Wednesday 29, November 2017 by Jessica Combes

Offshore wealth management sees adjustments with CRS rule

 

The offshore wealth management market is undergoing a significant adjustment following the rollout of the Common Reporting Standard (CRS), and while there may be some impact on the classic tax havens, the major offshore markets will continue to grow as before, according to GlobalData, a leading data and analytics company.

The CRS is a major change to a market known for being opaque. Last year saw the first collection of data occurring by the early adopters, broadly speaking the EU and dependent states, with the first exchange to occur in 2017.

“Four out of the top five offshore markets are among the early adopters of the CRS, hailing as they do from the EU. However, there is little evidence that offshore investors have shifted assets to avoid disclosure. All five offshore markets were the largest in the world in 2015 and continued to be so into 2016,” said Andrew Haslip, Financial Analyst at GlobalData.

Agreed in 2014, the CRS is the new multilateral automatic exchange of tax information, designed to combat tax evasion by moving the standard for sharing tax information among nations from, ‘upon request’ to automatically.

The institutional sector rather than individual investors had a better year; with the offshore sector becoming more based around the needs and plans of pension and investment funds of various types.

“The fundamental calculus of the offshore market has long been shifting away from client anonymity, which is now a driving force for offshoring among only three per cent of high net worth offshore clients, according to GlobalData. The drive towards offshoring has shifted towards maintaining balanced portfolios through more general geographic diversification, now the top reason to offshore wealth among high net worth investors,” said Haslip.

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