Three Unobvious Risks for International Entrepreneurs: Antwort Law Practice

A second or third citizenship for entrepreneurs is no longer a luxury, but an everyday tool for mobility, asset protection, and personal security. It's not just a new document allowing visa-free travel to other countries, but also a new legal, tax, and banking profile for its holder. This is where potential applicants should be extremely cautious. At Antwort Law, thanks to our work in many jurisdictions, we encounter situations where entrepreneurs, without developing a comprehensive strategy, obtain a second passport and face account freezes, bank audits, and regulatory risks. We would like to substantiate these calls for caution with a real-life example from our practice and also warn you of two other less obvious risks:

China and Turkey

Our client from Russia plans to obtain a second citizenship, but offers are very limited due to the high risk of sanctions against his first citizenship. What little we can offer him is unsuitable, as he is not simply interested in a travel passport but wants to strengthen his business profile for investors and partners. Turkey remained the only viable option, as it still offers Russians a citizenship program through repayable investment in the country, specifically the purchase of liquid real estate. However, the client has a manufacturing facility in China, which makes it difficult to obtain a Turkish passport for geopolitical reasons. We continue to work with him on this matter, as we are always committed to individualized work with a positive outcome.

Trendy Jurisdictions

We often receive inquiries about opening holding companies, trusts, or companies in "trendy" countries, such as Saudi Arabia or Scotland, which they heard about at a business meeting or read on a blogger, claiming that "advanced" entrepreneurs choose them because they know something others don't. Sharing experiences and adopting best practices is certainly great, but it shouldn't be done blindly; it requires a precise alignment of your personal interests and circumstances with the realities of the jurisdiction you're seeking to connect with. In most cases, such ideas, seemingly out of thin air, don't survive our first consultation, during which we clarify their actual goals and compare them with the actual situation in the desired jurisdiction.

One company as a "hub" for all funds

It's certainly easier for an entrepreneur to operate a single "main" company for all their purposes: it's cheaper to maintain, less bureaucracy, less confusion over transactions, and all funds and assets are kept in one place. If your turnover is small and your activities are highly focused, then this setup can last for a long time, but only until the first real audit. Yes, using only one company for all your activities is not prohibited by law, but let's think about it like a bank, from the perspective of their risk management. Say, for example, you have one company that receives revenue from clients, pays suppliers/contractors, issues loans to other companies, invests in various assets, pays dividends to the owner, and sometimes accumulates additional reserves. Such a company faces increased interest due to its diverse activities, raising questions about the marketability of transactions, loan interest, profit distribution, and tax base, increasing the risk of additional assessments, disputes with tax authorities, and audit complications. We recommend adhering to the principle of functional separation, using separate functional companies with specific roles instead of a single "hub." For example, an operating company receives revenue, pays suppliers, and conducts core business; a holding or investment company receives dividends, invests in assets, and owns shares; and a financial company manages intra-group financing, issues loans, and accumulates profits when necessary. This is not about "more companies," but rather a clear division of functions.

International business, citizenship, and banking are a unified system in which an error at one level inevitably manifests itself at another. We start not with choosing a citizenship, but with analyzing the business and the geography of operations, assessing funding sources, forecasting bank reactions, and modeling tax and compliance implications. Only then do we offer solutions that work not just on paper, but in real banking practice. Schedule your first consultation with Antwort Law, and we'll help your business become even more efficient and secure.

Lidia Ivanova

International lawyer
Antwort Law