October 2, 2018
| On 10 months ago

Financial emigration from South Africa

Financial emigration from South Africa is a compliant step from a tax perspective and a formal process..

Financial emigration from South Africa is a compliant step from a tax perspective and a formal process with the South African Reserve Bank (SARB) to change your status from “resident” to “non-resident” for exchange control purposes.

South Africans living abroad are not aware that they can financially emigrate from South Africa without affecting their South African residency status or their citizenship.

How to financially emigrate from South Africa

An announcement from National Treasury, confirmed in Parliament on the fourteenth of September states that South African expatriates abroad are going to be required to pay tax on their worldwide earnings if they earn over R1 million p.a. and haven't ceased tax residency in South Africa.

This announcement has led to an increase in the number of people emigrating from South Africa financially. Financial emigration brings with it considerable advantages.

As a South African living overseas you may transfer offshore:

• Your Retirement annuity, even before age fifty five. There is no restriction on how these funds may be used in the country in which you have chosen to live.
• Any South African Inheritance proceeds
• The assets declared in your emigration application
• Any Passive income that accrues to you including rent, dividends, director’s fees, regular payments for services rendered in South Africa and financial gain from discretionary or vesting trusts

Financial emigration from South Africa involves three steps

Step 1: Make formal application to Financially emigrate from South Africa to SARB and get tax clearance with SARS. South Africans who have lived outside the country for more than five years can apply to the South African Reserve Bank for financial emigration through one of the South African banks, (no tax clearance required), provided all your assets and remaining liabilities are declared.

If you have been residing overseas for fewer than 5 years, you will require a tax clearance from SARS. Once you have obtained your tax clearance, you can submit your application to SARB to change your status to non-resident.

It should be reiterated that this doesn't have an effect on your citizenship, does not involve relinquishing your passport or affect your rights to reside in South Africa in the future. The main purpose for recording money emigration to the South Africa authorities is to ascertain and facilitate the free flow of capital from South Africa.

Step 2: Withdrawing your assets from South Africa. Once the South African Reserve Bank has approved status for financial emigration, you are required to open a non-resident account (also called a capital account) with the bank that submitted your application to SARB. At this stage you'll be able to withdraw your retirement annuities. This withdrawal is subject to tax associate degreed an application for a taxation and you will be required to apply for a tax.

SARS will have to approve the application and determine the tax to be deducted. Your bank will require proof of tax clearance and proof of your approved financial emigration

Once these approvals are in place your finds can be transferred to your non-resident bank account.

Step 3: Transferring your funds abroad.
Once your funds are reflecting in your non-resident account, and your bank has run the necessary checks, they will give the all clear and your funds be released in the bank account of your country of residence.

Is Financial emigration from South Africa worthwhile?

There’s no denying, the financial emigration process does require a lot of paperwork and red tape and can take as long as six months, barring any problems. However, once it's done, you'll be able to access your South African funds freely whilst living abroad.