Contrary to popular fiction, offshore asset protection isn’t just for mobsters, gangsters, or lawyers on the run. Though it is true that shady deals do occasionally take place in offshore accounts, many ordinary people take advantage of the benefits of placing their investments in the hands of foreign accounts.
Offshore asset protection is perfectly legal.
Assets protected on foreign soil are still subject to United States taxes, as according to the IRS, United States citizens and residents are taxed on their worldwide income. Using an offshore account to avoid U. S. federal income tax will lead to prosecution for tax evasion.
Countries known as tax havens offer favorable tax incentives to foreign investors. This acts as a benefit to the country in for the form of increasing their economic activity and it is also a benefit to the investor by shielding them from the higher tax burden of their home country.
Popular countries used for offshore asset protection include: The Cayman Islands, Switzerland, Liechtenstein, Bermuda, The Bahamas, The Cook Islands, Nevis, Anguilla, Gibraltar, Turks, and Caicos.