Selecting foreign bank for IT business
Sooner or later each company decides to go international. However, sometimes bank accounts in your country may not meet the main criterion of the world’s trade relations, namely, speed of money transfer. A partner will not be able all the time to wait for his funds for goods or services. Thus opening an account with a foreign bank makes sense.
A foreign bank account has lots of advantages besides the speed of transaction processing. Firstly, maintenance of privacy of financial operations. Secondly, profitable credit conditions compared to local banks. Thirdly, deposits are not available to the government of your country. Fourthly, the possibility to save on expenses when making international transactions. Fifthly, guarantees concerning security of funds on an account. Sixthly, higher level of beneficiary’s security. Seventhly, possibility to open a merchant account, which enables payment card operations.
Nevertheless, first of all you have to determine in which country you will open an account and familiarize yourself with restrictions of your country’s legislation concerning financial operations with some jurisdictions. You should also pay attention to the law on bank secrecy of a chosen state.
Selection of a bank and its country should also be based on the specifics of an IT company as over 90% of payments are electronic. For this reason such criterion as the possibility to open a merchant account takes the first place since it is necessary for business in order to accept payments by debit or credit cards, especially online. Undoubtedly, the easier option is to choose a bank in the country of company registration as in this case you will not have to transfer money to another country and will be able to avoid extra expenses. Not to lose money, pay attention to those clauses of the contract with a banking institution that specify tariffs, otherwise you might need to pay up to 50 euros for each withdrawal operation. Remember that well-proven European banking institutions may not only require disclosure of beneficiaries’ names but also report the income to the tax authorities of your country. Banks of classic offshore jurisdictions and the Baltic states may ignore some of your actions and offer the most favorable terms for opening an account, but all financial institutions will require full information about beneficial owners. But there is a shortcoming: in case of some suspicions concerning your company’s activity an offshore bank will freeze your account until the circumstances are clarified. You should also pay attention to the legislation of the country of the bank in order to prevent payment of tax on withdrawal of funds from its territory. Unfortunately, about 90% of clients are not informed about it. Pay attention to the type of license of a banking institution in payment systems MASTERCARD or VISA not to encounter difficulties when trying to withdraw money in another country.
In most cases internet entrepreneurs choose exactly offshore bank accounts. The main condition of IT business is minimum presence in the country of receipt of funds; hence opening an account in the country of residence of a client is unwanted. On the other hand, you should decide how the company’s profit will be used including withdrawal for personal purposes. Certainly, you may just transfer the funds to an account in the country of residence and pay taxes, and if taxmen have some questions, try to prove legality of the money. Alternatively, you can turn to offshore banks and open a personal account there, which will help you save your money. Offshore banks https://www.offshorecompanyregister.com/offshore_account.php let you associate a VISA debit card with your account and withdraw your money in any country of the world.
Unlike many European banks, classic offshore banking institutions do not inform the tax authorities of the country of residence of the account holder. Information about an account is not available to third persons, thus security is guaranteed. And reliability of many offshore banks should not be doubted. Their quality of service is higher than in some other countries.
But it is not as easy as it seems at first glance as offshore transactions have their own pitfalls affecting any fields of activity, in particular the field of internet technologies.
Many entrepreneurs register a company or open an account in classic offshore jurisdictions, which entails a number of inconveniences. Firstly, IT business implies acceptance of payments by debit and/or credit cards. The problem is that payment systems MasterCard and VISA forbid to work with persons resident in countries on the black list of offshore zones. However, some payment systems will work with such companies but the commissions will be substantial. Secondly, midsize and large companies try to avoid partners from offshore jurisdictions who are known for provision of anonymous bank accounts or complete concealment of the beneficial owners in spite of a possibly interesting offer. Thirdly, it is not advisable to locate servers in distant countries since the speed of internet connection and thus information exchange will be several times lower; on the other hand location of all the servers in another country may lead to tax and legal consequences.
Those are only basic problems that an IT company may encounter. A competent approach is needed in this case. A correctly drawn up offshore scheme not only enables minimization of the tax basis but also use of companies registered in prestigious countries in your business. Depending on the list of tasks two or more companies are to be registered in countries whose legislation makes it possible to solve the tasks as profitably and fast as possible.