If you are thinking about leaving the country, you might want to know if you are allowed to keep your South African bank account open in South Africa when the emigration is formalized. People have many reasons for wanting to keep their bank account open which range from wanting to send money back home to wanting to maintain their local debit orders. Whatever the reason for wanting to keep your bank account is, it’s best to familiarize yourself with emigration laws and requirements when financially emigrating from South Africa.
What is Financial Emigration?
Just how much do you understand about financial emigration? Where most would-be expats get confused is that they don’t understand the difference between emigration and financial emigration. Emigration is the process of physically relocating from one country to another, either for the short term or long term. Financial emigration is the process that follows if/when emigration has become a permanent thing. When you financially emigrate, the process of moving your assets from the old country to your new country of residence is actioned.
During this time, the taxpayer must change his/her status with the South African Reserve Bank. This means that you will change from “resident” to “non-resident”. Most South Africans immediately worry that this will negatively impact on their citizenship when in fact, financial emigration is done for the purpose of exchange control and will have no bearing on your citizenship status at all. Financial emigration is handled through the South African Reserve Bank and the South African Revenue Service. This is to ensure that individuals comply with the income tax act and that they are in fact a non-resident as per the compliance regulations.
Must I Close My Bank Account When I Emigrate from South Africa?
As the process of financial emigration involves transferring a person’s assets to the new resident country, it only makes sense that their South African bank account must be “closed” during the process. During the process of financial emigration, only one authorized financial dealer is allowed to be used for the transfer of assets, which means that bank accounts need to be closed so that your dealer can finalize the transaction.
Must I Close My Bank Account Completely, Immediately?
There’s a common misconception that the South African bank account must be closed in entirety, immediately which can lead to loose ends. The fact of the matter is that it is the status of the bank account that is changed. The account will no longer be a regular bank account, but rather an emigrant capital account, often also referred to as a “blocked asset/non-resident” bank account. The account is not completely closed, because the South African Reserve Bank requires an SA bank account number in order to initiate the financial emigration process.
You might be wondering what the difference is between a regular local bank account a “blocked asset” bank account. The main difference is that you will have no internet banking features and no card facilities when your bank account status is changed to a “blocked asset” account. In order to transfer funds out of the account or into it, you will need to personally get in touch with the bank to effect these transactions for you. Debit orders can continue to run from the bank account as per normal. While this is how most blocked asset bank accounts work, it is always recommended that you get in touch with the bank or your authorised dealer to learn exactly how their facility works.
The funds in the Emigrant Capital account must be declared on the MP336(b) form before it will be possible to transfer them. Credit cards also need to be paid off and closed before the process can be finalized. The status of your local bank account will need to change because when you choose to financially emigrate from South Africa, you are proving your intention to permanently live and earn money outside of South Africa.
If you will still earn money in South Africa, you will need to do a tax return each year, even if it is a zero return. If you wish to be completely deregistered from the tax system, you will need to make an application for this only once your financial emigration is finalized.
Can I Be a Shareholder of a South African Business and Have a Business Bank Account if I Financially Emigrate?
Most people believe that they are completely cut off from South Africa when they go through financial emigration, but that’s simply not the case. Even when it comes to business in the country, allowances are made for shareholders and business owners. As a shareholder of a private company, you can have a business bank account in South Africa even after you have financially emigrated.
Get More Information & Guidance on Financial Emigration at FinGlobal
Understanding the intricacies of financial emigration from South Africa can be tough. With the rules changing from time to time and the process being such a major one, it’s within your best interests to consult with the professionals in the industry. If you would like to find out more about what happens to your bank account when you financially emigrate from South Africa, take the time to get in touch with us at FinGlobal. We provide premier advice and guidance to South African expats across the globe. For expert advice, simply contact us at FinGlobal. You can give us a call on +27283122764 or email us on info@finglobal.com.