Physical emigration and financial emigration from South Africa are two very different processes. Physical emigration involves packing up your belongings and moving to a new country for either a short-term or long-term contract. It can also include leaving South Africa permanently to start a new life abroad. Financial emigration can either accompany physical emigration or it can take place retrospectively, once you have settled abroad.

 

What is financial emigration?

Financial emigration, also known as formal emigration concludes your financial affairs from a South African point of view. When you financially emigrate from South Africa your status, for exchange control purposes with the South African Reserve Bank, changes from resident to non-resident. Financial emigration does not change your status as a South African. You and your family still have the right to South African citizenship and your South African passports.

When can financial emigration take place?

Financial emigration can take place at any time. FinGlobal, South Africa’s first company assisting South Africans with the global transfer of their money, has helped many South African expats financially emigrate. In the majority of instances, the financial emigration was done retrospectively, meaning that most expats had left the country over the last 30 years and had never recorded their financial emigration at the time of their departure.

What are the advantages of financial emigration?

Financial emigration helps free the flow of your capital (and income) from South Africa and helps protect your savings from the rand’s fluctuations in the global currency market. For many people, the huge advantage is that they are able to withdraw and transfer their South African retirement annuity offshore, even before they are the age of 55. The cash from their retirement annuity can be used for any purpose – from buying a new home to investing in their children’s education.

Financial emigration also helps in situations when your finances change. For example, you may be living in New Zealand and suddenly receive an inheritance back in South Africa. You may then discover it is difficult to get the money out of the country because while you have physically emigrated, you haven’t financially emigrated and the South African Exchange Control still considers you to be a South African resident.

Along with South African retirement annuities and source inheritance, financial emigration allows you to transfer offshore:

 

• The proceeds of assets declared in your emigration application
• Passive income, i.e. rent, dividends, director’s fees, salary for services rendered in South Africa and income from discretionary or vesting trusts

Can anyone financially emigrate?

As long as you are living abroad, you can financially emigrate. In order to financially emigrate, your tax affairs must be in order and up-to-date. Once you have financially emigrated, for exchange control purposes, your South African bank account becomes a capital account, which is subject to regulatory restrictions. Your remaining South African-based assets and transactions from this account will be controlled by the bank holding your capital account.

How to financially emigrate

Financial emigration involves a very specific set of procedures including obtaining a tax clearance certificate, completing a Form MP 336(b) and then recording your emigration with the South African Reserve Bank and the South African Revenue Services. This process can take up to six months and can be challenging if you are living abroad at the time. For a free consultation on how we can help you smooth the obstacles and reduce the red tape, contact FinGlobal today.