How to explain Offshore banking to a five year old

princeofpounds

Media discussions about this kind of thing are always frustratingly nebulous.


There are several reasons to use offshore companies when conducting business.


There is, for example, a big difference between:


a) using an offshore company as a way to hide beneficial ownership of an asset (which can span anything from investing illegal gains to simple privacy)


b) using an offshore company as part of a tax structure (which can span anything from tax evasion, to sensible tax planning aka avoidance and deferral, to avoiding paying double tax when countries lack proper tax arrangements)


c) using an offshore company to simplify a regulatory structure (which can span anything from sanctions-breaking to simply opening an EU branch).


and so on.


The interesting part is always why these structures are used, not their mere existence.