International Private Business Owners & Investors – Navigating through unpredictable Tax and Political Landscape

April 2025 /

We hit an era of regulatory shifts and geopolitical uncertainties, where our clients face increasingly complex decisions and headwind for their wealth. Indubitably the risk of landing in unknown territory is getting higher. 

Should one consider selling its international business, transferring its ownership to next generation or relocating abroad, any of these come with significant financial and legal implications to preserve wealth. 

How to proceed for passing through these milestones? 

1. Selling or Transferring a Business: Some Key Considerations

Entrepreneurs contemplating a sale to third-party or transfer to next generation must address critical tax and legal factors:

  • Mergers & Acquisitions (M&A): Unexpected tax reforms can impact the net proceeds of a business sale.  Structuring the deal effectively—through phased exits, earn-outs, or holding structures—can help soften (tax) costs. A thorough preparation of due diligence is also paramount to capture these points and maximize value for stakeholders.
  • Regulatory and Compliance Risks: Different jurisdictions impose rules on international corporate transactions, requiring proactive legal review to avoid unexpected liabilities (anti-trust, ESG, …).
  • Business Succession Planning: For those looking to pass on their business to family members or trusted partners, succession planning is crucial. Tools such as private trusts/foundations, family holding companies, and shareholder agreements can provide tax efficiency and seamless governance to ensure business continuity and control.

2. Asset Protection: Some Legal and Financial Safeguards

Beyond business operations, entrepreneurs must secure their private wealth against economic volatility, legal disputes, and tax overreach.

  • Trusts, Foundations and Insurance Wrappers: where identified as relevant under your own circumstances, these structures provide for asset protection, confidentiality, and potential tax neutrality.
  • International Holding Structures: Establishing a legal entity with diversified asset base and robust governance rules across specific jurisdictions can significantly reduce client exposure to regulatory changes, country risk bail out and family disputes.
  • Tax-Efficient Investment Strategies: Proactively aligning investment portfolios with evolving tax laws ensures continued growth and compliance.

3. Changing Tax Residency: Managing Exit Taxes and Compliance Risks

Relocating to a more favorable jurisdiction comes with substantial challenges we typically point out:

  • Exit Tax and Recapture Mechanisms: Some countries levy taxes on unrealized capital gains on shares when an individual change its tax residency. Relocation can potentially lead to substantial costs if not closely monitored with specific operations. Roll-over and tax deferral in the outbound country may be available, whereas step-up can be sometimes offered in the inbound country. On the other hand, inheritance tax aspects must be considered as there may be catch-up trap rules depending on residency length.
  • Control and management of operating and holding structures: Tax authorities do not hesitate to challenge the effective control and management of legal entities so as to attract tax residency in case of mismanaged relocation. Improper structuring or lack of documented governance can lead to unexpected tax controversy for both the company and the business owner.  Reorganizing operational substance and presence is critical to mitigate such risks in a relocation context.
  • Substance and Residency Rules: Authorities increasingly scrutinize personal residency claims such as treaty benefits, requiring demonstrable economic and personal rationale to justify new tax domicile changes and status.

Conclusion: Proactive Planning -with long-term view- 

In a world changing at an unprecedented pace, international business owners and investors must take a strategic approach to monitor their financial and legal affairs to preserve their wealth.  Engaging with expert advisors, leveraging effective legal structures, and anticipating regulatory shifts are key to ensuring business transition, asset protection, and long-term financial security for the family.

By staying ahead of these challenges, entrepreneurs can maintain control over their wealth and navigate uncertainty with confidence.