Doing Business Abroad

One of the easiest (and most expensive) ways to live and work in a foreign country is to start your own business, which, in some countries, is virtually the only way that many foreigners can obtain a residence permit. The amount a business investor needs to invest varies considerably, e.g. from a few thousand to a million dollars or more (many countries 'sell' residence permits to wealthy investors). Businesses that create jobs are welcomed with open arms, particularly in areas with high unemployment, and a business licence may be conditional on the employment of a number of local citizens.

Most people find doing business in a foreign country exceedingly frustrating and the bureaucracy associated with starting a business, even in many western countries, is often onerous. The red tape can be almost impenetrable, especially if you don't speak the local language, as you will be inundated with official documents and must be able to understand them. It's only when you come up against the full force of foreign bureaucracy that you understand what it really means to be a foreigner! It's difficult not to believe that the authorities' sole purpose in life is to obstruct business (in fact it's to protect their own jobs). Patience and tolerance are the watchwords when dealing with foreign bureaucrats and will also do wonders for your blood pressure!


BEWARE! For many foreigners, starting a business in a foreign country is one of the fastest routes to bankruptcy known to mankind! In fact, many foreigners who start a business abroad would be better off investing in lottery tickets - at least they would then have a chance of receiving a return on their investment! Many would‑be entrepreneurs return home with literally only their shirts on their backs, having learnt the facts of life the hard way. If you aren't prepared to thoroughly research the market and obtain expert business and legal advice, then you shouldn't even think about starting a business abroad.

Generally speaking, you shouldn't consider running a business in a field in which you don't have previous experience. It's often advisable to work for someone else in the same line of business to gain experience, rather than jump in at the deep end. Always thoroughly investigate an existing or proposed business before investing any money.

As any expert (and many failed entrepreneurs) will tell you, starting a business abroad isn't for amateurs, particularly amateurs who don't speak the local language.

Many small businesses exist on a shoe-string, with owners literally living from hand to mouth, and they certainly aren't what could be considered thriving enterprises. Self‑employed people usually work extremely long hours, particularly those running bars or restaurants (days off are almost impossible in the high season), often for little financial reward. In most countries many people choose to be self‑employed for the lifestyle and freedom it affords (no clocks or bosses), rather than the money. It's important to keep your plans small and manageable, and work well within your budget, rather than undertake a grandiose scheme.

If you're planning to buy or start a seasonal business based on tourism, check whether the potential 'real' income will be sufficient to provide you with a living. This applies particularly to bars, restaurants and shops in holiday resorts, especially those run by foreigners relying on the tourist trade, hundreds of which open and close within a short space of time. Don't overestimate the length of the season or the potential income and, most importantly, don't believe everything a person selling a business tells you (although every word may be true). Nobody sells a good business for a bargain price, least of all one making huge profits. In most areas, trade falls off dramatically out of the main holiday season (e.g. June to September in North America and Europe) and many businesses must survive for a whole year on the income earned in the summer months. The rest of the year you could be lucky to cover your costs.

Professional Assistance

Due to the difficulties in complying with (or understanding) local laws and bureaucracy, there are agencies and professionals in many countries that specialise in obtaining documents and making applications for individuals and businesses. They act as a buffer between you and officialdom, and will register your business with the tax authorities, social security, register of companies, Chamber of Commerce and other official bodies. A lawyer or notary can also do this, but will be much more expensive. If you're a professional, you may have to take a routine examination before you can be included on the professional register with the Chamber of Commerce.

There are also business consultants and relocation agencies in many areas, who provide invaluable local assistance. International accountants such as Price Waterhouse and Ernst & Young have offices in most countries and are an invaluable source of information (in English) on subjects such as forming a company, company law, taxation and social security. Most countries maintain Chambers of Commerce abroad, which are also a good source of information and assistance.

Legal Advice

Before establishing a business or undertaking any business transactions in a foreign country, it's important to obtain expert legal advice from an experienced lawyer and accountant (who speaks English or a language you speak fluently) to ensure that you will be operating within the law. There are severe penalties for anyone who ignores the regulations and legal requirements. Expert legal advice is also necessary to take advantage of any favourable tax breaks and to make sense of the myriad rules and regulations. It's imperative to ensure that contracts are clearly defined and water‑tight before making an investment, because if you become involved in a legal dispute it can take years to resolve.

Businesses must also register for local sales, purchase or value added tax. Most people require a special licence to start a business and no commitments should be made until permission has been granted.

Among the best sources of local help and information are Chambers of Commerce and town halls.

Avoiding the Crooks

In addition to problems with the authorities, you may also come into contact with assorted crooks and swindlers who will try to relieve you of your money. You should have a healthy suspicion regarding the motives of anyone you do business with abroad (unless it's your mum or spouse), particularly your fellow countrymen. It's also generally best to avoid partnerships, as they rarely work and can be a disaster. In general, you should trust nobody and shouldn't sign anything or pay any money before having a contract checked by a lawyer. It's a sad fact of life, but foreigners who prey on their fellow countrymen are commonplace in some countries. In most cases you're better off dealing with a long-established local company with roots in the community (and therefore a good reputation to protect), rather than your compatriots. Note that if things go wrong, you may be unprotected by the law, the wheels of which grind extremely slowly in some countries - when they haven't fallen off completely. 

