Gone are the days when claiming your South African inheritance from abroad felt like scaling Everest in flip-flops. Thanks to recently relaxed exchange control regulations, inheriting from back home is now a much smoother journey and less of a bureaucratic nightmare. So, if you’re a South African expat and someone’s mentioned you in their will, don’t sweat the paperwork. Deceased estates can now easily distribute your rightful share, even if you’re a non-resident beneficiary sunning it up abroad. Once the estate’s been settled, you can transfer your inheritance offshore and honour the memory of your loved one or distant relative by enjoying the windfall left to you with less red tape and fewer headaches.
Here’s what you need to know about estate distributions from South Africa to non-resident beneficiaries:
1. Exchange control regulations have relaxed in your favour, as an expat:
In the past, it was necessary to complete formal emigration through the South African Reserve Bank in order to become a non-resident for tax purposes, which was the only way to create a free flow of capital out of South Africa. This was because all cross-border transactions involving residents were by default prohibited unless prior approval was sought from SARB. South African expats had to first become non-residents for exchange control purposes, in order to get their hands on money in South Africa to transfer it abroad.
This is no longer the case. Forex providers no longer apply different sets of rules to residents and emigrants. The only distinction made is between South African resident assets and non-residents. Today, cross-border financial transactions are permissible, with the exception of those subject to capital flow control measures or high-risk transactions that are deemed likely to be illegal or shady in some way.
2. It’s now much easier for South African deceased estates to make distributions to non-resident beneficiaries:
If you are still a South African tax resident, you can make use of your exchange control allowances:
- If the amount inherited is less than R1 million you do not need to seek prior approval before transferring the payout overseas, as long as your tax compliance is in order. You can use your Single Discretionary Allowance to claim your deceased estate distribution as a foreign beneficiary.
- If the amount is more than R1 million but less than R10 million, you can use your Foreign Investment/Capital Allowance and follow the Approval of International Transfers process as required by the South African Revenue Service.
If you no longer meet the requirements for South African tax residency, these allowances are no longer available to you to move money offshore:
In other words, if you left South Africa a number of years ago and you completed formal emigration through SARB, you will now need to straighten things out with SARS first before you will be able to receive your deceased estate distribution as a non-resident beneficiary. This means you will need to go through the official process in order to cease your South African tax residency.
Why all the extra admin now? One of the new paperwork requirements as part of the SARS Approval of International Transfers (AIT) process is the Non-Resident Confirmation Letter that is now only issued when you complete the process of tax emigration. If you have already ceased tax residency, and you did not receive this confirmation letter, you will need to manually apply for one on the SARS Contact Us Page.
How do non residents inherit money from South African estates?
When transferring an estate distribution out of South Africa, as a non-resident beneficiary, you will need to supply the following documentation to your authorised dealer:
- Death certificate
- The Last Will and Testament of the deceased
- Liquidation and Distribution Account
- Letter of Executorship
- In addition to your TCS PIN obtained from the SARS Approval of International Transfers (AIT) process.
- Your SARS Non-Resident Confirmation Letter
If you don’t already have one, you will need a Non-Resident Bank Account in South Africa, into which your estate distribution will be paid out, before it can be transferred to you as a non-resident beneficiary.
If you are a non-resident beneficiary with an estate distribution that exceeds R10 million, you will undergo an intensified SARS verification into the source of your funds, after which you will need to seek approval from FinSurv. Larger transfers are subject to a risk management evaluation at an exchange control level which includes an assessment of your tax status, the origin of your funds, and a personal risk analysis, aligning with the anti-money laundering and countering terror financing regulations contained in the Financial Intelligence Centre Act.
FinGlobal: cross-border specialists for South African expats
Handling the paperwork involved in getting your estate distribution paid out to you as a non-resident beneficiary can be time-consuming and stressful. At FinGlobal, we’ve made it our business to remove the headache and eliminate the administrative burden for you. We’ll handle everything for you, every step of the way. All you need to do once you’ve signed the paperwork is sit back, track our progress online, and wait for your money. It really is that simple with us! We can also help you with a number of other cross-border services, such as tax emigration, tax clearance, international money transfers, and more.
To find out more about FinGlobal’s services, please leave your contact details below and we’ll be in touch to discuss your specific requirements.