Foreign accounts are useful for many reasons and facilitate travel and business, especially if traveling to or doing business with one or more countries in particular. Foreign accounts are not solely about having a savings account abroad, because a foreign account can be in the form of a fixed deposit, business and or merchant account, securities trading or brokerage account or even a trust account that is being managed by a local lawyer.
A business or company foreign account can be opened on behalf of a company or institution that operates overseas through a subsidiary, branch or other business setup. The company’s finances can be managed through that foreign account to facilitate the receipt of payments and for the transfer of funds. Such foreign accounts are opened in accordance with the requirements of the bank involved and all corresponding services will be made available to the business so that trade and financial management can occur smoothly. To open a business foreign account, banks may request business references, the company’s registration number, the names and addresses of the directors/beneficial owners and shareholders and any other relevant information.
Internationally, banking services are generally modernized and are accompanied with a number of services that facilitate banking and managing several foreign accounts, especially as many banks nowadays possess overseas branches and in this way facilitate seamless transacting and banking on a global scope. A foreign account can therefore be viewed online and transactions can be made comfortably, in the confines of an office or room. Account statements are usually downloadable, internal transfers can be made and account balances can be reviewed as desired. This makes it possible to keep track of a foreign account and to ensure that it meets its primary objectives, be they for business, education or pleasure. Essentially, a foreign account can be operated like an offshore account and for various reasons is likened to an offshore account. One thing that is almost certain is the fact that the holder of the account is able to achieve heightened privacy in the sense that the account is not located ‘at home’ and therefore can be managed discreetly without the involvement of any local resident, especially if the bank involved has no ties or affiliated branches or head offices ‘at home’.
Depending on the currency used in the country in which the foreign account is held, the possibility to save money in a given (foreign) currency is created. Thus, if a Londoner has a business foreign account in the United States, he or she is now able to trade in US dollars without being obligated to convert pounds into US dollars or vice versa so that he can meet expenses arising out of the US. In the case of a company, all trade can be done in US dollars without implicating UK accounts or US currency can be accessed without having to be constantly converting British pounds into US dollars every time that cash is needed. The same concept applies for someone working or attending college/university in the United States and simply makes a lump sum cash deposit into the US foreign account instead of having funds transferred from home every time that money is needed. Doing this makes it easier to manage cash and earn interest and access bank benefits like debit and credit cards in the interim.
Before opening foreign accounts, factors that should be taken into consideration include the economic and political stability of the country and the tax implications that holding such an account may have. Even though a foreign account may serve to manage the finances of an overseas company, if resident in a different country, withholding taxes may become applicable if the country in which you reside levies tax on international income. This is important for many reasons, one of which includes applying for tax credits and exemption in order to avoid double taxation by all means.