More people than ever before are conducting business, living, or investing across borders. With an estimated 272 million expats worldwide and international agreements like the Schengen Zone, allowing over 400 million people to travel freely across its member countries, the world has become increasingly interconnected.
This has brought with it a growing need for international banking services, as more people seek access to flexible financial solutions that can accommodate their global lifestyle and investments.
But with so many different jurisdictions and regulations, it can be difficult to know where to start or how to choose the right bank for your needs.
So, what are the benefits of international banking, and how do you ensure you make the right choices for your financial needs?
Advantages of banking beyond borders
Transacting in multiple currencies
One major advantage is the ability to transact in multiple currencies. If you’re doing business across multiple jurisdictions or you’re simply a frequent traveller, you can avoid the hassle of fluctuating exchange rates and minimise transaction fees by holding different currencies within one account. And with the new wave of online banks like Revolut and Wise, this has become much easier and more affordable than before.
Enhanced security
Security is another huge plus. Political and economic instability is an unfortunte reality of the world we live in nowadays and having an international bank account gives you that extra layer of protection. Places like Switzerland, Singapore, and the UAE have built their reputations on rock-solid legal systems, financial stability, and strict banking regulations. This means your money isn’t only shielded from political or economic changes in your home country, but it's also backed by advanced security protocols, something that’s becoming more and more important with the rise in cyberattacks and online fraud.
Tax benefits
International banking can also offer significant tax benefits, depending on where you're based and where your account is located. This is especially useful for HNWIs who often need to manage substantial assets across multiple jurisdictions. The UAE, for example, is known for having no income or capital gains tax, making it an attractive hub for wealth management. It also boasts an extensive double taxation treaty network with over 100 countries, ensuring that income earned abroad isn’t taxed twice.
As well as this, international banking can provide advantages like tax deferral ensuring income generated in an international account isn’t taxed until it’s repatriated.
Privacy and asset protection
And lastly, there’s privacy and asset protection—two key considerations for anyone looking to safeguard their wealth internationally. Switzerland and Liechtenstein, for example, are well known for their stringent privacy laws, and while regulations have tightened in recent years, they still offer a level of discretion that’s hard to match elsewhere.
For example, Switzerland, long regarded as the gold standard for banking privacy, continues to provide robust protections against unauthorised access to account details. Similarly, places like the UAE offer trusts and other asset protection vehicles, which can help shield your wealth from creditors or legal challenges.
Whatever your reason, the benefits of international banking can be considerable—but the complexity of managing multiple accounts in different jurisdictions shouldn’t be underestimated.
Practical steps for setting up an international bank account
Once you've weighed the benefits of international banking, it’s important to understand how to select an account that suits your needs, whether that’s for business expansion, managing personal wealth or tax advantages:
1. Research jurisdictions and banking laws The first step is choosing where you want to open your account. Jurisdictions like the UAE, Switzerland, and Singapore are popular for their robust legal frameworks, but each country has different regulations for international account holders. For example, while the UAE doesn’t impose income or capital gains tax, Switzerland is known for its discretion and privacy. Start by understanding the local laws in the countries you're considering and how they fit your financial goals.
2. Understand reporting requirements Many countries have stringent reporting requirements for international accounts. For example, UK citizens and residents must report foreign income on their Self-Assessment tax return if it’s over £2,000. Additionally, any income from overseas assets must be declared to HMRC to avoid penalties.
It’s essential to understand your home country’s tax laws regarding foreign income to avoid fines and legal issues. Additionally, be sure to check if the country where you’re banking has double taxation treaties that prevent foreign earnings from being taxed twice.
3. Choose the right type of account Not all international bank accounts are the same. You’ll need to decide whether you want a personal account, a corporate account, or even a trust or offshore account. Some banks offer multi-currency accounts, which can be helpful if you’re frequently moving money between countries. Online options have made managing multiple currencies more accessible and affordable, but traditional banks may offer more robust services and asset protection.
4. Compare fees and services International banking often comes with higher fees than domestic accounts, especially when it comes to currency exchanges, transfers, and account maintenance. Carefully evaluate the cost structures of different banks and understand how those fees might affect your overall financial strategy. You’ll also want to consider what services are provided, including access to financial advisors, wealth management, and online banking capabilities.
5. Gather required documentation International banks often require more documentation than domestic accounts. Typically, you'll need to provide proof of identification, address, and possibly banking history. In some cases, documents will need to be notarised or certified by relevant authorities.
6. Consult a financial advisor Given the complexities of international banking, especially regarding tax implications and legal regulations, it’s often a good idea to consult with a professional. A financial advisor can help you navigate the specific challenges of managing wealth across borders, ensuring that your accounts are set up in a way that maximises benefits while maintaining compliance with all relevant laws.
Best regions for international banking
Switzerland
Known for its banking stability, Switzerland holds about 25% of global offshore wealth, totalling $2.4 trillion USD. While banking secrecy has lessened due to global transparency rules, Swiss banks maintain some of the world’s highest capital adequacy ratios at over 20%, far exceeding global standards. For HNWIs, minimum deposits for private accounts often start at $1 million USD.
Singapore
As a major Asian financial hub, Singapore manages over $3 trillion USD in assets and is home to more than 200 banks. Its favourable tax regime, including no tax on foreign income, has attracted over 400 family offices as of 2020. Singapore’s focus on wealth management and political stability makes it a top choice for both individuals and businesses.
United Arab Emirates (UAE)
The UAE, particularly Dubai, has quickly become a financial hub, contributing 12% to Dubai’s GDP via the DIFC. Offering zero personal income tax and favourable regulations like 100% foreign ownership, it’s especially attractive for wealth management. Its currency peg to the USD and political stability also makes it a strong contender for global banking.
Cayman Islands
With over $1.4 trillion USD in assets under management, the Cayman Islands is a premier offshore destination. 70% of the world’s hedge funds are domiciled here, drawn by the zero-tax policy (no income or capital gains tax). While it faces global pressure for transparency, it remains an attractive location for wealth protection, offering confidentiality under stringent but stable regulation.
Legal and corporate structures
The type of legal or corporate structure you have can also impact your banking options. If you’re setting up an international business, you’ll need to consider how your corporate structure—whether it’s a limited liability company, trust, or partnership—affects your access to banking services. For example, LLCs offer flexibility in managing international accounts, as they typically provide limited liability protection. On the other hand, trusts may offer greater asset protection and tax planning benefits, but they often face stricter banking regulations, as banks conduct more due diligence to prevent misuse.
A wide range of benefits
Opening an international bank account can offer a wide range of benefits, from making your global business operations smoother to providing better wealth protection. However, the process requires careful planning and a solid understanding of the legal and financial implications involved. Whether you’re an individual looking for more security or a business aiming to expand internationally, seeking professional advice can help you make the best decisions for your situation.
