How to acquire a foreign residency or citizenship by starting a business
Dani van Vuuren, Business Development Consultant at Sovereign Trust (SA) Limited
In a previous article, we discussed how South Africans can use Financially Independent or Passive Income Programmes and Tax Residency programmes to acquire a second residency, or even citizenship. In this article, we focus on the opportunities offered by business investment and incubation programmes.
The route to a second residency or citizenship doesn’t only lie through high-priced Golden Visas and ‘donations’ to foreign governments. For growing numbers of South Africans, starting a business in another country is proving to be a rewarding way to acquire an alternative residency.
Moving abroad offers a range of benefits, says Dani van Vuuren, a business consultant at Sovereign Trust. These include the ability to travel internationally without visa restrictions; providing better education and a multitude of career prospects all while offering a comfortable, convenient and tax efficient location to retire with greater tax efficiency; wealth management; and estate planning.
"If you’re looking to start a business in a foreign jurisdiction, there are two key options: Investment programmes or business incubation programmes,” she says.
Active, Start-up and Business Investment Programmes
These programmes offer residence permits to applicants who establish a business or invest in a business in a chosen country. A major benefit of these programmes is that their investment and entry requirements are often relatively low, as the host countries are looking to incentivise job creation and economic activity.
Some of the most popular jurisdictions for South Africans to start new businesses include Cyprus, Guernsey, Portugal, the United Kingdom (UK), Mauritius and the United Arab Emirates. There are also various options available in Singapore, Thailand, Antigua & Barbuda, the Bahamas and the Cayman Islands.
Investment and minimum stay options vary broadly between each country – for example, Cyprus requires only one visit every two years, while the UK demands that a business owner live in the country full time.
Business Incubation Programmes
These programmes offer residence permits to applicants who commit to investing and working with specialist business incubation partners and local government-backed research and development (R&D) facilitators to establish a local business and economic activity. In some cases, these programmes have low minimum stay requirements.
Here, the countries offering major opportunities for South Africans include Portugal, Canada and the US. Each country requires a minimum investment for this type of programme, but there are clear paths to permanent residency and ultimately citizenship.
“There are so many points to consider before deciding which programme, and which country, is right for you and your family’s needs. These include succession and estate planning; personal, commercial and health insurance; and investment and retirement planning,” says Van Vuuren.
“Second residencies may influence how your wealth and estate is handled and taxed at death, how a country taxes your pension, the inheritance laws applicable to that country, as well as the need (or lack thereof) for change of insurance. Do the smart thing: get professional advice, and do your homework before jumping into potentially life-changing decisions.”
