Looking to grow your wealth beyond South Africa’s borders? If you’re thinking about taking your money offshore, the Foreign Investment Allowance (FIA) is one of the key tools available to you. The South African Revenue Service (SARS) allows individuals to transfer funds from South Africa within an exchange control and tax framework that enables access to global investment opportunities, diversification, and long-term financial growth. But, as with all things SARS, it’s important to understand the rules and requirements before making your move.
Let’s unpack how the foreign investment allowance for individuals works, what you need to get started, and how to make the most of it.
What is the Foreign Investment Allowance?
The foreign investment allowance South Africa offers is an exchange control provision that makes it possible for tax-compliant South African residents over the age of 18 to legally invest offshore. Each year, you can transfer up to R10 million abroad, on top of the R1 million Single Discretionary Allowance (SDA). That’s a total of R11 million available annually for offshore investments, travel, gifts and more—if you meet the requirements.
Unlike the SDA, the FIA allowance requires a Tax Compliance Status (TCS) PIN from SARS. This verifies that you’re in good standing with SARS and is essential for any international money transfer from South Africa over the SDA threshold.
Read more: Six things SARS wants you to know about the limits on transferring money out of South Africa.
Why use your FIA to move money out of South Africa?
Here’s why more South Africans are using the foreign capital allowance South Africa offers to explore offshore opportunities:
1. Global diversification
Let’s be honest: the Rand is unpredictable. Political uncertainty and economic instability can erode your savings. Offshore investment options – like global equities, foreign real estate, or international funds – can protect your capital from local volatility.
2. Better returns, broader options
Sticking to local investment platforms limits your options. The offshore investment allowance South Africa allows you to tap into booming global markets, diversify across asset classes, and potentially earn higher returns.
3. Tax and estate planning benefits
Certain offshore jurisdictions offer favourable tax structures and estate planning benefits. Used wisely, offshore investments can be part of a long-term strategy to grow wealth and pass it on efficiently.
4. Annual allowance resets
Here’s the thing—if you don’t use your FIA each year, you lose it. Transferring funds offshore in smaller chunks over time is often easier and more cost-effective than waiting to move a large lump sum later.
Read more: Your foreign capital allowance in South Africa: The do’s & don’ts.
What you’ll need before moving money out of South Africa
If you’re ready to transfer money from South Africa, here’s what SARS and the South African Reserve Bank (SARB) will expect from you.
1. A valid SARS TCS PIN
To use the Foreign Investment Allowance, you must request a Tax Compliance Status (TCS) PIN from SARS. This PIN confirms that you are tax compliant and is required before any FIA transfer can be processed. The bank will use it to perform a tax compliance status verification directly with SARS.
Read more: Your SARS Tax Compliance Status – what expats need to know.
2. SARS Approval for International Transfer (AIT)
If you plan to transfer more than R1 million offshore in a calendar year, you need to complete a SARS AIT application. This applies even if the transfer is within your R10 million FIA limit. The AIT process involves more detailed financial disclosures, so allow enough time for SARS to process the application.
Read more: International money transfers from SA – what SARS wants you to know about the AIT process.
3. South African Reserve Bank approval
If your offshore transfer is more than R10 million, you will also need SARB approval for foreign payments once SARS has approved your AIT application. This is part of South Africa’s exchange control regulations and involves stricter checks.
Offshore investments – risk factors to be aware of
Just because you can invest offshore, doesn’t mean you should do it without doing your homework first. Here, you’ll want to consider:
- Exchange rate volatility: Timing matters. The value of the Rand can swing quickly. Transferring funds when the Rand is weak could cost you more. Working with a financial planner who monitors exchange rates can help you transfer at the right time.
- Tax compliance and reporting: Even if your money is offshore, SARS still expects you to declare your offshore investments in your tax return. The South African tax on offshore investments you will be required to pay will depend on the type of income earned (e.g., interest, dividends, or capital gains). Not reporting this income can lead to audits or penalties.
- Foreign jurisdiction risks: From political instability to tax law changes, foreign countries come with their own risks. Always research your destination or seek advice from professionals who understand international investment rules.
Read more:
- Smart money moves: How to lessen the impact of tax on your offshore investments in South Africa.
- Global wealth building – making sense of offshore investment from South Africa amidst strict tax rules.
The SARS foreign investment allowance is a smart way for South Africans to build a more resilient and globally diversified portfolio. Whether you want to grow your wealth, plan your estate, or simply hedge against the unpredictable rand, offshore investing opens up real opportunities—if done right.
But like most things involving SARS and SARB, it’s all about being compliant and informed. If you’re unsure about how to verify tax compliance status, apply for a TCS PIN, or navigate the AIT SARS process, don’t go it alone.
Read more: Limits on international money transfers out of South Africa – what you need to know.
FinGlobal: cross-border financial specialists for South Africans
At FinGlobal, we help South Africans like you make the most of their annual exchange control allowances. From SARS AIT application to SARB approval and everything in between, we handle the international money transfer paperwork so you can focus on what matters – growing your money, globally.
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