What does Financial Emigration Mean? Advice for South African Expats

Many South Africans leave South Africa unaware of their future plans. Perhaps they are going overseas on a year-long expat assignment, or they could be simply travelling and working their way around the globe.

As they become more settled in a new country, their thoughts often turn to staying there for the long term, which is when they start to consider financial emigration, but many are unaware of the process and what it entails.

What does financial emigration mean?

Financial emigration is also known as formal emigration and simply means your status, for exchange control purposes with the South African Reserve Bank, changes from resident to non-resident. Financial emigration does not change your status as a South African. You and your family still have the right to South African citizenship and your South African passports.

Financial emigration can happen at any time 

Financial emigration concludes one’s financial affairs from a South African point of view. FinGlobal, South Africa’s first financial emigration company, has assisted many South African expats to financially emigrate from South Africa. In the majority of instances, the financial emigration was done retrospectively, meaning that most expats had left the country over the last 30 years and had never recorded their financial emigration at the time of their departure.

The advantages of financial emigration

Financial emigration helps free the flow of your capital (and income) from South Africa and helps protect your savings from the rand’s fluctuations in the global currency market. For many people, the huge advantage is that they are able to withdraw and transfer their retirement annuity offshore, even before they are the age of 55. The cash from their retirement annuity can be used for any purpose – from buying a new home to investing in their children’s education.

On completing your financial emigration, you may also transfer any South African source inheritance abroad, any passive income, for example rent, dividends, director’s fees and income from discretionary or vesting trusts and the proceeds of any assets declared in your emigration application.

Things to be aware of when you financially emigrate

In order to financially emigrate, your tax affairs must be in order and up-to-date. Once you have financially emigrated, for exchange control purposes, your South African bank account becomes a capital account (previously known as a blocked account), which is subject to regulatory restrictions. Your remaining South African-based assets and transactions from this account will be controlled by the bank holding your capital account.

Moving and settling into a new country is a very challenging process and financial emigration can be quite a daunting and complex process if you undertake it on your own. The entire process from submitting your documents to accessing your funds is usually six months, providing everything proceeds smoothly. There are many rules, regulations and requirements to meet at every stage, however with the right advice and support from a South African Reserve Bank approved foreign exchange intermediary.

For a free consultation about the financial emigration process, contact FinGlobal today.

Article supplied by FinGlobal.