If you’re a South African living abroad or planning to leave the country permanently, you’ve likely come across the term financial emigration. But what exactly does it mean, and what are the tax implications of emigrating?
In this article, we’ll break down financial emigration in simple terms, explain what it means for your relationship with SARS (South African Revenue Service), and outline the key documents and steps involved. We’ll also explain how Apostil.co.za can help you navigate the process smoothly and legally.
What is financial emigration?
Financial emigration is the formal process of notifying SARS and the South African Reserve Bank (SARB) that you have permanently moved your tax residency abroad. It’s not the same as giving up your South African citizenship, but it does change how you’re taxed by South Africa.
As of 1 March 2021, the process is no longer handled by SARB but instead entirely by SARS, as part of your tax compliance status.
Why financial emigration matters
If you live outside South Africa permanently, but still earn income from a South African source (like rental property or investments), SARS may expect you to pay tax on that income unless you’ve formally changed your tax status.
Financial emigration allows you to:
- Prove you’re no longer a South African tax resident
- Avoid double taxation on foreign income
- Access retirement annuities or pension funds before the age of 55 (after 3 years abroad)
- Ensure compliance with SARS regulations and avoid penalties
Tax implications of emigrating
Changing your tax residency doesn’t mean you’re off the hook completely. Here’s what to expect:
1. Exit tax (Capital Gains Tax on worldwide assets)
When you financially emigrate, SARS considers it a “deemed disposal” of your global assets—even if you haven’t actually sold anything. You may need to pay Capital Gains Tax (CGT) on the difference between the market value and your base cost.
2. Income tax return still required
Even if you’ve ceased tax residency, SARS may still require you to submit a final income tax return showing your change of status and paying any taxes owed.
3. Retirement fund withdrawal
You can access your retirement annuities early (before age 55) only after you’ve been a non-tax resident for at least three years. Once approved, your lump sum withdrawal will be subject to tax—but usually at a lower rate.
4. Double Tax Agreements (DTAs)
If you’re a resident in another country, a DTA between South Africa and your new home country may protect you from being taxed twice. However, DTAs vary, and it’s crucial to follow the correct process with SARS to benefit from these agreements.
Key documents required for financial emigration
To complete the financial emigration process with SARS, you’ll need:
- Your Tax Compliance Status (TCS) PIN showing “Emigration”
- A completed Declaration of Cease to be a Tax Resident
- A motivational letter or explanation outlining your move abroad
- Proof of residence in your new country (e.g., utility bill, lease, or work visa)
- Passport copies and SA ID
- Income tax number and recent returns
- Details of your assets and liabilities (if applicable)
Depending on your financial profile, additional supporting documents may be required.
Need help getting these documents in order? We assist South Africans around the world with fast and reliable support.
Frequently asked questions
Do I lose my South African citizenship if I financially emigrate?
No. Financial emigration affects your tax residency, not your citizenship.
Can I return to South Africa after financial emigration?
Yes, but your tax residency will be reassessed based on your physical presence and intention to stay.
Do I still have to pay tax on South African income after emigration?
Yes, you’ll still pay tax on any South African-sourced income, but not on foreign income, if your status change is approved.
Final thoughts on the tax implications of emigrating
Financial emigration is a smart move for many South Africans living abroad, but it’s important to do it the right way. With the right guidance, you can protect your income, access your retirement funds, and avoid costly tax complications.
Ready to start the process?
Contact Apostil.co.za today and let our expert team guide you through every step, from gathering your documents to getting final SARS approval.