Why Every Founder Should Conduct a Personal Risk Audit

While caught up in the adrenalin rush of product development, go-to-market strategies and financing obligations, founders often have a blind spot that they consistently overlook – themselves and their families. Objectively identifying business risks is relatively straightforward, yet it’s hard for founders to step outside of their own subjective analysis and understand how their own potential vulnerabilities may impact their family life if circumstances change.

Founders need to think about how circumstances outside of their immediate control can impact their ability to operate and prosper in their home country. Recent events in the US are a prime example of how policy changes, in particular, changes to healthcare entitlements, immigration policies and persistent high inflation, as reported by the US Bureau of Statistics, are causing individuals to reevaluate how they may potentially impact the long-term future for family life.
Second residency advantages without the need to relocate

Portugal’s AIMA has stated that applications for second residency/citizenship, such as its Golden Visa residency-by-investment programme, can be achieved remotely through capital investment. While there is no immediate requirement to relocate, it provides families with the optionality of an effective Plan B, enabling them to relocate if the situation in their home country deteriorates further.

Even if the political landscape stabilises in their home country, second residency still provides a range of attractive benefits. Many are drawn to the possibility of enjoying a more stable, safer society and relaxed lifestyle. They also view second residency/citizenship programmes as providing access to a cheaper cost of living and, in many cases better education opportunities and more affordable healthcare, according to OECD and WHO data that highlights strong educational outcomes and high-quality, affordable healthcare in many European jurisdictions.

Tax and legacy planning benefits
Domestic political changes can also impact tax planning, from both a personal and business perspective. Recent global macroeconomic uncertainty, driven by international conflicts and stock market volatility, have the potential to undermine previously viable financial plans around inheritance, succession, tax planning and higher liabilities in relation to wealth taxes, as highlighted by recent EY and OECD tax reform reporting.

Residency by investment programmes enable business owners to expand operations into alternative, potentially more lucrative, markets. If legal and regulatory changes impact business activities, second residency/citizenship allows business owners to easily incorporate a subsidiary, or new venture, in different markets and trading blocs, such as the EU, Middle East or Mercosur, the South American trading bloc and customs union.

Enhanced mobility delivers new opportunities
Another advantage provided by enhanced global mobility is the opportunity to bypass disruptive travel restrictions when exploring alternative, dynamic marketplaces. EU residency in countries such as Portugal, enables visa-free access to the entire Schengen Area, with holders entitled to spend up to 90 days within a 180-day period in other Schengen Area countries. For founders seeking to expand into new markets and benefit from growing economies, enhanced mobility makes it much easier to explore options and do the essential groundwork needed to prepare to leverage new opportunities.

Residency and citizenship schemes can also help with asset protection. They unlock the ability to open foreign bank accounts to hold hard assets and foreign currencies outside of a founder’s jurisdiction. This helps to facilitate favourable tax and estate structuring to prevent erosion of a founder’s asset base and protect against punitive inheritance tax obligations that may apply in their home country.

An intelligent approach to intergenerational asset transfer
Places like Malta and Cyprus also have existing non-domicile tax frameworks that enhance efficiency through enabling founders to restructure tax residency, corporate domiciles and asset ownership to deliver increased efficiency and sustainability. Such opportunities shouldn’t be viewed as avoidance or evasion; they’re simply about the intelligent and lawful use of different internation tax regimes to preserve intergenerational asset transfer without eroding value or being dragged into prolonged legal disputes.

Second residency/citizenship programmes enable founders to create an effective Plan B capable of delivering multiple benefits from both a tax and lifestyle perspective. Founders that objectively examine how personal vulnerabilities can potentially impact their family’s security and long-term sustainability have taken the first step towards protecting the assets they’ve spent years building – and provide a solution to the impact of events at home that are beyond their control.