Many South Africans choose to emigrate, yet the process of financial emigration is often confused with physical emigration.
South Africans who have relocated abroad, or are thinking of doing so, can benefit from tidying up their financial affairs in the Republic by undergoing the process of financial emigration. We unpack the process, clear up common misconceptions and explain the benefits of becoming a non-resident.
What is the difference between emigration and financial emigration?
Despite sharing a common word, these are two very different processes. Emigration is the physical act of moving from one country to another – packing up your belongings and starting a new life elsewhere, in the UK or Australia for example.
Financial emigration is the process of informing the South African Reserve Bank (SARB) that you have permanently left South Africa. This changes your status from a permanent resident (or resident living temporarily abroad) to that of a non-resident of South Africa. This does not happen automatically, even if you have physically emigrated from South Africa.
Many people confuse the change of residence status with relinquishing their South African citizenship, but this is not the case. Informing the SARB that you are no longer a permanent resident in South Africa does not affect your citizenship status. The only thing that affects this would be if you apply for citizenship in another country, in which case you would need to apply for dual citizenship.
Should I financially emigrate?
Financial emigration is not necessarily for all expats. Whether it is right for you will depend on what kind of retirement savings and assets you hold. All South Africans have the annual R1 million single discretionary allowance and R10 million foreign investment allowance (which requires SARS tax clearance). Both of these can be used for foreign investment and asset transfer without having to financially emigrate. However, if you have a retirement annuity that you would like to cash in before retirement age, then financial emigration is the only option.
Read the full article by Sable International here: https://www.thesouthafrican.com/financial-emigration-for-south-africans-everything-you-need-to-know/