The start to end of transferring your funds abroad

Investing in international property; paying for a destination wedding; repatriating parts of your salary to loved ones in another country or any other reason for transferring your money abroad is a process that RandTangle can assist with. You might have wondered what the process of transferring funds internationally is. There are several ways you can access your money in South Africa. This includes using normal allowances, such as your annual Discretionary Allowance, or formally emigrating from South Africa.

The first is a Single Discretionary Allowance of up to R1 million a year and the second is your Foreign Investment Allowance also known as a Capital Allowance of up to R10 million a year.

See the table below to help you understand the difference:

Single Discretionary Allowance (SDA)Capital Allowance (CA) or Foreign Investment Allowance (FIA)
A limit of R1 million in a calendar year.R10 million limit in a calendar year.
No foreign Tax Clearance Certificate (TCC) is necessary.You need to apply for a foreign Tax Clearance Certificate from SARS before you can use it.
This allowance may be used to make a number of overseas payments and investments. For example: Gifts Loans Investment purposes, like buying shares Donations Study allowances Overseas card payment And more.This may be used for other purposes where you already exceeded your SDA and may be invested into offshore investment portfolios, property, or other assets and investments in foreign countries outside the common monetary area (eSwatini, Lesotho, Namibia, and South Africa).

Source: South African Reserve Bank (2021)

If you’re thinking of transferring your funds abroad or investing, here’s what you need to know. You will need a tax clearance certificate if you are transferring any funds abroad. South African residents over the age of 18 may use their R1 million discretionary allowance to make international payments without having to provide supporting documents.

South African residents over the age of 18 may also use their R10 million investments allowance to invest in funds abroad. To make use of this, you will need to get a Tax Compliance Status Pin Letter from SARS.

This certificate can be used to apply for foreign investment allowances available to South Africans abroad, without financial emigration. To get such a certificate can take up to 21 working days. SARS keeps an updated list of all required supporting documents for Foreign Investment Allowance on their website, however our team at RandTangle can help you source the necessary documents with ease.

Supporting documentation is required by the South African Reserve Bank (SARB) for all other payments.

Our team at Randtangle with its wealth of exchange control expertise can guide you and submit applications to ensure an effective process to invest or transfer offshore. We can assist you every step of the way, from A-Z. We will ensure that your transfers are quick and hassle-free, no matter where you want to send them and make sure you are compliant with South African exchange control regulations throughout any transfers you make.

RandTangle only charges a service fee based on the specific circumstances and need surrounding the emigration of each client, and the services required, we do not have a commission-based service fee that changes based on policy size.

For complete assistance with transferring funds abroad and any questions, you might have- contact us for a no-obligation quotation. –

Read More

The Effect of Exchange Control on Financial Emigration

Exchange Control has impacted the process of financial emigration for South Africans. The most recent changes herein came into effect on the 1st of March 2021, when the exchange control component of financial (formal) emigration was eliminated.

This new process of controlling an emigrant’s remaining assets in South Africa has fallen away and all transfers from their accounts will be managed and treated as regular fund transfers. These transfers need to align with the same provisions as any other foreign capital allowance transfer applicable to current residents.

The new regulation specifically benefits South Africans who have formalised their non-tax residency status with SARS. The income transfers for South Africans permanently living abroad are no longer required to report to the Financial Surveillance Department.

As a result of the removal of this specific exchange control restrictions on individuals, National Treasury also advised in the 2020 Budget Review that both South African residents and emigrants would be treated equally.

South African residents or South Africans residing abroad, now enjoy the same single discretionary allowance of R1 million without the need for a tax clearance status from SARS. Authorised entities may also allow the transfer of funds of up to R10 million.

Exchange controls still prevalent in direct foreign investments by South African corporates and for the acquisition of foreign assets by institutional investors.

If this process seems daunting, rest assured that we assist with every step of the way. We save costs and deliver a full-service solution. At RandTangle, we specialise in exchange control services. Simply fill in a quick form online, and let one of our helpful consultants contact you to help with the process.  

