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We answer your questions about financial emigration

by Lucy Smith | Sep 20, 2016
  • We help South Africans financially emigrate, withdraw their retirement annuities and transfer those funds offshore. The process of financial emigration is complex and each situation is unique, but here are some answers to the questions our clients often have about the process.

    If you’re thinking about undergoing the process of financial emigration, have a read through the answers of these seven questions and get a better understanding of this process.

    Does financially emigrating mean I have to give up my citizenship?

    Many people confuse the financial aspect of emigration with relinquishing their South African citizenship (passport) and becoming a citizen of the country in which they now reside. If you financially (formally/officially) emigrate, this will only change your tax status with the South African Reserve Bank to that of a non-resident. You will not have to give up your South African citizenship and/or passport to do this.

    Can I transfer my South African retirement annuity/pension directly into another in the UK?

    Unfortunately it is not possible to transfer directly from one fund in South Africa to another in the UK (or any other country). You will need to withdraw the fund in Rands first, then transfer these to a bank account in your new residing country and then invest those Pounds into a new fund in the UK.

    Our wealth team will be able to give further advice on the best investment options for you once you have financially emigrated.

    Do I need permanent residency or citizenship in my new residing country?

    As a general rule, you do need permanent residency/citizenship in your residing country in order to financially emigrate. This being said, we have dealt with some cases whereby clients do not yet have permanent residency.

    In these circumstances, the SARB have approved cases where the client has included additional information in the application confirming they have no intention to return to South Africa. On this basis they have then be granted financial emigration without the need to prove permanent residency. These clients have already been living in their residing country for several years though.

    In these situations we cannot guarantee an application will be approved, however, we would be happy to try for you. We have a couple of cases currently awaiting approval, so we will be able to give you feedback on this if/when they get approved.

    Can I still financially emigrate if I have remaining assets in South Africa?

    Should you have any assets you wish to, or have to, leave in South Africa (such as a living annuity) you will still be able to financially emigrate. It may make your financial emigration a little more complex, but no matter your situation we can assist you with everything you would need to provide the SARB with.

    For example, if you still own property, this is not necessarily an issue but you will need to declare your intentions in your application to emigrate. Additionally, if the property is still bonded, this would also be declared as a liability.

    From a tax perspective you would need to continue to submit South African-based tax returns and pay tax in some circumstances. The tax credit can then be sought in your country of domicile. You would also need to take capital gains tax into consideration too.

    Why do I need tax clearance for emigration if I have been out of the country longer than five years?

    If you have been out of South Africa longer than five years, you will be exempt from having to supply tax clearance for emigration in your financial emigration application to the SARB. Clients who have been out of South Africa for less than five years will need tax clearance for emigration from SARS before their application can be submitted to the SARB.

    However, in all circumstances should you also need to withdraw retirement annuity funds, you will still need to be able to provide tax clearance for emigration to the providers to process your withdrawal so that they can provide this to SARS when requesting a tax directive.

    Can I withdraw my retirement annuity just by proving that I am no longer a resident in South Africa?

    Current legislation only allows you to withdraw a retirement annuity policy early after you have financially emigrated. Financial emigration officially changes your status to that of a non-resident with the SARB. For further information regarding the recent confusion relating to this, you may wish to read this article.

    How long will the whole process take?

    Shouldfinancial emigration be required to access your funds, on average you are looking at a turnaround of approximately six months once we have your documentation in place and barring any unforeseen circumstances. 

    As a general case example, we can give you the following timescale: 

    • One to two months for client to get documents completed and sent to our London office – if based in the UK.

    This time can be reduced depending on how quickly you get the necessary documentation to us.

    • Two months for the SARB and SARS to issue your financial emigration approval and tax clearance.

    In some cases we will need tax clearance before we can proceed with the SARB application. Although recently SARS have become quicker in issuing these tax clearances, a general guide can be as long as 21 working days. This is also dependent on whether tax affairs are up to date.

    • Two months at withdrawal stage.

    At this stage, the providers will then need to apply for a tax directive with SARS before they are able to release the funds for payment. Please note that the providers can take between one to three weeks to process your application before submitting to SARS. The tax directive takes four to six weeks once the providers have submitted to SARS. After this is approved, the providers will deduct the tax due and then proceed with payment.

    As you will see, our hands are tied at many stages of the process waiting for SARS, the SARB and the provider to process applications their side. Unfortunately, financial emigration and retirement annuity withdrawal is not a quick process from start to finish.

    Having said this, we do ensure that any process which can be completed simultaneously is carried out and we will always make sure we are ready for the next step to ensure a smooth application from start to finish.

    Further questions?

    If you have any other questions not covered in this post, or if you’d like more information on any aspect of financial emigration please do not hesitate to get in touch on the details below.

    Our team is here to help you secure your financial future. Give me a call on +27 (0) 21 657 1553 or send us an email and we’ll provide you with the expert advice you need.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services Licence issued by ASIC to deal in foreign exchange (1st Contact Group - AFS Licence number 335 126).

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