Switzerland, Singapore, Luxembourg: Here's Where the World's Richest Store Their Offshore Accounts
In a bid to avoid heavy taxes, many of the world’s wealthiest opt to set up offshore accounts in countries with more tax-friendly policies. Plenty of movies and shows have depicted offshore accounts in a malevolent light, designed specifically for drug lords, corrupt politicians, and the like.
There are certainly issues regarding offshore accounts, such as loose regulations and confidentiality agreements that make it possible to commit money laundering and tax evasion. But in reality, it’s a feasible and legal option to protect your assets in tax havens—for now.
According to Boston Consulting Group (BCG), there is roughly $10 trillion in personal wealth being stored in offshore accounts, with Switzerland being the prime destination for private assets. According to BCG, over $2.4 trillion in private wealth was parked in Switzerland in 2020, with Western Europe as the top source of cross-border accounts.
Following Switzerland are Hong Kong and Singapore, which hold $2.1 trillion and $1.2 trillion in offshore wealth, respectively. Naturally, the source of this wealth is from other Asian countries. Other popular offshore countries are U.S.A. ($0.9 trillion), U.A.E. ($0.5 trillion), Luxembourg ($0.4 trillion), Monaco ($0.3 trillion), and Liechtenstein ($0.2 trillion). The U.K. ($0.4 trillion) is also on the list, but listed separately from the Channel Islands and the Isle of Man ($0.5 trillion), both found within its territory, as the two territories act independently as tax-friendly entities.
While the U.S.’s offshore wealth is sourced from Latin America, the U.A.E.’s come from the Middle East. Meanwhile, aside from Switzerland, the wealthiest people from Western Europe are storing their wealth in the U.K., Channel Islands and the Isle of Man, Monaco, Luxembourg, and Liechtenstein.
For now, Switzerland reigns as the top cross-border booking center for wealth, but that’s expected to change in 2023 as BCG predicts Hong Kong will take the lead due to inflow from mainland China. Hong Kong and Singapore are forecast to have the highest compound annual growth rate from 2020 to 2025 at nine percent each.
In just five years time, Asia could be the world’s biggest cross-border financial center holding the most amount of offshore wealth in the world.