South Africans in Portugal: A guide to living annuities and more

For many South Africans in Portugal, a living annuity is their largest retirement asset and one of the most complex. Because it remains in South Africa while funding life abroad, a clear plan is needed to access it, hedge against the Rand, and manage income effectively.

This can create several challenges. Exchange rate movements can impact your income. Tax treatment can change once you become a Portuguese resident. And structures that worked in South Africa may no longer be efficient.

As rules evolve, including tax emigration and the three-year rule, doing nothing is a risk. Without a clear strategy, you could face unnecessary tax and reduced income over time.

Living annuities and the three-year rule

Many expats believe that once you have your Portuguese residency, you can simply access your South African retirement savings freely.

However, South Africa’s three-year rule applies:

• You must tax emigrate from SA and be non-tax resident for three consecutive years to access the full capital of a Retirement Annuity or Preservation Fund
• This rule determines when and how you can withdraw lump sums

If you have already "retired" into a living annuity, then the three-year rule to access funds already within a living annuity is not applicable.

This means the capital is generally locked in and you can only draw an income, typically between 2.5% and 17.5% p.a. at your elected frequency (monthly, quarterly, bi-annually or annually).

This makes cross-border planning essential to ensure your retirement income remains accessible, tax-efficient and sustainable while living in Portugal.

Three ways your annuity income loses value

If you’re receiving your monthly Rand payout into a South African bank account and transferring it to Portugal, you could be losing money in three ways:

• Currency risk: You earn in Rands but spend in Euros. If the Rand weakens, your income drops in real terms. A 10% fall in the Rand means a 10% cut to your lifestyle in Portugal.
•  Tax leakage: Your annuity may be taxed in South Africa. Without the right tax mechanisms being put in place, you could pay more tax than necessary or miss credits in Portugal.
• Transfer complexity: Even with the 2026 relaxations to the Single Discretionary Allowance (SDA), moving regular income requires ongoing administrative oversight to ensure you do not fall foul of SARB “bona fide” current transfer requirements.

Rand hedging

Moving from Rands to Euros requires more than just transferring money. It requires the right strategy.

Within your living annuity, the underlying investments should be positioned towards global markets. By maximising offshore exposure by way of hard currency allocations, your annuity can grow in hard currencies, helping protect your purchasing power in Portugal.

This shifts your income from being purely Rand-dependent to being aligned with the currency you live in.

The EU-regulated advantage

Managing a South African living annuity from Portugal is a cross-border discipline. An adviser who only understands the Rand, or only understands the Euro, cannot see the full picture.

By working with an EU-regulated adviser who specialises in the South African diaspora, you ensure that your income is not just “transferred,” but optimised for your new life in the EU.

Through strategic planning, particularly under the old NHR regime, there is an opportunity to build a Euro-denominated investment that can offer longer-term benefits, while further reducing exposure to ongoing Rand volatility and uncertainty.

See also: Portugal’s tax incentive: What you need to know about NHR 2.0

Cross-border tax and wealth events in Portugal

Sable International is hosting a series of expert-led events to help expats navigate their cross-border financial position with confidence.

Meet our tax and financial specialists to discuss:

• Residency and tax status in Portugal and your home country
• Cross-border planning to reduce tax exposure and protect wealth
• Property and investment structuring across jurisdictions
• Retirement planning, exit strategies and succession planning

Event dates:

• 25 May 2026 – Porto | Sheraton Porto Hotel & Spa
• 27 May 2026 – Cascais |  InterContinental Cascais-Estoril
• 28 May 2026 – Carvoeiro | Tivoli Carvoeiro Algarve Resort
• 29 May 2026 – Almancil | Wyndham Grand Algarve

Book your consultation with our SA and EU-regulated advisers to review your cross-border wealth strategy. Contact us today to build a plan aligned with your goals. Email [email protected] or give us a call on +44 (0) 20 7759 7519.