offshore account for Euros

cisko65

I am a tax payer here in the UK and have some Euro in a Barclays account with 0% interest. I read something about opening a Euro offshore account. Any suggestions for one with some interests? 
Thanks

bowlhead99

cisko65 said:

I am a tax payer here in the UK and have some Euro in a Barclays account with 0% interest. I read something about opening a Euro offshore account. Any suggestions for one with some interests? 
Thanks

What did you read about it? Did what you read tell you that the rates are lower for Euros than they are for pounds?

If you're UK resident you don't need to keep your money in a UK account and could put it in an account outside the UK if you prefer - and if you find a bank that will take you as a customer who's not resident in their country - though you'll still have to pay UK taxes on the interest income you earn.

The European Central Bank publishes statistics about average deposit and borrowing rates throughout the Eurozone. 
(https://www.ecb.europa.eu/press/pr/stats/mfi/html/ecb.mir2004~0d872b8d6e.en.html)
For the month of April, they reported that the composite interest rate for new deposits with fixed maturity made by companies was -0.05% (that's right, a negative interest rate).

If you are an individual in a household, rather than a company, you are likely to be depositing much smaller amounts than the millions that companies are putting away, and so you can get better rates. The fixed term rate for household accounts was 0.26% in April - e.g. if you put money away for a fixed term of up to a year, on average the banks are offering 0.22%, and some shorter durations such as 3 months were paying in the 0.3-0.4% per annum range  (perversely with Euros, the central bank rates are negative and there's no expectation that they will increase soon, so you may actually get a lower rate if you ask for a larger or longer-term deposit).

If you are just looking for an instant access (overnight) rate, the composite rate offered by Euro area banks was 0.02% for April (they have not released the May report yet). It will not have improved since then, given the general lowering of market interest rates and the fact that further quantitative easing / money printing / government stimulus has been announced as recently as this week.

So, yes, there are some banks paying 'some interests' above 0.00%, but the average rate being offered for instant access is only 0.02% ; European households had over €4 trillion in such accounts at the date of the last report. And if you find the highest paying ones, you will have to filter out the ones that don't take money from non-residents.  Just like with the UK, the best accounts are only offered to people who are tax resident in the same country of the bank (to save them the hassle of international tax reporting) and who might be likely to buy other bank services from time to time (to make it worth their while offering you an above-average interest rate, so they can make their money back by selling you loans or credit products or other 'value added' services).

As an example of a rate on offer, picked haphazardly from European bans - Swedbank in Estonia will let you have 0.01% a year on their Easy Saver instant access account (no minimum deposit) or 0.05% on a term deposit. So you could deposit €1000 and after four years of the compound interest you'd have €1002.03. You don't need to be physically resident in Estonia to get the account, but you need to have a genuine connection with the country such as property or a business.  However, Estonia is quite advanced when it comes to doing business digitally and so you could get an electronic personal ID relatively easily and incorporate an Estonian company, and use those credentials to establish a bank account.

They have a fee to open the account if you're not an EU resident (€200 if you do it later than whatever point being UK resident stops qualifying as EU for their internal purposes). And if they accept your account application they will contact you and you have to show up in person to the branch within 30 days with all your ID and documentation (including the documentation about your company's active business in Estonia) to get everything going. A bit of a hassle with the reduced availability of flights at the moment and the fact that you would have to go into quarantine when you came back to the UK.

If that sounds like a bit of a hassle to earn €2 over four years from a €1000 deposit, you may prefer to stick with Barclays. 

I have Euro and USD accounts with Citibank here in the UK. On Euro instant access flexible savings accounts they offer 0.05%.  They do also have a 'reward saver' at 0.10%, though it's not suitable if you want access to your money, and it's unavailable for new clients unless it is opened alongside a Citigold Current Account, and for Citigold you will have a £75 per month account fee unless you get it waived by having an average monthly balance of £150k.  I've had accounts with them for more than a decade, back when they offered more general banking products, and signing up to Citigold wasn't a requirement. But now they are quite niche and mostly looking for international wealthy expats / high net worth customers. Barclays is more of a high street bank, but not looking for wealthy savers with lots of Euros, so it's not surprising that they offer 0% interest when giving you the service of securely storing your Euros.

chamelion

Nexo, if you have appetite for a bit of risk for 8% reward 

cisko65

bowlhead99 said:

cisko65 said:

I am a tax payer here in the UK and have some Euro in a Barclays account with 0% interest. I read something about opening a Euro offshore account. Any suggestions for one with some interests? 
Thanks

What did you read about it? Did what you read tell you that the rates are lower for Euros than they are for pounds?

If you're UK resident you don't need to keep your money in a UK account and could put it in an account outside the UK if you prefer - and if you find a bank that will take you as a customer who's not resident in their country - though you'll still have to pay UK taxes on the interest income you earn.

The European Central Bank publishes statistics about average deposit and borrowing rates throughout the Eurozone. 
(https://www.ecb.europa.eu/press/pr/stats/mfi/html/ecb.mir2004~0d872b8d6e.en.html)
For the month of April, they reported that the composite interest rate for new deposits with fixed maturity made by companies was -0.05% (that's right, a negative interest rate).

If you are an individual in a household, rather than a company, you are likely to be depositing much smaller amounts than the millions that companies are putting away, and so you can get better rates. The fixed term rate for household accounts was 0.26% in April - e.g. if you put money away for a fixed term of up to a year, on average the banks are offering 0.22%, and some shorter durations such as 3 months were paying in the 0.3-0.4% per annum range  (perversely with Euros, the central bank rates are negative and there's no expectation that they will increase soon, so you may actually get a lower rate if you ask for a larger or longer-term deposit).

