You could be forgiven for thinking there was something wrong with Irish residents investing money outside the Republic. Often the subject of shady dealings in the past, offshore investments have a tarnished reputation.

The most recent figures from the Revenue Commissioners show that 19,000 people declared £158 million in foreign income for the tax year 1997/ 1998. So what do these people know that the rest of us don't?

To begin with, it's important to distinguish between offshore and foreign investments. Offshore funds are assets invested offshore, for example the Isle of Man or the Channel Islands, where tax advantages exist. Gains are subject to the taxation rules of the investor's permanent country of residence. The IFSC in Dublin operates as an offshore location.

Most places, including the rest of the EU, make no special tax provision for non-resident investors. Since the Finance Bill, the tax treatment is the same for funds invested in the rest of the EU as it is for domestic funds.

Moving money: Any Irish person can invest in any currency anywhere and there is no requirement to deal with a local office here. There is a list of offshore product providers available from the Central Bank but an investor is free to deal directly with the foreign fund manager or bank of choice.

This was not always the case, as people following the testimony of various tribunals will be aware. There used to be quite severe currency controls until December 1992 restricting the movement of money by Irish nationals.

The Central Bank does advise that anyone making contact with an overseas operation should ask by whom that organisation is regulated and whether it adheres to any codes of conduct.

Any direct unsolicited mail should be ignored, as it is illegal here for financial companies to tout for business in this way. This does not include mail sent for the information of existing customers.

There are numerous well-established and reputable international firms that provide a range of attractive investment funds.

Tax treatment: One of the main competitive advantages that foreign funds used to have over domestic funds was the gross roll up of tax. While Irish funds used to be taxed on an annual basis, foreign funds were untouched until the investor cashed out.

Since January 1st this year, Irish funds have moved to the gross roll up tax system, removing the edge foreign funds used to have.

The biggest disincentive for foreign funds used to be the fact that 40 per cent capital gains tax was applied to returns. This was compared to the standard rate of tax plus 3 per cent - currently 25 per cent but coming down to 23 per cent in April - which was applied to domestic funds.

The tax regime was harmonised for EU and domestic funds in the Finance Bill and now both operate on the principle of gross roll up and are taxed at the lower rate.

You would think this would have led to increased activity from foreign fund managers promoting into the Republic. As yet, this has not happened.

Low profile: The main problems for foreign fund managers, according to Mr Paul Overy of Financial Engineering Network, are brand awareness and distribution.

A lot of international fund managers stopped their marketing activity here, as offshore investments got a bad name through various scandals.

Now there is little awareness of the top foreign names and it's possible to get a good selection of international funds through well-known local financial houses.

According to Mr Overy, most people with an appetite for sectoral or geographical investment are wealthy and do it themselves with professional advice. In his experience, smaller Irish investors are fairly unadventurous.

But what makes international funds interesting is their range. They are drawing from investors globally and can offer specialist funds that appeal to people with particular investment interests.

Choosing funds: There's nothing to stop Irish investors going for whichever famous or unusual equity fund grabs their fancy.

Mr Douglas Farrell of National Deposit Brokers says these funds are suited to people who are more concerned with choice than cost.

"These funds tend to be expensive, 5 per cent to get in, 0.5 per cent to get out and a 1.5 per cent annual management charge," he said.

Investors making up their minds need to consider where the fund is investing, briefly take into account past performance and assess the level of charges and service. The reputation of the promoters of the products is also important.

Declaring foreign income: So where does tax compliance come into all this? According to Ms Marie Barr of the Institute of Chartered Accountants, all the relevant information must be included in an individual's tax return.

Irish residents must declare: any foreign bank accounts; when an asset is acquired; and income from foreign assets.

An Irish resident who has acquired an asset must also account for the disposal of that asset.

As for having money on deposit outside the Republic, Ms Barr says that, aside from some limited exceptions, there's little sense in doing it. Any interest is subject to 40 per cent capital gains tax and you are also taking a currency risk. Irish residents are free to hold a deposit account within the State in any currency.

The vast bulk of overseas or cross-border investment by Irish residents in recent years has been property-based.