Formal tax emigration from South Africa

What is formal tax emigration?

Many South Africans have emigrated without formal tax emigration from South Africa.

Formal emigration is the process to close your financial affairs when leaving South Africa immigrating to another country – and changing your status-for tax purposes from resident to non-resident. Emigration does not affect your citizenship or the right to retain your South African passport. There may be many advantages of arranging this formal tax emigration.

Tax Emigration does not affect your citizenship or the right to retain your South African passport. There may be many advantages of arranging this formal emigration:

• Should there be a potential inheritance, this can be remitted only if the beneficiaries have formally emigrated.
• If there are any insurance policies or retirement annuities, these can be made paid up and proceeds can be remitted. They can be paid out even if retirement age is not reached.
• If you formally emigrate, your non-South African assets are no longer subject to Estate duty in South Africa.
• Passive income i.e. rent, dividends, director`s fees, salary for services rendered in South Africa and income from trusts can be formally remitted.

We can assist in arranging all aspects of formal tax emigration.

Requirements

What are the requirements of formal emigration?

To formally emigrate, if there are assets in South Africa, it is necessary to get a tax clearance and to submit a tax return at date of emigration which would tax income until date of immigration. On the date of immigration all assets other than fixed property would be valued and any capital gains would be taxed as an effective exit tax.

If there is income on fixed properly, they would continue to be taxed in South Africa after immigration. Capital gains would be taxed when realised. All assets held in South Africa after immigration would be held on the bank handling the emigration and held in a blocked account.

If I emigrate from South Africa, do I have to relinquish my South African citizenship?

No. Emigrating from South Africa formalises your exit from South Africa for exchange control purposes. It does not mean that you have to relinquish your South African citizenship. You can retain your South African passport.

I have been living abroad for a number of years, how do I formalise my emigration?

In terms of exchange control policy, private individuals (natural persons) who reside permanently in a country outside the Common Monetary Area are required to formalise their emigration via SARS

Can I transfer the proceeds from the insurance policy directly to my overseas bank account?

Yes. The proceeds from insurance policies may be transferred directly to the emigrant abroad where the emigrant has no bank account in South Africa, provided the person’s emigration has been formalised and that the foreign capital allowance limit will not be exceeded.

South African Retirement Annuities?

Retirement annuities in South Africa can transfer the full capital value of your South African RA`s offshore before age 55

Checklist

Requirements when applying for emigration

• ID documents of husband and wife
• Certificate of Citizenship in new country
• Latest Bank statements of all accounts
• Insurance Policies (Retirement Annuity, Endowment policy, Life policy etc) – must have original copy of policy
• Fixed Properties – valuations at date of emigration
• Stocks, shares, unit certificates etc – Listed Investments and Unlisted Investments – valued at date of emigration
• Debtors ( loan accounts, credit cards etc) – at date of emigration
• Details of Interest in Trusts
• Any other liabilities
• Proof of tax registration in new country of residency