If you are just looking for an instant access (overnight) rate, the composite rate offered by Euro area banks was 0.02% for April (they have not released the May report yet). It will not have improved since then, given the general lowering of market interest rates and the fact that further quantitative easing / money printing / government stimulus has been announced as recently as this week.

So, yes, there are some banks paying 'some interests' above 0.00%, but the average rate being offered for instant access is only 0.02% ; European households had over €4 trillion in such accounts at the date of the last report. And if you find the highest paying ones, you will have to filter out the ones that don't take money from non-residents.  Just like with the UK, the best accounts are only offered to people who are tax resident in the same country of the bank (to save them the hassle of international tax reporting) and who might be likely to buy other bank services from time to time (to make it worth their while offering you an above-average interest rate, so they can make their money back by selling you loans or credit products or other 'value added' services).

As an example of a rate on offer, picked haphazardly from European bans - Swedbank in Estonia will let you have 0.01% a year on their Easy Saver instant access account (no minimum deposit) or 0.05% on a term deposit. So you could deposit €1000 and after four years of the compound interest you'd have €1002.03. You don't need to be physically resident in Estonia to get the account, but you need to have a genuine connection with the country such as property or a business.  However, Estonia is quite advanced when it comes to doing business digitally and so you could get an electronic personal ID relatively easily and incorporate an Estonian company, and use those credentials to establish a bank account.

They have a fee to open the account if you're not an EU resident (€200 if you do it later than whatever point being UK resident stops qualifying as EU for their internal purposes). And if they accept your account application they will contact you and you have to show up in person to the branch within 30 days with all your ID and documentation (including the documentation about your company's active business in Estonia) to get everything going. A bit of a hassle with the reduced availability of flights at the moment and the fact that you would have to go into quarantine when you came back to the UK.

If that sounds like a bit of a hassle to earn €2 over four years from a €1000 deposit, you may prefer to stick with Barclays. 

I have Euro and USD accounts with Citibank here in the UK. On Euro instant access flexible savings accounts they offer 0.05%.  They do also have a 'reward saver' at 0.10%, though it's not suitable if you want access to your money, and it's unavailable for new clients unless it is opened alongside a Citigold Current Account, and for Citigold you will have a £75 per month account fee unless you get it waived by having an average monthly balance of £150k.  I've had accounts with them for more than a decade, back when they offered more general banking products, and signing up to Citigold wasn't a requirement. But now they are quite niche and mostly looking for international wealthy expats / high net worth customers. Barclays is more of a high street bank, but not looking for wealthy savers with lots of Euros, so it's not surprising that they offer 0% interest when giving you the service of securely storing your Euros.

Thanks for your very details information. I feel quite down about the available opportunities. Might have to stick to 0%. I will also look into Nexo (last see reply I received). Thanks again.

Archi_Bald

cisko65 said:

 I will also look into Nexo

MSE people have already dissected Nexo: https://forums.moneysavingexpert.com/discussion/6011962/nexo-io-6-5-is-it-safe/p1

cisko65

chamelion said:

Nexo, if you have appetite for a bit of risk for 8% reward 

Thanks, I checked the website. Will need to understand the most important thing: where do risks come from? Can't find anything on MSE.

Archi_Bald

cisko65 said:

chamelion said:

Nexo, if you have appetite for a bit of risk for 8% reward 

Thanks, I checked the website. Will need to understand the most important thing: where do risks come from? Can't find anything on MSE.

The risk is that you might lose every last penny of the money you deposit into Nexo as they are not part of any compensation scheme.

cisko65

I crossed Nexo out, thanks. A friend mentioned Axa privat investor. Any advice?
I might need a financial adviser but don't know how/where I can look for someone I can trust. 

Archi_Bald

cisko65 said:

I might need a financial adviser but  don't know how/where I can look for someone I can trust. 

I would suggest definitely not on the Internet.

Best probably to ask trusted family / friends / colleagues / neighbours for recommendations. If it were me, I would look for an independent financial advisor. That is, if the sum of money involved would warrant the involvement of payable advice. They usually aren't interested unless you have several tens of thousands to invest, and you'll be further limited by wanting to discuss Euros. Also, advisors generally deal with investments, not with savings - - - it's not clear what your requirements are, so difficult to offer opinions.

bowlhead99

cisko65 said:

I crossed Nexo out, thanks. A friend mentioned Axa privat investor. Any advice?

In your original post you wanted to use an account offshore to deposit your euros because you didn't get any interest with Barclays.

Then you discovered that bank accounts don't really pay much or any interest in Euro deposits.

So now you're considering an investment service where you would take investment risk to get a better return. Do you really not mind taking a risk that the investment you buy will become worth less than you paid for it, by the time you need the money?

I might need a financial adviser but don't know how/where I can look for someone I can trust

How complicated is your problem that you would need to buy advice? Originally you were just looking for a bank account that paid more than zero percent on Euros, but they are hard to find in a country like this one where Euros aren't legal tender. And 'pointing you towards a bank account that has a slightly higher rate of interest' is not a popular service for which people are willing to pay much money, because it's not something for which an adviser can add much value to what a customer could find for themselves, so professional financial advisers don't have much interest in selling that service. Nor drawing up shortlists of deposit accounts in foreign countries.

If you don't want the service of 'finding a bank account' and instead are looking for 'building a portfolio of investments to invest for a decade or more', then an independent financial adviser could be of use, assuming you have £100k+ where the fees might become reasonable without dragging down the net return too much. You could try an IFA search tool such as adviserbook or others.