Where should I set up an offshore bank account?  My business is
completely legitimate.  I want to use a very large multinational bank
(Barclay's?).  I only want to domicile in a location the IRS will
bless as completely legal and above board.

I need to take care of the lawn. So I can't answer fully.
I'm watching the grass growing as I type. ;-)
So I just pulled up a couple links that looked insightful.

What Is an Offshore Bank?
[ http://www.schweizer.ch/Myths%20Swiss%20Banking.htm ]
An offshore bank is any bank that operates outside the jurisdiction of
the country of residence. That includes banks in the USA, Canada,
Switzerland, but also small countries like Liechtenstein or the
Bahamas. It means any branch of a bank from one country operating in
another country.

Example: The branches of Barclay's or of Citicorp located in the
Bahamas are subject to the laws of the Bahamas, not to the laws of
England or the US.

 
[ http://switzerland.isyours.com/f/portrait/Bankrate.com.html ]

[ http://swiss-bank-accounts.com/e/index.html ]
[ http://swiss-bank-accounts.com/e/faq/ ]


[ http://www.swconsult.ch/chbanks/faq.htm ]


It's wide open for other reasearchers,
-AI

Thank You !  Good luck with the lawn!

I am a US citizen/economist working at an overseas university.

Some thoughts:

1. You can not, generally, reduce your US/IRS tax liability by going
offshore.
You are required to make reports to the IRS on your overseas
investments on
the same forms as your US investments (e.g. Sched D for cap gains,
etc...).
As a foreign bank or broker will not be sending you 1099s, the burden
of keeping the proper records lies with you.

Foreign investments should be stocks in companies with a real
business, bonds or other debt, and standard bank accounts. NO FOREIGN
MUTUAL FUNDS. NO INDEX SHARES. There is a set of special IRS tax rules
for investing in foreign mutual funds (the PFIC rules) that make it
better to stick to US-headquartered mutual funds.

2. Since investing overseas does not cut your US tax burden, and could
expose you to taxes in foreign countries, you need to really think
about whether an overseas account is right for you.

3. If you want to go offshore because you want to live overseas, do
business
overseas, or invest overseas, then here are some places to consider
opening
an account:

Belgium -- if you are not a belgium resident/citizen, then you can be
exempted from Belgium tax for your investments. Major banks include
Fortis,
KBC.

Hong Kong -- HK does not tax any kind of investments activities. Major
banks
include HSBC, Hang Seng, Bank of China.

New Zealand -- Higher interest rates, but volatile currency.  NZ has a
pay-once
taxation regime, in comparison to the USA where stock dividends get
taxed  twice. The approved-issuer-levy on foreign bank accounts is a
2% tax of your
interest.  On stocks, the withholding tax is something like 15% for a
US citizen, because of a US/NZ tax treaty.  You can (usually) claim
credits for these taxes against your US taxes dollar-for-dollar.

Switzerland has some good banks (e.g. UBS), but they do impose a 25%
withholding tax there.

Good luck.

Thanks, Doc !   I really appreciate your taking the time to furnish these leads.

At link below you can open on-line a "money market" bank account
http://www.swissnetbank.com/shortstart.html

Thank you!  Much appreciated!

Dear Alien,

A brief word of caution, if your business is in the US;
if your customers and sales are in the US; 
there is no place on the planet Earth that IRS will sanction - unless
you report all the income from that offshore account in your US tax
return.

And if you're going to do that, why bother with the time, trouble and
expense to go offshore?

(I can think of some reasons...and in fact, am researching them. But
those clients will be reporting all their income on their US tax
returns. It's just another legal issue they need addressed.)

So, if you have a legal issue that takes you offshore, and you ARE
reporting your income, IRS doesn't care where you set up. Set it up
for your own convenience, then.

Best wishes,

Your TaxMama-ga