For complete assistance with your financial emigration process and any questions you might have – contact us today:

(Sources: Final Response Document on the 2020 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2020 Draft Taxation Laws Amendment Bill and 2020 Draft Tax Administration Laws Amendment Bill,

Read More

Tax After Financially Emigrating

The Financial Emigration process changed on 1 March 2021, but what happens once financially emigrating? Let’s answer your questions regarding exit tax in South Africa and the implications after leaving the country.  

Tax emigration and financial emigration are often confused to be the same. Financial emigration is that of leaving the country to live abroad and transferring all your financial assets out of the country. This process does not mean an individual is not considered a tax resident of South Africa. It is also important to note that changing your tax residency does not imply that you can suddenly financially emigrate and may not even have an impact on the financial emigration process.  

SARS studies the time spent in South Africa as well as the assets held in your name – should you financially emigrate this process will provide evidence for the tax emigration process. 

SARS then requires you to declare your tax status to decide how you should be taxed. A South African tax resident pays tax based on worldwide income and asset based whereas a non-tax resident will only be taxed on South African based income and asset base.  

Exit Tax is the final tax charged on one’s assets before leaving South Africa and is also referred to as Capital Gains Tax. Exit tax is due the day of or the day before becoming a non-tax resident of South Africa, this includes discarding of certain assets such as foreign fixed property, shares, unit trusts and trust funds. This does not apply to South African fixed property in the taxpayer’s name, cash, personal assets nor retirement interests held in pension, provident and retirement annuity funds.  

To be declared a non-tax resident, you need to undergo an ordinarily resident test or a physical presence test. This proves whether you have a permanent residence to return to or how many days at a time you are in the country. Once declared a non-tax resident, South Africans will no longer be charged worldwide income tax in South Africa – they will only be charged tax on SA based income. Should a taxpayer not submit Exit Tax, they can be charged with a penalty of up to 200%.  

The emigration process can be backdated as far back as when you first leave the country.  

Our team at RandTangle can walk you through the tax emigration process and deal with all the necessary parties so you can emigrate with ease. Contact us today at

Read More

Deadline missed, now what?

It’s official. Formal emigration as we know it, has come to an end as of 28 February 2021, what now?

On the 15th of January 2021, the President assented to the Taxation Laws Amendment Act No. 23 of 2020 (“TLAA”), which was subsequently promulgated on 20 January 2021.

From the 1st of March 2021 retirement annuity funds will be locked in for a minimum of three consecutive years. South African pension and provident fund members are only allowed to access their funds at retirement, but formal emigration enabled South African expats to access their funds at an earlier age, once the process of formal emigration has been finalised. Many South Africans make use of their retirement lumpsum to financially assist them in the early years of emigration or to set them up for financial success in a new country. Should you need the funds, take note of the deadlines below.

Before 28 February 2021

If the exchange control emigration application is successfully submitted to the SARB before 28 February 2021 and approved before 28 February 2022, you would be able to still access your retirement funds under the old dispensation.

Post 1 March 2021

As of 1 March 2021, South African expats will only be able to access their retirement funds if they can prove that they have been a non-resident for tax purposes for three consecutive years.

What will enable one to be classified as a non-sa-tax resident?

To determine your tax residency status, the following analogy explains it best.

Consider a scenario of basic training where a Major is trained by a Captain and if the Major can overcome the obstacle course he or she will be allowed to proceed to the next rank. In the below analogy the Major will be the South African Expat and the Captain will be Sars. The obstacle course will be the ordinary residence and physical presence test that will determine the tax status of the applicant wishing to encash his retirement annuities.

The obstacle course will ultimately consist of two parts:

  1. The ordinary residence test
  2. The physical presence test

Let us have a look at the first part:

When assessing whether a person will be determined as an ordinary resident in South Africa the following factors will be considered.

  1. An intention to be a ordinary resident in South Africa
  2. Your most fixed and settled place of residence
  3. Your habitual abode, for example, where are your memberships and  subscriptions
  4. Where do you work and where is your family living
  5. Your working status in South Africa, are you a permanent employee or do you have a work visa
  6. The location of your belongings
  7. Your nationality
  8. Application for permanent residence, if you are not living in South Africa, do you have permanent residency elsewhere.
  9. Periods abroad, what % on the days in the year do you spend offshore
  10. Frequency and reasons for visit, how often do you visit South Africa and what are the reasons for visiting?

