Over the last few months and in the wake of the OECD crackdown on tax havens, when talking to my personal consulting clients and handling the free anonymous e-mail consultations we offer to members, I’ve been asked numerous questions about participating in offshore tax amnesty programs like the IRS’s ‘Offshore Voluntary Compliance Program‘ (OVCP), the UK’s ‘New Disclosure Opportunity‘ (NDO) and equivalent programs in many other countries.

Some surprising countries like the Netherlands – including Netherlands Antilles – and Argentina are also getting very agressive with their non-compliant taxpayers and are busy signing Tax Information Exchange Agreements (TIEAs) with offshore havens.

First of all, the usual disclaimers. There is no easy to answer to this question as it depends very much on personal circumstances. International tax lawyers I have talked to are divided in their opinions too. My job here is simply to report what I’m hearing on the offshore grapevine. Nothing here should be construed as tax advice.

The USA  Offshore Voluntary Compliance Program has attracted the severe criticism for being highly ambiguous – even those participating in the amnesty and filing their FBAR forms have received no guarantee that they will not be subject to criminal prosecution later. So, one might ask, what is the benefit of participating in the amnesty? The IRS are effectively saying to taxpayers “you just have to trust us.” Hmm. Any good lawyer will tell you not to trust the opposition. And on that basis many good lawyers have advised clients that it is not in their interests to participate in the amnesty.

Although it has now technically finished, we hear that the IRS may still be offering informal ‘deals’. And the main point of such deals is to collect intelligence on offshore bankers, lawyers, accountants and others who have assisted US taxpayers in tax evasion in the past.

In this regard, I have specifically warned a few clients about undeclared accounts they have in banks that I won’t name in public, but which are likely to be high on the IRS radar. Certain European banks, mainly banks in Switzerland, Austria and Denmark, that I could probably count on the fingers of my two hands, have been very active in the past in terms of marketing their services to Americans. UBS was one of them, but there are others, including some small boutique private banks with mainly American clients.

If the IRS didn’t know about these offshore banks before, they certainly do now. So which banks do you think will be top of the list for auditing with a fine tooth comb once the new QI rules are agreed sometime next year? (More on the new 2010 QI rules coming up shortly in Q Bytes – we are working on that now)

You already know if you are a client of one of these banks or not. In the past, they had representatives travelling worldwide – even to the USA – meeting American clients, often at gatherings frequented by libertarians, banking privacy enthusiasts and the like.

If your hidden account is in a bank with few US clients that has not popped up on the radar, you are undoubtedly in a much more advantageous position. But it’s still not too late to close out your accounts with the affected banks and move assets into a more robust, legally watertight asset protection structure – hopefully including assets that do not trigger reporting requirements (physical gold comes to mind.) By closing such vulnerable accounts as soon as possible, you can minimize (but not eliminate) the risk of detection, since audits should hopefully cover only active accounts.

A second, unstated, purpose of the amnesty programs and the IRS spin machine (press releases etc) is simply to scare people with bluff. A lot of the most productive Americans, who have been the stimulus that brought prosperity, jobs and wealth to their country over past decades, won’t be enjoying a relaxing holiday season this year. We don’t think this is fair, of course.

Although bank secrecy is under attack, it’s certainly not dead yet. On the other hand I’ve been saying for years that it is a BIG MISTAKE to hold unreported bank accounts in your personal name. There are much better ways to legally hide money and protect what is yours. Which are the best offshore banking countries for 2010? We regularly write about such solutions and about the safest and best offshore banks here at Q Wealth Report. We believe in practical, positive advice – not scare tactics.

If you don’t see what you want in our publications, paid-up members are entitled to a free e-mail consultation (subject to the natural limits of my time) and/or to a referral to an expert US tax lawyer we know and recommend based in Panama who can also help with disclosure and amnesty matters.

The IRS have declared the US amnesty a huge success. The UK tax authorities, however, have openly admitted that they are disappointed with the number of people coming through under the NDO. In an effort to attract more, they have extended the deadline through to January 4th.

