The sector of offshore investment that is growing most rapidly is probably that of equity investment. This is due in great part to the massive interest increase in direct stock market dealing (private) that coincided with the explosion of internet business. Because of the increased base of international businesses that rely upon internet marketing the choice of equities available for purchase is nearly limitless. However, you cannot jump into the international investment arena without proper research and preparation.
Any equity investor should decide first where he or she wants to base any offshore trading. Your investment base is important because every jurisdiction has different rules on amounts of investments, fees and other factors that affect taxation. When starting out with small investments this can be a legitimate approach to investment but when you are talking about sums in the six and seven figures it is important to research possible locations to determine what locale will provide the most financial benefit.
As international trade and investment regulations change the process of buying foreign equities has become simpler than it has been in the past. Until recently stock exchanges and dealers were limited by strict regulations prohibiting foreign investment. These dealers must follow guidelines or lose their ability to trade stock altogether. High tax countries are known for more constraining regulations than those with lesser taxes. These countries to not allow trade in exchanges that are not recognized in their jurisdictions.
The internet has often allowed electronic trading to bypass regulatory laws in diverse nations altogether creating an increased demand for electronic stock trading networks that provide access to an ever increasing selection of international securities. By trading electronically networks can offer more options as well as escape from stamp duty that is still applied in several nations.
Because of the financial benefits available in equity investment offshore many corporate ventures may be financed via offshore investments. This can also be used by investors who can manage gross dividends without increased taxation. While there are limits to this ability it is worth further investigation in many cases.
There are two components to consider when purchasing equities offshore. The first is dealing costs and the second is taxation. Dealing costs are those accrued when first making a purchase. What percentage of purchase is the dealer charging to set up your purchase? Search around to find your best value but make sure you are using a reputable dealer. Taxation refers to the tax percentage you will pay in the country where you are investing as well as the country in which you reside. It is important to follow taxation laws to the letter so that you are not later faced with severe penalties for tax fraud.
Choosing a jurisdiction can be difficult so make sure you find an advisor that you can rely upon to remain objective. If you find an advisor in your home country make sure that he or she is experienced in offshore investment as well as offshore equities specifically.
Related articles
Leave a Reply