The above mentioned part 1 of the obstacle course should be examined as a whole and over a period of time. A before and after difference should be determined to clarify the difference in scenarios.

If part 1 of the obstacle course, the ordinary residence test, determines you as a non-sa-tax resident the Captain will move you on to Part 2, the physical presence test. In the physical presence test you will be tested on the following: Have you been in South Africa for…

  1. More than 91 days in the year of assessment
  2. More than 91 days per year for five years
  3. More than 915 days during a five year period

The above mentioned periods are not needed to be consecutive and there can be several intermittent periods. Some fine print in the rules also includes the below:

  1. When doing the physical presence test and counting the days, days spent traveling in South Africa are not counted as days in South Africa.
  2. To determine the days spent outside South Africa, only days of which you are not inside the South African borders will count.
  3. A person who is determined to be a resident based on the physical presence test ceases to be a resident if they have spent more than 330 consecutive days outside the borders of South Africa. 

Should the Major pass the above obstacle course he will be classified a non-sa-tax resident. The National Treasury has confirmed that the three years mentioned above can start before 1 March 2021. This means that if on 1 March 2021 the member already met the requirements and was not a South African tax resident for a period, they do not need to start counting the three years again from 1 March 2021.

The[1]  new legislation also implies that provident and provident preservation fund members will only be able to take a maximum of one-third of their unvested retirement fund assets in cash at retirement unless their total unvested retirement fund assets are R247 500 or less. The remainder will have to be used to purchase an annuity. This is in line with the benefits allowed in pension funds and retirement annuities.

A new process will be implemented to assist South Africans who emigrated to encash the lump sum of their retirement funds. The new process is not set-in stone but will most likely include taking into consideration the policy provider’s requirements, SARS requirements, the need for documentary supporting evidence and proof of non-residency status for an uninterrupted period of three years.

Formal emigration as we know it, will change, but RandTangle will guide South Africans who live abroad to navigate through these uncertain times.

Sources: Smith, C. 2021. Ramaphosa has signed a 3-year retirement fund lock-in into law – so what does this mean? News article. News24. Date of access: 12 February 2021.

Read More

What tax rules apply upon early withdrawal of retirement annuities during Formal Emigration?

Once a South African citizen has emigrated from the Republic of South Africa, and that emigration is formally recognised by the South African Reserve Bank (SARB) for purposes of exchange control, they are eligible to apply for the early withdrawal of their retirement annuities. 

But what are the financial implications that South African expats face when they cash in their annuity early? 

The different retirement vehicles will have different tax implications. A pension, provident and preservation fund each have different rules that apply when an individual wants to withdraw their funds. 

Many South Africans make use of their retirement lumpsum to financially assist them in the early years of emigration or to set them up for financial success in a new country.

Pension Fund

A pension fund is a retirement fund that receives frequent contributions from you and your employer. If you leave a company before you retire, for example when you resign, you may have to move your retirement savings out of the company fund. You can move your savings either to:

  1. Your new company’s pension fund
  2. A preservation fund or to a retirement annuity fund

Provident Fund 

A provident fund is the same as a pension fund, but differs in that when you resign or retire, you can take the entire lump sum as cash, which you’ll be taxed on. You don’t need to purchase an annuity.

Preservation Fund 

This is a retirement fund which is specifically designed to receive lump sum benefits from a pension or provident fund when you resign from your employment before retirement. While the funds are in the preservation fund, the capital continues to grow. You can make one partial or full withdrawal from the fund before you reach age 55. After that, you can only access the balance after age 55. 

The rules and tax implications upon cashing out your pension, provident or preservation fund early

Reynier Hugo, Certified Financial Planner at Alexander Forbes, told Business Insider: “The usual restrictions of not being allowed to withdraw before age 55, as well as the one-third maximum cash lump sum withdrawal, with the rest to buy a pension, does not apply to individuals who are formally emigrating. However, the amount received will still be subject to tax in South Africa. The tax will differ from the type of Retirement Annuity or Fund the South African expat is part of.” 

