Can I Have a Business Bank Account in a Different Country?

Despite the connotations of money laundering and tax evasion, there are actually lots of perfectly legitimate reasons to have a bank account overseas.

For instance, if your business frequently works in different countries, transferring money or operating in multiple currencies, then it can make transactions much easier to manage. In most cases they’re also straightforward to set up, and work in a similar way to standard accounts.

What types of international bank accounts are available?

Before you start shopping around, you might want to check with your current bank! Most UK high street banks offer international bank accounts which work just like regular domestic accounts.

Customers can normally use credit and debit cards with these accounts, set up online banking, and even access credit facilities. Just remember that lending criteria may vary, and your ability to access credit might be affected if you’re considered to be a foreign national.

Fixed-rate versus variable rate international banking

Before you do commit to anything, always check the terms and conditions. Fixed-rate accounts often require customers to leave funds in their account between one and five days. Variable rate accounts can allow quicker access to funds, which is always handy in a crisis!

International banking with additional services

Just like domestic accounts, overseas banks (or UK banks which offer international banking) will sometimes offer additional features to new customers. Mobile banking, cheap international transfers, or additional services like insurance or loans might all be part of the package.

Multi-currency accounts

Multi-currency accounts are designed to remove the friction of transferring money across borders, so fees tend to be lower. The currency exchange rates are typically based on the ‘mid-market rate’, which is the de facto ‘real exchange rate’ used by currency traders. Your bank is more likely to add their own mark-up.

Know the benefits and drawbacks of international bank accounts

The pros and cons of international banking does largely depend on your specific circumstances. The good news is that there are generally more advantages than not!

But what about the negatives?

Despite the numerous benefits of international bank accounts, users should consider some of the drawbacks as well. This type of account can be more expensive, with higher transfer and admin costs applied to transactions, or requiring large initial deposits.

You might also need to maintain funds above a certain level in order to avoid fees, which can have implications for your cash flow!

Other banking protection schemes may well be in place, but some countries don’t offer the same level of financial services protection as they do in the UK. Request information from the bank you’re considering to help you weigh up your options.

How do I set up a bank account in another country?

Setting up an offshore business account isn’t dissimilar to opening a domestic bank account. Most worldwide banks are required to comply with anti-fraud and money-laundering rules, so you’ll need to provide personal information, as well as proof of address, identity, and income.

Banks also like to know about the types of transaction that could go through your account, so they may request bank statements from your current provider, invoices, or wage slips. Further evidence again might be needed for accounts used for investments, inheritance, or real estate.

Above all, banks usually need proof that you’ll meet their minimum eligibility requirements as a new customer, so be prepared to prove this.

Are there extra costs for having a bank account in another country?

Making electronic funds transfers internationally usually involves charges, so be sure to check what transfer rates and deals are available when choosing your bank. The cost might also affect your pricing.

Getting a good deal is important because there are few other options aside from an electronic transfer. Domestic cheques can’t usually be used internationally, and having to visit the bank frequently is impractical if you’re based elsewhere!

Again, if you’re using a credit or debit card abroad then remember to look into fees as they can accumulate over time. You might be able to mitigate these by setting up both domestic and offshore accounts and transferring larger sums between them, ready to use in-country with your card.

International banking and tax

One of the most significant expenses you’re likely to accumulate through offshore business banking is tax. If this isn’t disclosed to the relevant tax authority, expect to be heavily fined if you’re caught.

It’s also worth checking that there’s a double-taxation agreement between the country you reside in, and the country where your account is hosted – otherwise you might be asked to pay tax on the same money twice!

Bookkeeping in multiple currencies

A significant advantage of an an international business account is that it enables people to select their own currency for their funds. For those living in a country where the currency is due to decrease in value or is generally unstable, this is a huge benefit.

If you intend to make frequent payments then it’s worth checking fees as well, otherwise things can get quite complicated. Converting currencies when making a deposit or withdrawal can be expensive if you need to apply tax, or if exchange rates are unfavourable.

Good bookkeeping software (we’re real smooth, we know) will include multi-currency tools which make the crossover easier to manage.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.