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For South Africans living abroad or contemplating an international move, financial emigration is something you’re likely to consider at some point. While at first it may seem to be a costly and daunting undertaking, there are several important advantages which expats will enjoy after successfully completing the process of financial emigration from South Africa.

So, what do you need to know about financial emigration? If you do it right, the costs of financial emigration can be significantly overshadowed by the benefits.

When you should be considering financial emigration

If you’re still in South Africa weighing up your relocation options, it’s advisable to make sure you know what to expect in terms of the tax implications of your move and any exchange control regulations that apply to you,  before you determine your course of action. You’ll need to plan how and when you’re going to access your financial assets to transfer them abroad, and whether or not financially emigrating would make your life easier.

If you haven’t recorded a financial emigration with the South African Reserve Bank (SARB), you will still be considered a South African resident for exchange control purposes even if you live in another country. In terms of SARB rules, a South African resident may only avail of a single discretionary allowance of R1-million and a foreign capital allowance of R10-million per annum.  For the transfer of any funds in excess of the foreign capital allowance limit, a special application will have to be submitted to SARB.

So what is financial emigration and what does it entail?

Financial emigration is simply the official process whereby South Africans are able to change their status from “resident” to “non-resident” with SARB for exchange control purposes. In so doing, you must inform SARB of your intention to financially exit the country permanently.

Here’s a quick breakdown of the process:

  1. Completion of a Form MP336(b) and submitted to your bank with supporting documents required.
  2. Your bank will endorse (stamp) the MP336(b) which you will submit to SARS to apply for a Tax Clearance Certificate – Emigration (TCC Emigration).
  3. If you have received your TCC Emigration, you will provide this to your bank, who will record the emigration with SARB.
  4. Once your financial emigration has been recorded by SARB, your status will change from resident to non-resident.

As with all bureaucratic processes, there is a long wait and a fair amount of red tape to navigate. This process can take anywhere between 3 – 6 months to complete, provided there are no extenuating circumstances and you have submitted the correct paperwork to your bank.  Once you have financially emigrated and SARB has changed your status for exchange control purposes, your bank will then open an emigrant’s capital account to hold your South African assets for overseas transfer.

Financial emigration pros and cons.

As with everything in life, there are pros and cons to every decision you make. Because financial emigration is a personal choice, you’re going to have to weigh up those pros and cons carefully.

Some of the advantages:.

  • You’ll get the opportunity to cash in and transfer abroad the proceeds of any retirement annuity, or pension, provident or preservation fund – usually not an option before maturity date.
  • The proceeds of your retirement annuity, pension, provident or preservation fund are yours to do with as you please – a nest egg for your new life in your new home country.
  • The transfer of your South African-sourced inheritance(s) received subsequent to your emigration will be easier for you, without the hassle of applying for tax clearance first.
  • It is possible to backdate your financial emigration in specific circumstances, which could be useful for lowering any capital gains tax (CGT) liability that might arise.

Some of the disadvantages:

  • You will no longer be permitted to hold a South African credit card
  • CGT liability will be set in motion when your financial emigration is formalised and you are deemed to have sold your assets the day before your emigration.

How much does financial emigration cost?

No two fingerprints are the same, hence we strive to tailor your process to satisfy your financial emigration needs.  

To ensure that you’re going into the process with eyes wide open, and you’re aware of all the considerations, it’s advisable to seek a financial emigration expert for objective guidance and clarity on your ideal way forward to financial freedom. The right financial emigration partner will offer:

  • Transparent fees and fair value: with bespoke cross-border financial solutions.
  • Guaranteed fixed fees for specific services: for predictable costs to avoid the uncertainty of percentage-based fees that vary depending on the transaction amount.
  • A personalised assessment of your individual requirements and objectives.

You’ll know you’ve found a reliable and trustworthy financial emigration provider as they will be an authorised financial services provider and will advise you upfront of the fees that will be payable and the services that will be rendered. While the price will be discussed and determined beforehand, you need only pay on successful completion of the agreed-upon services. This way – when costs are clear up front and payment is dependent on the outcome, you’ll have peace of mind that everything will happen as it should.

In other words, when you ask your potential financial emigration partner: “how much does it cost to financially emigrate from South Africa?” they should be able to give you a detailed, transparent and fixed answer.

Looking to get the ball rolling on your financial emigration?

FinGlobal has already helped more than 34,000 South Africans across 80 countries with varying aspects of their cross-border financial portfolios. If you’re moving countries to start a fresh chapter, or you just want to start investing offshore to diversify your risk and protect your wealth, we’ve got all the expertise you need – exchange control, foreign exchange, tax and more – under one roof.

Give FinGlobal a call today. We’re waiting to conduct your free, no-obligation personal assessment to give you a tailored roadmap to achieving financial freedom – whatever that looks like for you!