A separate UK tax amnesty is one negotiated exclusively with Liechtenstein, which it is generally agreed by experts offers very favorable terms to taxpayers. However, only 27 people have come forward so far under this amnesty. From this month, the Liechtenstein disclosure amnesty is being extended to allow UK taxpayers who hold undeclared accounts in other jurisdictions to move those accounts to Liechtenstein and then take advantage of this special amnesty.

Anyway, if you want to be kept informed on this subject it is a regular topic in our weekly Q Bytes newsletter. It is absolutely free, just sign up and confirm your e-mail address. We will not spam you and you can unsubscribe instantly at any time. To sign up to Q Bytes click here.

“When the facts change, I change my mind. What do you do, sir?”  Keynes’ comments are very relevant to the fast changing world of banking where we do business today. Investors more than ever have to keep on their toes, keep themselves informed, and not be complacent.

Which are the world’s safest or best offshore banks? Where is the best country to open a bank account? Which is the best offshore tax haven? Is it still a good idea to open a bank account in Switzerland?

These are the type of questions I get on a daily basis as an offshore wealth management editor and consultant. For example, in recent months I have seen a lot of the fallout of the UBS scandal in the United States. Swiss banking giant UBS has closed thousands of  bank accounts based in their Swiss branches where American residents or citizens were involved as signatories – even accounts that had been open for decades. Many investors believe that Credit Suisse could be next on the hitlist and are beginning to think that ‘small is beautiful’ when it comes to private banking.

The answer, as I always have to explain, is that there is no ‘best offshore bank’ nor even ‘best offshore banking country.’ A whole range of individual circumstances come in to play. Investors have many different motivations when looking for a new bank. Often these days, the level of service, privacy, and asset protection are far more important than the tax implications of a secret offshore bank account.

For example, your citizenship is very important. If you are a US citizen your options are more limited, as many offshore banks no longer accept US citizens as clients. Canadians or Australians for example will have fewer problems in this regard. But the traditional wisdom is that for the best level of privacy, choose a bank that does not have offices or branches in your home country.

If you are a citizen of a European Union country (including the United Kingdom of course) then the European Union Savings Tax Directive comes into play, and you might prefer to hold your offshore bank account in one of the tax-haven type banking countries that is not a signatory to this treaty. That rules out Switzerland, Andorra and the Cayman Islands for example – and brings into play other prominent financial capitals a little further afield, like Panama or Singapore.

But there are also other nuances to look out for besides citizenship and residency. What kind of services are you looking for? Do you want one with the best online trading technology or the one with the highest level of personal service? Generally, those two are polar opposites.  Traditional private banking is expensive. Whereas for online trading in the financial markets, maybe you don’t even need a bank account these days.

Most offshore banks offer debit and/or credit cards, and internet banking – two essentials for the modern expat bank account. But again from here, services vary widely. Will it be a Maestro ATM card or a an American Express Platinum? If you are mainly interested in cash withdrawals using an offshore card, then Maestro might be better. But other clients want the prestige and service level afforded to those Gold and Platinum level clients – not to mention perks like airline miles offered on HSBC’s Panama Platinum Mastercards (that can be very valuable if you are conducting serious business through your offshore company.)

Ultimately, then, there is no correct answer – the best offshore bank account for one person is completely different from the best account for somebody down the road. If you would like to read more about this, you will find 40 or so pages of easy to read advice in my Practical Offshore Banking Guide 2009. This report is available instantly for download in pdf format, and also includes contact details of ten offshore banks we can particularly recommend that are suitable for most of our readers.

The guide is FREE OF CHARGE if you are already a member of The Q Wealth Report. If you are not yet a member, you can sign up online right now for the price of a good lunch ($87 to be precise) and get instant access to this information, together with our no-quibble money back guarantee of satisfaction. Or, if you are not ready just yet but would like to stay in touch, sign up for our Q Bytes online newsletter and get a free five part course on offshore banking and asset protection.

by Peter Macfarlane for The Q Wealth Report