According to providers, offshore investors want an alternative to accounts that stick to the EU Savings Directives Rules.
This news comes as life assurance companies have indicated a stronger focus on offshore bond wraps and deferred-interest accounts, which do not attract the scrutiny of the directive. Standard Life is about to enter the market and is continuing to research the level of interest from the public.
Other providers offering deferred interest or offshore bond-wrapped products include Norwich Union, Prudential and Friends Provident. The EU Savings Directive states that account holders with savings in the Channel Islands or Europe must declare the amount invested or pay a non-disclosing fee. A withholding tax of 15% is charged to those people not wishing to disclose the amount they have sheltered offshore.
Our view
The reality is that for some it is cheaper to pay a withholding tax of 15% than declare the interest on your tax return and pay 40%! Or for Dutch investors 50%!