There are two different tax tables that are applied to lump sum benefits received, of which one being for lump sums received from a pension, pension preservation, provident, provident preservation, or retirement annuity fund on withdrawal and the other being for receipt of such lump sums on death, retirement, or termination of employment.

We are going to focus on the first tax table mentioned above. 

According to SARS (2020), for the 2020 tax year of assessment, the first R25,000.00 of the withdrawn amount would be exempt from tax. Thereafter, any amounts more than R25,000.00 will be taxed on a progressive scale starting at 18%. 

Where the applicant is a member of a pension, provident or retirement annuity fund, the following particulars in respect of each fund must be submitted on a separate sheet:

•    Name of fund,
•    Expected lump sum amount to be paid out; and
•    Date of expected payment.

Keep the following information readily available when applying to withdraw from your annuity or fund. 

The different retirement vehicles also face different implications upon withdrawal of the lump sum. 

Pension Fund

It is important to note that emigration alone will not result in the authorisation of a member withdrawing their full amount before their retirement age. The fund member must firstly terminate their employment contract.  

The lump sum will be regarded as capital and depending on the other capital remitted abroad, may require an application to be made to the SARB for remittance (R10million per annum). The member can transfer the lump sum after tax deductions, and the pension income out of South Africa. 

For assistance with taxation on your pension fund, get in touch with us today.

Provident Fund 

Upon terminating employment, and thereby leaving an employer’s provident fund, the fund member is entitled to withdraw their full retirement interest in the provident fund as a lump sum. 

The fund member of a provident fund can transfer the full lump sum after tax deductions out of South Africa. This lump sum will be regarded as capital, and depending on the other capital remitted abroad, may require an application to be made to the SARB for remittance if it exceeds R10 million per annum. For guidance on how to determine exactly how taxation on your provident fund lump sum will work, get in touch with us here.

Preservation Fund 

This fund serves as a savings vehicle into which proceeds from a pension or provident fund are paid. 

Additional contributions from a preservation fund are not permitted, and there are no tax consequences on the transfer of a full retirement interest from the pension or provident fund to a qualifying pension preservation or provident preservation fund. 

Since the 1st of March 2019, it’s been possible for a member to gain full access to a retirement interest in a preservation fund after they formally emigrated. This will still be possible even if the one withdrawal option has already been used. 

If a member retires from a preservation fund after they formally emigrated from South Africa for exchange control purposes, the rules apply to retirement in the event of a pension preservation fund and thus will be the same for the pension fund. In the event of a provident preservation fund, it will be the same as a provident fund. 

On the 1st of March 2021, a new tax bill law will be implemented. You can read all about it here.

We treat every individual’s formal emigration process with the attention to detail it deserves. If you need clarity on how emigration will impact you and your Pension Fund, Provident Fund or Retirement Annuity, get in touch with us today.


For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978

Read More

The implications of the tax law amendment and what to do next?

Tax law amendment

The 2020 Draft Taxation Laws Amendment will change the way we view formal emigration. This tax law amendment has a ripple-effect on South Africans who plan to leave the country, as well as expats whose emigration has not yet been finalised.

What does the new tax law amendment propose?

Although an individual can access all of their current pension fund upon resignation, the current legislation states that previous pension funds held in a pension preservation fund or retirement annuities, are inaccessible until retirement age, or until formal exchange control emigration takes place. A main benefit for formally emigrating South Africans has been access to their retirements annuities before the retirement age of 55.

Many South Africans make use of their retirement lumpsum to financially assist them in the early years of emigration or to set them up for financial success in a new country.

“Members of preservation funds and retirement annuity funds may withdraw from such funds if they formally emigrate from South Africa for exchange control purposes when their emigration is approved by the South African Reserve Bank,” said ENSAfrica.

However, the new tax bill proposes that a person only ceases to be a South African tax resident, if they remain a non-resident for at least three consecutive years. This mean that a person’s retirement annuity will be tied up in South Africa, should a person not file for formal emigration before the 28th of February 2021.

What needs to be actioned by South African expats before the 28th of February 2021?

