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It is important to note that financial emigration is a formal process with the South African Reserve Bank (SARB) to change your tax status from “resident” to “non-resident” for exchange control purposes. It however does not affect your South African citizenship status.
The more complex part of financial emigration is often the Emigration Tax Clearance Certificate that is required. Most people assume that because they have left the Republic they are no longer required to file their annual tax returns with the South African Revenue Service (SARS). This however is not the case if you have any South African source income and as such, when applying for your tax clearance certificate it may show that you have a number of tax returns outstanding which must then be brought up to date before SARS will issue your Emigration Tax Clearance Certificate.
We have partnered our offering with a leading financial institute to offer you the best possible currency rates once your financial emigration is complete and you are ready to move your money out of South Africa.
We have listed some Frequently Asked Questions below to guide you.
Q: What is financial emigration?
A: Financial emigration is the official process that changes your tax status to non-resident for exchange control purposes in South Africa. Done through the South African Revenue Service (SARS) and the South African Reserve Bank (SARB), this formal process ensures that you meet all the requirements of the Income Tax Act in order to be reclassified from resident to non-resident. It does not affect your South African citizenship, your right to a South African passport nor does it affect your ability to own property in South Africa.
Q: Can I financially emigrate and keep my property in South Africa?
A: Yes, you can, even if it’s just to cover costs. If your properties are occupied, it is considered as a South African asset and thus subject to taxation.
Q: What happens to your properties if you decide to formalise your emigration from South Africa?
A: You can still keep immovable property. The original title deed will be brought under the control of the authorized dealer who handled your financial immigration. If property sold later, proceeds from the sale must be paid to your emigrants account. Proceeds thereof must be transferred abroad as part of your annual foreign allowance. Income, such as rental or interest on fixed property, earned after the financial emigration process, must be verified by supporting documents such as rental agreements.
Q: Can I financially emigrate from South Africa if I still own property there?
A: Yes, you can. Even though you may have completed the process of financial emigration, you’re still eligible to hold a bank account and other assets like a house back in South Africa. The financial emigration process does not change property ownership. You can keep properties and the normal tax rules apply on rental profits and capital gains when you sell them.
Q: What does this mean?
A: It’s basically another way of saying that you’re free to do anything with your assets in South Africa, if the money doesn’t leave South Africa and it stays under the watchful eye of an authorised dealer.
Q: What other reasons would there be for me to financially emigrate from South Africa?
A: Financial emigration is one of the handful of exceptions to the rule that your retirement annuities cannot be touched before the official retirement age of 55.
Once you’ve completed the financial emigration process with the South African Reserve Bank, you are then free to make an application to cash in your retirement annuity and transfer the post-tax proceeds abroad. The money that comes from your retirement annuity is yours to do with as you please, you are not obliged to put it into another pension or retirement facility abroad.
Things to know about the financial emigration process, if you’re a property owner:
- You must nominate an authorised dealer to handle your financial emigration.
- If you own a property in South Africa the original title deed of the property will need to be handed over to the bank or authorized dealer that handled your financial emigration.
- If you have a bond on your South African property, or other liabilities against your property, the bank or authorized dealer will need to be satisfied that your liabilities in South Africa are adequately secured. This means you need to ensure that the bank or authorised dealer you use is satisfied that you can meet your obligations.
- Income such as interest and rental on fixed property may continue to be earned after the financial emigration process, however, such funds must be verified by means of supporting documents, such as rental agreements.