Buying an Existing Business

It's much easier to buy an existing business than start a new one from scratch and it's also less of a risk. The paperwork for taking over an existing business is also simpler, although still complex. Note, however, that buying a business that's a going concern is difficult, as most people aren't in a habit of buying and selling businesses, which are usually passed down from generation to generation. If you plan to buy a business, obtain an independent valuation (or two) and employ an accountant to audit the books.

Never sign anything that you don't understand 110 per cent, and even if you think you understand it, you should still obtain unbiased professional advice, e.g. from local experts such as banks and accountants.

In fact, it's best not to start a business at all until you have the infrastructure in place, including an accountant, lawyer and banking facilities. There are various ways to set up a small business and it's essential to obtain professional advice regarding the best method of establishing and registering a business abroad, which can dramatically affect your tax position. It's also important to employ an accountant to do your books.

Starting a New Business

Most people are far too optimistic about the prospects for a new business abroad and over‑estimate income levels (it often takes years to make a profit) and under-estimate costs. Be realistic or even pessimistic when estimating your income and overestimate the costs and underestimate the revenue (then reduce it by 50 per cent!). While hoping for the best, you should plan for the worst and have sufficient funds to last until you're established (under‑funding is the major cause of business failures). New projects are rarely, if ever, completed within budget and you need to ensure that you have sufficient working capital and can survive until a business takes off. Banks are usually extremely wary of lending to new businesses, particularly businesses run by foreigners (would you trust a foreigner?), and it's difficult for foreigners to obtain finance abroad without local assets. If you wish to borrow money to buy property or for a business venture abroad, you should carefully consider where and in what currency to raise finance.


Choosing the location for a business is even more important than the location for a home. Depending on the type of business, you may need access to motorway (freeway) and rail links, or to be located in a popular tourist area or near local attractions. Local plans regarding communications, industry and major building developments, e.g. housing complexes and new shopping centres, may also be important. Plans regarding new motorways and rail links are usually available from local town halls. 


Hiring employees shouldn't be taken lightly abroad and must be taken into account before starting a business. You must usually enter into a contract under local labour laws and employees often enjoy extensive rights. If you buy an existing business, you may be required to take on existing (possibly inefficient) staff who cannot be dismissed, or be faced with paying high redundancy compensation. It's very expensive to hire employees in some countries, where, in addition to salaries, you may need to pay an additional 50 per cent or more in social security contributions, bonus months' salary, four to six weeks paid annual holiday, plus pay for public holidays, sickness, maternity, etc. 

Type of Business 

The most common businesses operated by foreigners abroad include holiday accommodation, caravan and camping sites, building and allied trades (particularly restoring old houses), farming, catering, hotels, shops, franchises, estate agencies, translation and interpreting bureaux, language and foreign schools, landscape gardening, and holiday and sports centres. The majority of businesses established by foreigners are linked to the leisure and catering industries, followed by property investment and development. Many professionals such as doctors and dentists also set up practises abroad to serve the expatriate community. There are also opportunities in import and export in many countries, e.g. importing foreign products for the local and expatriate market, and exporting locally manufactured goods. You can also find niche markets in providing services for expatriates and others, which are unavailable locally.


Companies cannot be purchased 'off the shelf' in most countries and it usually takes a number of months to establish a company. Incorporating a company in most countries takes longer and is more expensive and more complicated than in the UK or the USA (those bureaucrats again!). There are a wide range of 'limited companies' and business entities in many countries and choosing the right one is important. 

Always obtain professional legal advice regarding the advantages and disadvantages of different types of limited companies.

Grants & Incentives 

A range of grants and incentives are available for new businesses in many countries, particularly in rural and deprived areas. Grants may include European Union subsidies, central government grants, regional development grants, redeployment grants, and grants from provincial authorities and local communities. Grants may include assistance to buy buildings and equipment (or the provision of low‑rent business premises), research and technological assistance, subsidies for job creation, low-interest loans and tax incentives. Contact Chambers of Commerce and embassies for information. 

Wealth Warning 

Whatever people may tell you, working for yourself isn't easy and requires a lot of hard work (self‑employed people generally work much longer hours than employees); a sizeable investment and sufficient operating funds (most new businesses fail due to a lack of capital); good organisation (e.g. bookkeeping and planning); excellent customer relations; and a measure of luck - although generally the harder you work, the more 'luck' you will have. Don't be seduced by the apparent laid‑back way of life in some countries - if you want to be a success in business you cannot play at it. Bear in mind that some two‑thirds of all new businesses fail within three to five years and that the self‑employed enjoy far fewer social security benefits than employees. 


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A concise, thorough account of the Do’s and DONT’s for a foreigner in Switzerland – Crammed with useful information and lightened with humorous quips which make the facts more readable.

American Citizens Abroad

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