Tax emigration checklist: Essential documents and steps

Tax emigration is a critical process for South Africans moving to a new country. It involves formally ceasing tax residency in South Africa to avoid dual taxation and ensure compliance with the tax regulations of the new country. This tax emigration checklist is designed to guide you through the essential documents and steps required for a smooth transition, helping you avoid common pitfalls and ensuring that your tax obligations are managed effectively.

Understanding tax emigration

Tax emigration refers to the process of changing one’s tax residency from South Africa to another country. This involves formally notifying the South African Revenue Service (SARS) and complying with the tax regulations of the new country of residence. Tax emigration is crucial for individuals who plan to live abroad for extended periods, as it helps prevent double taxation and ensures legal compliance in both countries.

Reasons for tax emigration

Employment opportunities abroad

Many South Africans choose to emigrate for better job prospects, higher salaries, and enhanced career opportunities in countries with thriving job markets.

Retirement plans

Retirees often seek destinations with favourable climates, lower living costs, and attractive retirement benefits, making tax emigration a necessary step.

Change of residency for lifestyle reasons

Some individuals relocate to enjoy a different lifestyle, such as a better quality of life, improved healthcare, or the appeal of living in a particular country.

Legal and financial implications of tax emigration

Tax emigration has significant legal and financial implications. Failing to manage these correctly can result in legal issues, financial penalties, and ongoing tax liabilities. It’s essential to understand the tax laws of both South Africa and the new country of residence to ensure compliance and avoid double taxation.

Pre-emigration preparations

Assessing tax obligations

Review current tax obligations in your home country

Before emigrating, review your current tax obligations in South Africa. Ensure that all taxes are up-to-date and that there are no outstanding liabilities.

Determine future tax obligations in your new country of residence

Research the tax obligations in your new country of residence. This includes understanding income tax rates, capital gains tax, and any other relevant taxes.

Consider double taxation agreements (DTAs)

Double taxation agreements (DTAs) exist between South Africa and many other countries to prevent double taxation. Check if your new country of residence has a DTA with South Africa and understand how it will affect your tax obligations.

Informing relevant authorities

Notifying the tax authority in the home country

Inform SARS of your intention to emigrate. This involves submitting the necessary forms and documentation to change your tax residency status formally.

Informing local authorities about the change of residency

Notify local authorities in your new country of residence about your move. This may include registering your new address and providing relevant identification documents.

Essential documents for tax emigration

Personal identification

• Passport and visa copies
• Birth certificate
• Marriage certificate (if applicable)

Financial records

• Bank statements (last 3-6 months)
• Investment portfolios
• Property ownership documents

Tax documents

• Latest tax returns
• Tax clearance certificate from the home country
• Proof of tax residency status

Steps to complete tax emigration

Step 1: Obtain a tax clearance certificate

A tax clearance certificate is an official document issued by SARS, confirming that your tax affairs are in order at the date of issue.

To apply for a tax clearance certificate, submit an application form to SARS, along with proof of your current tax status and any outstanding tax liabilities.

Common issues include outstanding tax debts or incomplete documentation. Resolve these by paying any outstanding taxes and ensuring all forms are correctly filled out.

Step 2: Update financial institutions

Inform your banks and financial institutions about your move. Update your addresses and contact information, and consider closing or transferring accounts if necessary.

Step 3: Re-assess investments and assets

Review your investment portfolios and understand the tax implications on investments. Decide whether to sell, transfer, or keep your assets based on your new tax situation.

Step 4: Notify insurance providers

Update your health, life, and property insurance providers about your move. Check your coverage in the new country of residence and purchase additional insurance if needed.

Step 5: Seek professional advice

Consult with tax professionals to ensure all aspects of your tax emigration are handled correctly. Find international tax advisors and consider legal assistance for a smooth emigration process.

Post-emigration checklist

Updating address with all relevant institutions

Update your address with all relevant institutions, including banks, financial institutions, and insurance providers.

Registering with the local tax authority in the new country

Register with the local tax authority in your new country of residence to ensure compliance with local tax laws.

Monitoring and managing ongoing tax obligations

Regularly monitor and manage your ongoing tax obligations to ensure compliance and avoid any penalties.

Regularly reviewing tax status to ensure compliance

Periodically review your tax status to ensure that you remain compliant with both South African and international tax laws.