One of the first moves of applying the flag theory to your digital nomad life should be looking for an international (“offshore”) bank account.
The advantages of such an account are that you will not only save on international currency conversion fees but also keep your hard earned money (legally) from people in your country of citizenship (tax agency, people who want to sue you, ex partners, etc.).
While it is usually easy for authorities to access and block funds in your country of citizenship or residence, larger efforts are needed to access money in foreign countries. At the same time, authorities in another country usually do not care about your funds at only take it from their citizens, to not scare away foreign investors.
But where should you open your foreign bank accounts?
This usually depends on a number of factors:
your country of citizenship
your country of tax residency
the country where your business is incorporated
the country or countries that you are frequently visiting
Chances are high, that you already have an account in your country of citizenship and there is no reason to give it up completely.
For citizens of certain countries it is easier to open an account in foreign countries than for others, being it because of reporting requirements (e.g. US FATCA), trade embargoes (e.g. against Cuba or some African countries), or local laws in the destination country that make it too cumbersome for a bank to open a bank account for a foreigner.
In your country of tax residency it might make things easier to have a local bank account to pay taxes by direct debit or receive refunds, but you might not want to trust this account with a higher balance. What if the tax agency takes 100.000 instead of 10.000 from your account just because of human error and you need weeks to get it back, or you miss a deadline to file a form and they block your account until you comply? If you cannot afford to lose the money in the account from your country of tax residency, you need a safe alternative in another country.
The same rule applies for the country where your business is incorporated. Having an account for your business there makes it easier to pay local suppliers in their currency and to pay taxes or fees and receive payments, but the same trouble can happen to your company.
Having a bank account in the countries where you are usually spend a lot of time during the year might be a wise choice to save on foreign transaction and international ATM fees, although in some countries it may be quite a challenge to open one as a foreigner, your mileage may vary.
Finally, you should open accounts in financially stable countries to store money you do not need on an everyday basis, but on such a short notice that you have no possibility to otherwise invest it.
Which countries and banks are recommended?
European FinTech companies
These are often no real banks but financial service companies that have a special license to offer bank accounts or, if they are real banks, they operate only online through an app, without physical offices.
They often have lower KYC requirements than traditional banks and you can open an account via video identification or by sending notarized copies of your documents by email.
The drawback of these FinTech companies is, that your funds are usually not insured against bankruptcy so you should not hold high balances in these accounts.
If you are from North America, you might want to look in Europe or Asia, if you are from Europe you might want to look in the Americas and Asia and so on. Banks in most countries will open an account if you personally walk into a branch of the bank while visiting the country (sometimes you will need to apply for a local tax identification number before doing that), some might want to see a local address in the country.
The following is a non comprehensive list of countries that are interesting for a digital nomad. In most of these countries we can assist you in opening an account.
United States of America
Banks in the USA offer high quality online banking and one of the worlds best selection of credit card products. Usually you will have to open a bank account in person if you are not a US citizen and you will have to register for an ITIN number.
Lithuania has some interesting FinTech companies that open accounts remotely for a broad range of nationalities.
This option might be especially interesting if you want to safeguard your money against claims from EU countries (as long as the UK is still part of the union).
Ilse of Man
This special jurisdiction of the UK offers multi-currency accounts, is member of the SEPA system but not the European Union, so money in different currencies is safe there. An account can be opened remotely, but you can expect to have a minimum balance between 25k to 50k GBP to be elegible to become a customer.
Denmark is the only country (besides the soon leaving UK) that is not part of the directive that allows EU countries to claim money on bank accounts in other EU countries. To open account there you need to physically travel there and get a national identification number first.
This often underrated country has very good privat banking options and good multi currency accounts. Personal accounts can be opened remotely by sending legalized documents back and forth. Business accounts are usually opened in person. Georgia is not part of CRS (but FATCA) so it does not report accounts to most countries.
Still well known for its high class banking, Switzerland might be an interesting option for banking if you are willing to keep a higher balance (usually at least six figures) and visit the Swiss bank in person.
While it has become more difficult recently, it is still possible to open an account with an international bank in Hong Kong, but this is best done in person in the country and planning a few days for the process, as banks constantly change the documents they want to see and to have legalized before they open an account.
This country usually comes as a surprise, but Ukraine actually has quite some interesting banking options with low fees and good online banking. You might, however, chose to keep your money in a foreign currency (USD, EUR, RUR) as the local Hryvnia has a quite unpredictable inflation rate. You need to apply in person in a branch and need an Ukrainian tax ID number, so plan your stay for a week or two to get this done.
Caribbean islands or tax havens
While it is still possible to open a bank account in classical offshore jurisdictions like the Cayman Islands or British Virgin Islands, it becomes harder and harder to send money to these countries or receive payments from there. They might be suitable for a long term storage of funds, but not for everyday banking because of limited possibility to get a debit or credit card and high transaction fees.
If you are interested in opening an international bank account, you can have a look at our services here, or book a consultation to find the most suitable countries to host your new bank account.