Important notice

This article is outdated as the emigration process it explains has changed.

Please read our latest article, What to consider before you emigrate, and click here to view our latest emigration guide.

Why you want to emigrate is critical to understanding the financial consequences and planning for these

Clients often tell us they want to emigrate. However, when we start unpacking this, we quickly realise that they don’t want to leave the South African lifestyle − what they really want is a plan B. Likewise, South African residents often leave South Africa temporarily with the intention to return at a later date. It is critical to understand your objective so that you can understand the financial impact and make informed decisions.

The ideal outcome will depend on your unique circumstances, which is why professional advice is essential

Below are a few general guidelines to consider when deciding whether to emigrate or have a plan B:

• What will the financial gain be if you were to emigrate versus building a plan B?
• Are you willing to give up the South African lifestyle, for example warm weather and the many outdoor activities on offer?
• Where are your family and loved ones located?
• Is alternative citizenship or residency easily and affordably available to you? For instance, if you do not qualify for citizenship in another country by, for example, descent, what is the financial impact of the residency or citizenship programmes on offer in other countries?

Everyone’s circumstances will be different and, as shown above, there are many factors to consider. Seeking professional advice can help you make the right decisions for your situation. 

Emigration

Defining emigration

The Oxford dictionary defines emigration as ‘the act of leaving one’s own country to settle permanently in another’.

Emigration has both tax and exchange control implications

If you are considering emigrating, it is important to have a holistic picture of all the South African tax (SARS) and South African exchange control (SARB) implications during your lifetime. If you have South African resident children and/or grandchildren who are residing abroad but have not formalised their emigration, it is equally important to understand the impact your death may have on their ability to receive an inheritance from your South African estate.

There are separate processes that must be followed to end South African residency status for exchange control (excon) and tax purposes

The tax and excon processes could happen in tandem or independently, although from a tax perspective it is best to consider starting both at the same time.

Get advice, and in most instances, you will also require a formal tax opinion

We advise clients who wish to end their residency status for South African tax purposes to obtain a formal tax opinion setting out both the South African tax implications as well as the tax implications (and timing) relevant to the country to which they intend immigrating.

Unpacking the intention and purpose of having a plan B

From our conversations with our clients we have gathered that having a plan B is mostly about knowing that at any moment you can get on a plane and go and live in another country (where you own a property) and continue living the financial lifestyle you have been become accustomed to.

It is important to ensure you have enough capital abroad to fund your lifestyle

The good news is that South African residents can externalise a significant part of their South African assets without emigrating financially. In terms of the current excon limits, individuals can externalise R1 million per calendar year (through the SDA) without needing to obtain a tax clearance, and R10 million per calendar year (through the FIA) after having obtained a tax clearance certificate. In addition, SARB is considering special applications for externalising amounts well over these limits.