Offshore is a term referring to a location outside the boundaries of one’s home jurisdiction. It can refer to a land-based location or an island. The term can refer to investments, banks, corporations and real estate, among other holdings. Companies might move their headquarters or operations offshore to minimize taxes or expenses. In other words, any foreign-based entity located in a country other than the home jurisdiction can be referred to as offshore.
Similarly, offshore investing refers to a situation where an investor lives outside of the country in which he or she is investing. Originally it was mainly high net worth investors enjoying the benefits, since the costs were high but this is no longer the case. Technology and lower cost travel have substantially reduced the expense of investing offshore, allowing more people to reap the benefits. These can include asset protection, tax benefits and fiscal privacy. Offshore Financial Centers (OFCs) used to refer to countries and jurisdictions that provided investment and financial services to non-residents at a scale that was excessively large compared to the size of the country and its GDP. This is no longer the case. OFCs with the most rapid growth are countries and city-states with stable governments and judiciaries, and healthy economies. A well-educated population and easy access as a travel hub are other common elements of today’s popular OFCs.