If the exchange control emigration application is submitted before 28 February 2021 and approved before 28 February 2022, you would be able to still access your retirement funds.

South Africans that plan to emigrate within the next year, will need to take this law amendment into careful consideration when they plan their formal emigration. If you’re contemplating emigrating from South Africa in the future, you may want to consider transferring your current pension fund to the new employer’s pension fund when moving between jobs, instead of transferring your pension to a preservation fund. This way you will be able to access your pension fund in full when leaving your current job to move overseas. Otherwise, you will have to wait for at least three years to gain access to any retirement funds.

For many South Africans already living abroad, this tax bill amendment is  an enormous relief, as they would possibly already be a non-tax resident in South Africa. As a result of the amendment, they would be able to access their retirement funds as soon as they have been a tax non-resident for three consecutive years after 28 February 2021.

Divan Myburgh, Director of Randtangle, would highly advise South African expats to start the process of formal emigration as soon as possible, should you not want to wait for your annuity to be paid out after at least three consecutive years.  

Randtangle offers a wealth of formal emigration knowledge to assist South Africans to make informed decisions that will lead to a seamless emigration process. For a personal and complimentary consultation session, get in touch with Randtangle today.

For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978

Read More

How the COVID travel ban has affected the 183-day rule for foreign remuneration exemption

Any other year, if you worked outside of South Africa for more than 183 days in a 12-month period, you would qualify for tax exemption on your foreign income. However, 2020 is not a normal year. With the world in lockdown for a large part of the 2020 tax year, many individuals were stuck in South Africa, making it more difficult to reach that magical 183-day number. 

How do I qualify for the tax exemption under usual circumstances? 
Normally, South African tax residents working abroad would be entitled to a tax exemption from income earned abroad, provided that you’re physically outside of South Africa for 183 days in aggregate during any 12-month period and, during that 183-day period outside South Africa, at least 60 days must be continuously spent outside of South Africa. 

Does that exemption apply to all my income? 
For the 2020 tax year South Africa’s Treasury changed the tax law so that only the first R1 million you earn is exempted from tax if you meet the 183-day rule. Any income above R1.25 million would have been taxed at the relevant marginal tax rate.

But I’ve been stuck in South Africa due to the COVID travel bans and will not meet the 183-day rule criteria. What now?
Luckily, the National Treasury has considered this. In its response document to Parliament, they indicated that they are introducing changes to section 10(1)(o)(ii) of the Income Tax Act (ITA), in order to take into account the lockdown period during the COVID-19 pandemic. That change was to reduce the 183-day criteria by 66 days (the length of the level 4 and 5 lockdown). For the February 2020 to February 2021 tax year, you would only need to work outside of South Africa for more than 117 days in order to qualify for the foreign remuneration tax exemption. 

That section of the ITA also mentions a criterion for 60 days of the 183 days working outside of South Africa needs to be continuous. Has that requirement changed? 
No, that requirement has not changed. While the total number of days working outside of South Africa has been reduced to 117 days, the requirement for 60 of those days to be spent outside South Africa continuously has not changed, and will still need to be complied with to qualify for the foreign remuneration tax exemption. 
Now that South Africa’s travel bans have all been lifted, many South African’s will be looking to return to the foreign countries where they worked before the pandemic. With the foreign remuneration exemption criteria adjusted down to 117 days, but with the requirement still in place to spend 60 continuous days working outside of South Africa, it is critical that those hoping to take advantage of this will need to get back to work as soon as possible, or face steep tax bills. 
If you are leaving South Africa and not planning to come back, it would be wise to consider Financial emigration. There are a lot of advantages of Financial Emigration, get in touch with us to find out more.

For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978

Read More

How to cash out your retirement annuity if you are a South African expat

Pension, Provident, Retirement Annuity. If you have one, great! If you have one in South Africa and you live abroad and not planning on coming back. Not so great. So, what now?

What does retirement planning involve?

According to an article from Investopedia (2019) by Arthur Pinkasovitch, retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk.

Now you have a retirement annuity in South Africa, you are working offshore and decided to rather spread your wings and graze the grass on the greener side. What happens to your Retirement Annuity in South Africa?

