| Offshore funds are assets invested | | | | available to UK residents. |
| offshore where tax advantages exist. The | | | | The situation of each investor is |
| Bahamas or the Channel Islands can be | | | | different. Offshore investors tend to |
| considered as examples. These are funds | | | | have very complex criteria governing |
| outside the tax system of the country | | | | investment selection, so in addition to |
| where the intended investor is residing. | | | | standard criteria (for instance passive |
| Offshore funds offer eligible investors | | | | funds, low cost, no load etc) the |
| significant tax benefits compared to | | | | following issues must also be |
| many high tax jurisdictions such as | | | | considered. |
| United States and the European Union. | | | | 1. Complex international tax issues |
| However, where funds are repatriated to | | | | typically apply. Tax considerations are |
| high tax jurisdictions, they are usually | | | | urgently important. It is imperative |
| taxed at normal rates as foreign arising | | | | that a competent authority on |
| income. Many of these tax haven | | | | international tax law be consulted |
| locations are considered investor | | | | before any offshore investments are |
| friendly and are intentionally regarded | | | | made. |
| as financially secure. | | | | 2. Ensure that tax avoidance shouldn't |
| Many offshore jurisdictions, notably the | | | | be any investor's goal. The goal ought |
| British Virgin Islands, offer a zero tax | | | | to be maximization of post tax wealth. |
| regime for investment funds, which are | | | | It may sometimes make sense, therefore, |
| domiciled there, which allows the fund | | | | to invest in an imperfectly tax |
| to reinvest that part of its investment | | | | efficient vehicle if it is better, on an |
| portfolio's gains which would otherwise | | | | after tax basis, than any other similar |
| have been lost to tax. | | | | vehicles available. |
| A number of offshore jurisdictions have | | | | 3. Some countries largely prohibit their |
| recently tightened the regulation of | | | | residents from investing in overseas |
| offshore funds. | | | | domiciled investment funds (e.g., US, |
| Offshore funds such as overseas unit | | | | Canada). |
| trusts, open ended investment companies | | | | 4. Residents of some countries may have |
| and other similar collective investment | | | | local investing options available which |
| schemes, have a long established | | | | might be competitive with most of the |
| position of importance among the range | | | | countries but are not limited to |
| of savings and investment products | | | | Australia, Canada, Ireland, UK, US). |