). They are also supervised, regulated and insured in much more credible ways than many offshore brokers.

    So why would anyone open an account with an offshore broker?

    #4316
    Profile photo of unstoppable
    unstoppable
    Participant

    US citizens/residents might not want to open US-based accounts, for one. Another reason could be that US brokers don’t always accept non-US applications. Even if they generally accept foreign citizens, they will be less willing to take risks than offshore brokers.

    #4317
    Profile photo of tomas
    tomas
    Participant

    To avoid withholding tax on dividends, especially those from non us companies.
    To avoid US estate tax (for personal accounts)

    Also, Schwab requires 500K deposit for a foreign company account.

    #4322
    Profile photo of LP
    LP
    Participant

    To avoid withholding tax on dividends, especially those from non us companies.
    To avoid US estate tax (for personal accounts)

    Also, Schwab requires 500K deposit for a foreign company account.

    Withholding taxes are based on tax residence, not where your brokerage is. And US estate tax applies to all US equities not just ones held in a US brokerage

    #4323
    Profile photo of tomas
    tomas
    Participant

    To avoid withholding tax on dividends, especially those from non us companies.
    To avoid US estate tax (for personal accounts)

    Also, Schwab requires 500K deposit for a foreign company account.

    Withholding taxes are based on tax residence, not where your brokerage is. And US estate tax applies to all US equities not just ones held in a US brokerage

    Yes, so it’s mostly interesting for non us securities.

    #4327
    Profile photo of LP
    LP
    Participant

    To avoid withholding tax on dividends, especially those from non us companies.
    To avoid US estate tax (for personal accounts)

    Also, Schwab requires 500K deposit for a foreign company account.

    Withholding taxes are based on tax residence, not where your brokerage is. And US estate tax applies to all US equities not just ones held in a US brokerage

    Yes, so it’s mostly interesting for non us securities.

    I’m not aware of any countries which apply taxation based on where your brokerage is

    #4328
    Profile photo of tomas
    tomas
    Participant

    Ok, let my try to get it right:
    Etfs like vxus contains only non us stocks, but the fund is us domiciled, and will trigger us withholding taxes. So better options are etfs domiciled in other countries, which is not so easily available to buy through us brokers.
    Also about the estate taxes, I believe that cash that you might have in a us brokerage account would be subject to us estate taxes, while cash in non us brokerage would not.

    #4334
    Profile photo of LP
    LP
    Participant

    Ok, let my try to get it right:
    Etfs like vxus contains only non us stocks, but the fund is us domiciled, and will trigger us withholding taxes. So better options are etfs domiciled in other countries, which is not so easily available to buy through us brokers.
    Also about the estate taxes, I believe that cash that you might have in a us brokerage account would be subject to us estate taxes, while cash in non us brokerage would not.

    Most good US brokerages (like the ones you mentioned) are able to buy foreign stocks easily

    And about estate taxes, generally you shouldn’t be opening a brokerage account for storing large amounts of cash 😉

    #4336
    Profile photo of tomas
    tomas
    Participant

    IB can buy international stocks, Schwab can’t (they offer some).

    I wouldn’t keep a lot of cash there, but I’m just saying that is a risk, and one reason that some people will open offshore brokerage accounts
    Maybe you sold all your stock for some reason and then died while the cash is in the account.

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