Financial Emigration for South Africans

What is financial emigration
Financial emigration is a decision that needs to be made when one has decided to permanently move residency, and no longer reside in South Africa. This has both tax and exchange control implications. These are two separate processes, one with South African Revenue Service (SARS) and the other with South African Reserve Bank (SARB).

Financial emigration is, in effect, the formal emigration from a financial perspective. This is the changing of one’s status from resident to non-resident for exchange control purposes, with the South African Reserve Bank. Most importantly, this concludes your South African financial affairs and enables you to transfer your financial assets to another country.

The process means having to apply to the SARB for approval of your intended formal financial emigration, and you will have to follow a defined process which is set out by SARB. This includes providing the required emigration tax clearance certificate acquired from SARS (your SA tax affairs need to be up to date prior to this), as well as MP336(b) application form which you will obtain from your SA bank. All your assets will have to be declared to the SARB and a Capital Gains Tax (CGT) or exit tax will then be applied to the deemed disposal of these assets. The nature, location and date of acquisition of these assets will form part of the final (CGT) calculation.

Important to note is that financial emigration does not automatically ensure that you are no longer a tax resident in SA, but as it is a key element, it is best to consider starting them both at the same time. Your tax residency will be established in your new home country by the application of any relevant tax treaty.

Benefits of financial emigration
There are several benefits that come with financial emigration, some of which are:

■ Protecting your savings and investments from the volatility of the Rand.

■ Access to and transfer of your financial assets out of SA, with no further exchange control requirements. This includes any passive income (e.g.: rentals, dividends), and any future inheritances payable to you abroad from a SA estate.

■ Enabling you to move your accumulated retirement funds, retirement annuities, pensions and provident funds, to your new country of residence. If you are not yet 55 years old, financial emigration is the only way to access these funds before the official retirement age.

■ Relocating of your savings to any offshore destination or platform of your choice, with a free flow of capital.

In conclusion
It is very important to understand the options available and the implications of these options, both from the financial emigration perspective and the subsequent reinvesting perspective.

Professional guidance regarding the tax laws that will affect you in your new country of residency is of the utmost importance in order to allow you to make correct decisions.

Portugal is a white-listed tax jurisdiction within the EU and, with the added bonus of the benefits that come with the non-habitual residence regime, Portugal is classified as a very favourable tax jurisdiction.

For more information, email [email protected] to register for our webinar “Investment for a better future in Portugal” on November 3 or 5 at 20:00 (South African time) and 18:00 (Portugal time).

By Manuela Robinson

Manuela Robinson is the Joint-Country Manager of Blacktower in Portugal. With offices in Quinta do Lago and Cascais.
[email protected] | 289 355 685
Blacktower Financial Management (International) Limited is licensed by the Gibraltar Financial Services Commission. Licence 00805B. Blacktower Financial Management Limited is authorised and regulated in the UK by the Financial Conduct Authority.