What are offshore funds ?

Answer 1

An offshore fund is a collective investment scheme domiciled in a tax-haven located on an island juristiction or another low tax financial centre considered 'offshore', for example British Virgin Islands, Luxembourg or Dublin.

Advantages
Offshore funds offer eligible investors significant tax benefits compared to many high tax juristicitons such as the U.S. and EU.

Many of these tax-haven locations are considered investor-friendly and are internationally regarded as the financially secure.

Many offshore jurisdictions, notably the British Virgin Islands, offer a zero-tax regime for investment funds which are domiciled there, which allows the fund to reinvest that part of its investment portfolio's gains which would otherwise have been lost to tax. In addition, the regulatory regime in these offshore jurisdictions is deliberately light, with emphasis placed on the importance of balancing effective regulation for the benefit of the protection of investors on the one hand, with the establishment of a regime in which the conduct of investment business is fast and simple.


Regulation
Typically, the regulatory regime will take a two tier approach, making a distinction between funds which are offered generally to members of the public, which require a high degree of regulation because of the nature of potential investors, and non-public funds on the other. Typically, investors in non-public funds can be assumed to be sophisticated because of the nature of the offering - there may, for example, be a high minimum initial investment, say US$100,000, and/or a requirement that investors warrant that they are "professional investors". Or the fund will be designed for a small and select group of investors and the constitutional documents will limit the number of investors, say to no more than 50.

The tax advantages of the funds encourage high tax countries to apply some draconian laws to limit their distribution. For example, offshore funds cannot be promoted or distributed within the United States or to any citizen of the United States.


Criticism
Critics, among whom ATTAC NGO, alleged that they are a main player of the underground economy, allowing legalized tax evasion, in particular through the usage of shell corporations practicing transfer pricing.

Answer 2

An offshore fund is a collective investment scheme domiciled in a tax-haven located on an island jurisdiction or another low tax financial centre considered 'offshore', for example British Virgin Islands, Luxembourg or Dublin.

Answer 3

Offshore funds usually refer to bank accounts outside of the U.S., perhaps in the Caribbean. People from the U.S. store large sums of money in these funds, sometimes to hide it from the IRS. Offshore funds are also often used for money that is earned illegally, or embezzled.

A good example of when offshore funds are used is when Andy Fastow, ex-CFO of Enron, put money in them from profits that he earned illegally from scamming a bank.

Answer 4

Funds outside the United States of America.

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Answer 5

Funds that are in an account in a country w/ very little questions asked for why that $$ is there. Like a swiss account

Answer 6

Funds deposited in foreign banks.