Can you cash out an annuity early?

The legislation of Retirement Annuities (RAs) is very strict. If your funds are invested in a retirement annuity you can only access them at the age of 55. If your funds are invested in a company’s Provident or Preserver fund the only way to access it is if you leave the company. 

How can I move my retirement annuities overseas?

You will have to start the process of formal emigration. is an administratively complex process involving many different institutions, both commercial and governmental. We administrate the whole process, working with experts to deliver a carefully managed solution for you.

What are the costs of moving my retirement annuities overseas? At Randtangle we can assist with moving your retirement annuities overseas. The cost will depend on your needs. If you need guidance on how to cash out your retirement annuity to take your money with you to your next destination, please get in touch with us for a FREE quote.

For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978

Read More

How will the new proposed tax bill influence your retirement annuity?

Round 1: RSA Government vs RSA Expats

The South African Government is getting into the ring with the South African expats and – this is a fight not to be missed. Miaau! The Government cat is hungry.

In the left corner, weighing in at a substantial amount due to obvious reasons, is the South African Government. In the right corner we have those who left the South African soil and – these expats are shielding their hard earned international money like a hen protecting her chicks from a  the hungry Government cat.

From the side this it most certainly looks like a mismatch, but the hen has the gift of time on her hands. Will she make use of her options and protect her young? Or will the cat bombard her with new regulations and establish a new flow of resources? Read below to find out…

During the February 2020 Budget Speech, the National Treasury announced that the exchange control position is to be phased out as of 1 March 2021 and it would be replaced by a verification process.


Before we can answer the question, “Will this redefine formal emigration as we know it” it’s pivotal to understand the definition and implications of formal emigration. Formal Emigration is the process where your status as a resident change to non-resident for exchange control purposes in South Africa.

This process should allow South Africans who work abroad, more flexibility. But what does the new tax bill really mean for former South Africans and those in the process of formal emigration?


 RSA Resident                    —–>    Formal Emigration —->          Non-RSA Resident

(One can withdraw your lump-sum annuity before the age of 55) (Individual might not pay Tax in RSA)

(Pays Tax in RSA)                                                                          New Rules as of March 2021

 RSA Resident                    —–>    Tax emigration —->                 Non-RSA Tax-Resident

(One MIGHT be able to withdraw your lump-sum annuity) (Individual might not pay Tax in RSA)

Other changes the new tax bill will implement:

Both RSA and Non-RSA residents pays tax in SA without Tax emigrations (depending on the jurisdiction)

Both are treated the same when it comes to cross border transactions

No more blocked accounts for non-residents investing in RSA.

In short, bringing money into the country is easy, taking money out is hard. How hard, do you ask? You will be trailed and errored through several tests.

Anti-money laundering test

Risk management test

Tax status and source of income test

While the new tax bill is being put into place, the SARS procedures for formal emigration, in determining non-residency, will still be in accordance with the ordinarily resident and physical presence tests. However, it is important to consider that the National Treasury specifically mentioned that the tax treatment of individuals will be strengthened, following the new regime requiring South African expats to pay tax on their foreign employment income when it exceeds R1,25 million.

The new proposed bill aims to encourage South Africans who work abroad, to keep ties with the country thus asking the hen to step away from her chicks.


At the moment one can access his/her retirement annuity before the age of 55, with the new tax bill being proposed, an individual will still be able to access their retirement funds, but there will be a waiting period of at least three years. Unfortunately, this could mean that your Rand will be tangled up, for longer than anticipated, giving the fat farm cat some extra time to establish what percentage of your chicks he is going to pounce on.

By now it is common knowledge that the Government intends to dip into the retirement and pension funds for some desperately needed streams of income. If you have not yet Formally Emigrated as from 1 March 2021 your savings will be locked up in SA for three years before you can access them. It is like trusting the hungry farm cat to please be disciplined and not harm your chicks while you are away working towards a better future?!

We urge all our expats who have no intention to return to South Africa, to start the process of formal emigration. If you don’t act soon, you will be too late to Formally Emigrate and will have to comply with the new rules and regulations.

For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978

Read More

Formal Emigration

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.

Read More