Expat Pensions and Tax Deferred Growth
One of the primary advantages of investing offshore is the potential for tax benefit on your expat pension.
In some offshore juristictions life insurance policies and other investments are considered to be virtually tax free at source. Except for withholding taxes on dividend income, your investment is allowed to grow, free from the negative drag created by taxable events.
Depending on your nationality or resident-specific regulations, tax-free growth or tax deferred growth can have a significant impact on your long term net worth.
Compare the two investors below. They both invest $1000 per month and receive a 12% average annual return. The first investor has an expat pension that receives tax deferred growth on her investments. The second investor pays 2.5% of his returns in the form of ongoing taxes (earning 9.5% average annual returns after tax).
After 30 years of contribution the expat pension getting tax deferred growth has almost $1.5 million more money!
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