Your neighbour, your cousin, a high-school friend or even your hairdresser…. We all know someone who has, or is in the process of, emigrating.  And if you are reading this article, chances are that you are busy doing your homework and trying to find answers to some of those pesky questions that arise during (or even after) the process of not only moving yourself and your family but most importantly your assets and money to a different country and economy.

Immigration, emigration, formal emigration, financial emigration, tax emigration… These are all terms you will come across during your endless internet searches, but how does it work?  

Dealing with the concepts of formal, financial and tax emigration can be complicated. 

Financial emigration and formal emigration are in fact the same. It means that your status (for exchange control purposes with the South Africa Reserve Bank) changes from being a resident to a non-resident once the process has been completed.  But do not fret – your status as a South African citizen and Springbok supporter remains unchanged! You will remain a citizen, but your financial affairs from a South African point of view are wrapped up.

It is important to know that emigration does not only have exchange control implications, but also tax implications.  So not only is the South African Reserve Bank involved in your emigration, but the South African Revenue service is also involved.  So, there are separate processes to be followed to end South African residency status and tax purposes.

Why should you financially emigrate from South Africa?

Deciding to formally emigrate from South Africa needs to be based on whether it is the best option for your own personal circumstances, but there are many benefits to the process including:

  • become designated as an emigrant.
  • become able to access your South African retirement annuities before age 55.
  • make use of the exchange control facilities available to emigrants, including what is known as ‘externalisation’ or moving your accumulated retirement savings to your new country of residence.
  • You (or your beneficiaries if they are designated as emigrants) may receive inheritances paid to you abroad from a South African estate. (If you live abroad and have not formalised your emigration with SARB, you will be regarded as a South African resident temporarily abroad for Excon purposes. This means you or your beneficiaries may not directly receive an inheritance paid to you or them abroad from a South African estate.)
  • Ensuring your taxes are fully compliant and your tax residency status cannot be reversed
  • No South African tax liability on foreign income

What steps are involved in financial emigration?

We are breaking the steps down to the bare essential, but remember, the process is complicated, and the process is difficult, so one-on-one professional advice is definitely recommended!  

  1. Complete an MP336(b) form
  2. Apply for an emigration Tax Clearance Certificate through SARS.
  3. Submit your application to the SARB.

You will also need the following documents (and more):

  • Certificate of Citizenship/ Naturalisation or Permanent Residence permit in the Foreign Country (Including spouse & children if they are South African residents as well)

•       Certified copy of passport and Identity documents/Birth Certificates of all individuals listed on the Form MP336(b)

•     Documents of title of all articles of value. For example- The original of title e.g. property title deeds etc. will need to be dispatched to the Non- Resident Centre to form part of your South African blocked assets.

The process of formal emigration can be daunting, but if you have the right team to guide you, it will be a seamless process. Contact us for more information.