A bank that is regulated under an international banking license offers several important financial benefits for companies in different countries.

That’s not to say that this is the right option for every business, though. It’s important to understand exactly what this solution offers and whether this is the right time to open an account at a Panama bank.

Defining Offshore Banking

While it’s not uncommon for people to associate “offshore banking” with “hiding funds” in an overseas location or stashing it where it can be “cleaned” for questionable use, the truth is that opening an account in an offshore bank is nowhere near that dramatic in most cases.

Simply put, this is a financial service that is available to almost any company. It simply refers to banking in a location outside your home country. 

Opening an account with an offshore bank doesn’t have to be a complicated endeavor. It is a common part of forming a Panama offshore corporation, which means there is simply some paperwork to fill out and some benefits to reap.

Is Offshore Banking Illegal?

Simply put: no.

You are generally free to open a bank account outside of your home country as long as you are doing it for legitimate reasons and make the applicable reporting.

It is important to know that you are not exempt from taxes just because you’ve sent your money abroad. Each country has very definite requirements for anyone who sends their money overseas, so consult with a tax or law specialist in your home country to make sure you are in full compliance of your local tax obligations.

So, what counts as a legitimate reason for offshore banking?

Some of the most common motives including:

  • Setting up a business in a foreign country
  • Managing investments in a foreign country
  • Having an account in a location where you spend much of the year
  • Taking advantage of favorable tax treatment.

What are the Major Benefits of Offshore Banking?

Now that we have legitimate reasons to take your financial activities offshore, what, exactly, are the benefits of such an action?

The most obvious benefit is that this is one more way to safeguard your assets. However, some of the other benefits include:

  • Diversifying your investments.
  • The ability to invest in foreign stocks and other commodities, bonds, and mutual funds that may not be available in your home country.
  • Protect your assets against foreign claims or even domestic lawsuits.
  • Reduced tax rates on things like global real estate investments or foreign capital gains
  • A stable economic environment. This is particularly important if your home country is experiencing severe pollical or economic concerns.

Why Open an Offshore Bank Account in Panama?

It’s possible to open a bank account in many countries around the globe, so what makes an offshore bank in Panama the best option for your company?

This and other financial services have been a critical part of Panama’s business environment for years. The country has developed some effective banking laws which have contributed to the thriving business climate, and this means that businesses can expect a number of benefits.

Some of these advantages include:

  • The privacy regulations for banking in Panama are above the standards around the world.
  • A bank account can be opened in Panama with either a personal name or on behalf of a corporate entity.
  • Panama has used the U.S. dollar as its official currency since 1903, which eliminates foreign exchange controls.
  • The government in Panama offers a number of foreign investment incentives.
  • Panama is one of the leading financial business centers in Latin America.
  • There are also a number of asset protection options for companies in Panama that can complement your banking activities, such as offshore corporations and private interest foundations.

You can learn more about it in this banking in Panama FAQ.

How Long Does It Take to Open an Account?

Opening a corporate account for Panama banking can take some time, often between two to four weeks. This will all depend on each individual bank and how they normally conduct business.

It’s also important to note that while it’s easier than ever to open and manage a bank account in another country, Panama does take its time with new accounts, since they’re required by law to know a lot about their clients and their business activities.

How Much Does It Cost to Open and Offshore Bank Account?

Every bank in every country has different requirements for your minimum deposit. Some banks will let individuals open an account for as little as $300.

At Mata & Pitti, we provide referral services so you can open an account with a bank that meets your needs. While we don’t open the accounts for you, we work with high-rated banks in Panama, so we can connect you with right institution and begin guiding you through the process.