So you’ve just been granted permanent residency after leaving South Africa, which has got you pondering: do you still have to apply for financial emigration now that you’re a resident in another country? The answer is: yes. Read on to find out why…
Why and how to financially emigrate from South Africa
Just because you’re a permanent resident in a country outside of South Africa doesn’t mean you’ve cut financial ties with your home country officially. Doing so requires you to formalise your emigration with the South African Reserve Bank (SARB), in order to have your status changed from resident to non-resident for exchange control purposes.
Financial emigration isn’t something that happens automatically when you’re granted residency in another country. It is an entirely voluntary process, but you will have to make the application to the South African Reserve Bank in order to show them that they should change the way they view you for exchange control purposes. Here, permanent residency in another country is one of the supporting factors in favour of your application.
Why would you want to complete the South African financial emigration process?
There are a number of advantages that come with being considered a non-resident by SARB. The exchange control rules that apply to non-residents are far less stringent than those imposed on South African residents, so financial emigration works in your favour as it:
- Makes it easier for you to transfer money out of South Africa (capital and income) and reduces the administrative burden and annual restrictions on doing so.
- Makes it easier for you to protect your hard-earned savings from the Rand’s volatile performance in the global currency market.
- Makes it possible for you to access and transfer offshore the proceeds of your retirement annuity before the official retirement date, the proceeds of which can be used for any purpose.
- Makes it easier to transfer abroad your South African source inheritance, passive income (such as rental income, dividends, director’s fees) as well as any money/assets you’ve declared in your financial emigration application to the South African Reserve Bank.
- It also makes it easier to transfer abroad your income from a discretionary or vesting trust, in certain circumstances.
How to emigrate financially from South Africa
There are three main steps involved in financial emigration. After you’ve completed the South African financial emigration process, and the Reserve Bank has approved your application, they will no longer view you as a resident for exchange control purposes.
The South African financial emigration process
If you’re more of a visual learner, you’ll appreciate this infographic we compiled to explain the steps involved in financial emigration from South Africa, which will change your status to non-resident for exchange control purposes.
Read more on the three steps to financial freedom abroad aka financial emigration from South Africa.
How much does it cost to financially emigrate from South Africa?
As with everything in life, freedom comes at a cost and there are some drawbacks to financial emigration. It’ll be up to you to weigh up the pros and cons in making the decision to financially emigrate from South Africa. In the interests of full disclosure, some of the disadvantages include:
- As a non-resident, you will not have access to credit in South Africa. This means no personal loans, and no credit cards.
- Capital gains tax liability is triggered on the date your financial emigration is formalised and you will be deemed to have disposed of your assets the day before your financial exit. This can be a bit of a shock to the system if you’re not prepared for it.
As everyone’s personal circumstances differ, it’s impossible to put a price on financial emigration. Ensuring your unique needs are met requires a tailored emigration solution, and it’s worthwhile getting objective guidance and experienced clarity as you make your decision on whether financial emigration is your best move.
FinGlobal: Your trusted financial emigration partner
When it comes to financial emigration from South Africa, in addition to offering our objective advice on your personal circumstances, FinGlobal also promises:
- Transparent fees and fair value: To advise you up-front of the fees that will be payable on the services rendered (our services include going the extra mile!)
- Fixed fees for specific services: No room for unpleasant surprises with percentage-based fees that vary according to transaction value.
- To pay attention to you: To conduct a thorough personalised assessment of your individual needs and goals, and deliver a financial emigration solution that fits your circumstances perfectly.
Furthermore, we don’t expect any payment upfront. You’ll only pay us exactly what we agreed as a fee, upon successful completion of that service. This way you can rest assured that you’ll get what you pay for.
In addition to helping you every step of the way with the paperwork for your financial emigration, FinGlobal also offers a comprehensive suite of cross-border financial services for South African expats, including:
- Exiting the tax system
- Foreign exchange
- Tax clearance
- Tax refunds
- Retirement annuity withdrawals
- Pension fund income transfers
Trust your financial emigration to the experts. Leave us your contact details and we’ll be in touch to conduct your free, no-obligation financial emigration assessment.