Citizenship vs residency – what South African expats and those planning to emigrate need to know

For South Africans living abroad or planning to emigrate, understanding the distinction between citizenship and residency, especially residency for tax purposes, is critical. While citizenship determines your legal rights in a country, residency determines where you are taxed. Misunderstanding these concepts can lead to unexpected tax obligations or compliance issues with the South African Revenue Service (SARS), and nobody wants that!

In this guide, we’ll take a look at the major differences between citizenship and residency, explain how to determine your tax residency status in South Africa, and outline how to formally cease tax residency if you plan to emigrate.

Citizen vs permanent resident: what’s the difference?

Citizenship is a legal status that entitles you to hold a South African passport, vote in elections, and enjoy the full rights of a South African citizen. Historically, South Africans who obtained a second nationality without applying for permission from the Department of Home Affairs risked losing their South African citizenship.

However, in a landmark May 2025 Constitutional Court ruling, the law that automatically stripped South Africans of their citizenship upon acquiring another nationality was declared unconstitutional. This means:

• South Africans can now acquire dual citizenship in South Africa without needing to apply for permission beforehand.
• Those who previously lost their South African citizenship under the old law are now deemed not to have lost it. They can apply to the Department of Home Affairs for reinstatement of citizenship to restore their records.
• This ruling reinforces the right of South Africans to hold dual citizenship and ensures that citizenship cannot be revoked without due process.

While this ruling protects your citizenship status, it’s important to note that citizenship does not determine tax residency. You can hold dual nationality or retain your South African citizenship while living abroad, but you may still be classified as a South African tax resident and subject to worldwide tax unless you formally cease tax residency.

Read more: Automatic loss of South African citizenship no longer possible.

How is tax residency determined?

South Africa operates on a residence-based taxation system. This means that if you are a tax resident in South Africa, you are liable for tax on your worldwide income. If you are a non-resident for tax purposes, you are only taxed on income sourced from South Africa.

Read more: South African tax residency rules – expats, are you still tax residents of South Africa?

SARS uses two key tests to determine tax residency status:

1.The ordinary residence test

If South Africa is your usual or principal place of residence—where your personal, family, and economic interests are centred—you are considered ordinarily resident and are a tax resident.

2.The physical presence test

If you are not ordinarily resident, you may still be a tax resident if you meet all three conditions:

• You were in South Africa for more than 91 days in the current tax year, and
• More than 91 days in each of the previous five tax years, and
• More than 915 days in total over the past five tax years.

Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.

Failing both tests? You still need to cease tax residency officially

Failing both the ordinary residence and physical presence tests does not automatically make you a non-resident for tax purposes. You must formally notify SARS that you have ceased to be a tax resident by undertaking tax emigration.

This process involves:

• Completing the RAV01 form via SARS eFiling to kick off proceedings.
• Submitting supporting documentation (such as proof of permanent residence in your current country, employment contracts, or immigration status) upon request from SARS.
• Awaiting a confirmation letter from SARS regarding the non-resident tax status.

Until you receive such confirmation from SARS, you are still considered a South African tax resident and remain liable for tax on your worldwide income.

Read more: Tax emigration – how to become a non-tax resident of South Africa.

What happens when you cease to be a tax resident?

Once SARS confirms your non-resident tax status, the following changes apply to you, from a tax perspective:

• Capital Gains Tax (CGT): You are deemed to have disposed of your worldwide assets (except South African immovable property) on the day before your tax residency ends. This may result in an exit tax liability.
• South African-sourced income: As a non-resident, you are only taxed on income earned in South Africa (such as rental income or services rendered in South Africa).
• Retirement funds: You become eligible to cash in your retirement annuity before the age of 55. A three-year waiting period applies for access to certain retirement savings (such as retirement annuities and preservation funds) after ceasing tax residency.

Read more: Be aware – ceasing SARS tax residency can significantly impact your taxes and international money transfers.

Dual citizenship and tax residency: what you need to know

Thanks to the Constitutional Court’s 2025 ruling, South Africans no longer risk losing their citizenship when acquiring a second nationality. You can hold dual citizenship in South Africa and apply for reinstatement of citizenship if you lost it under the old law.

However, holding dual citizenship or multiple passports has no impact on your tax residency. Your country of tax residence is determined by your circumstances and SARS’ tax residency tests, not by the number of passports you hold.

Why tax residency matters for South African expats

Understanding your residency status for tax purposes is vital for managing your financial and legal obligations. If you continue to be a tax resident of South Africa while living abroad, you remain liable for South African tax for citizens working abroad. Failing to formalise your tax emigration can lead to ongoing tax obligations, compliance risks, and potential penalties.

How to become a non-tax resident of South Africa

To formally become a non-tax resident:

1. Ensure you fail both the ordinary residence and physical presence tests.
2. Submit the required documentation to SARS, including the RAV01 form via eFiling.
3. Be prepared for a potential exit tax liability.
4. Await confirmation in the form of a non-resident tax status confirmation letter.

For proof of your non-resident tax status, request a SARS non-resident tax status confirmation letter after completing the process.

FinGlobal: cross-border financial specialists

Understanding the difference between citizenship vs residency is essential for any South African expat or individual planning to emigrate. While the recent Constitutional Court ruling ensures you can hold dual citizenship and even apply for reinstatement of citizenship if you lost it under the old law, your tax residency status must still be formally addressed to avoid unnecessary tax liabilities.

If you need help sorting out your tax emigration or cross-border financial planning, the FinGlobal team is ready to lend a hand. Let us guide you through the process of determining your tax residency status and getting the necessary confirmation from SARS so you can enjoy peace of mind, wherever in the world you may be. We can also assist with retirement annuity encashment, international money transfers, and more. To find out more about how FinGlobal can make your financial transition seamless and hassle-free, leave your contact details below, and we’ll be in touch!