Katy Bolton
by Katy Bolton
Let us set the scene: a South African entrepreneur wishes to expand her business into Africa via Mauritius. Her children wish to attend university in the United Kingdom, and thereafter settle in Portugal while her parents have their sights set on retiring in Thailand. How does she best go about achieving these goals?
There is no doubt that this entrepreneur will have a diversified investment portfolio containing a mix of distinct asset types and investment vehicles, to limit exposure to any single asset or risk. Similarly, in the wake of Covid-19, many global citizens are looking for options to create optimal value and mitigate risk in terms of where they and their families can live, work, study, build wealth and invest.
Here enters the phrase “domicile diversification” – a familiar concept that has in recent years catapulted to the forefront of international tax planning strategies. It is a process whereby one takes advantage of our ever shrinking world by creating a geographically diversified domicile/residence portfolio through a selection of residence-and-citizenship-by-investment programs in a bid to transcend the constraints of a person's country of origin, improving the resilience of their portfolios, both financial and physical.
Domicile diversification can also be used as a legacy planning tool, preparing for future generations and providing them with access to countries and regions across the globe. If this is the goal, individuals must be sure to gain residence or citizenship rights in those countries which automatically entitles your children or other dependents the same rights afforded to yourself.
For a price, the South African entrepreneur can select several complementary residence options in a range of regions to enhance her family’s global mobility and cater to their differing needs. She and her children may make use of the UK Tier 1 Innovator Visa to gain residence in the United Kingdom, or the Portugal Golden Residence Permit Program or Cyprus Permanent Residence Program to gain residence in the European Union. For her business dealings in Mauritius, she may wish to acquire residence via the Mauritius Residence by Investment Program. Her parents would benefit from the Thailand Elite Residence Program, something she too may investigate if she chooses.
Gone are the days of single jurisdiction tax planning. The global citizen now requires a well-thought out strategy to mitigate risk, maximise value, and preserve wealth, all while considering the needs of the whole family and generations to come.
Nolands is an international auditing firm located in eleven offices in all major centres in Africa. Nolands employs almost 200 people and focuses on providing the best possible solutions for its clients. The company prides itself on being “not ordinary” and on its ability to integrate services and respond rapidly to clients’ needs.
Katy Bolton is Tax Consultant at Nolands Tax. She is an admitted attorney of the High Court of South Africa, with her highest qualification being a Masters in Commercial Law. Her interests in tax range from individual estate and tax planning to corporate tax and she is currently completing her Masters in Tax Law at the University of Cape Town. Contact Katy.
GGI member firmNolands TaxCape Town, South AfricaT: +27 21 658 6600Advisory, Fiduciary & Estate Planning, Tax