FINANCIAL EMIGRATION

The latest amendments to the ‘expat tax’ legislation are coming into effect from 1 March 2020. Currently, South African tax residents working abroad do not pay income tax in South Africa on foreign income earned. This applies if they have spent 183 days during a 12-month period abroad, with 60 of these days being consecutive. The latest amendments stipulate that only R1 million of foreign income will be exempt from income tax in South Africa and all foreign income exceeding this amount will be taxed.

Financial emigration is the process whereby individuals earning mostly/only foreign income financially emigrate from South Africa for foreign exchange control and taxation purposes, without giving up their South African citizenship. By financially emigrating from South Africa and living in another country, you will not be classified as a South African tax resident and, therefore, you will only be taxed on income earned within South African and not on any foreign income going forward.

This application process is complex and triggers capital gains tax, as well as foreign exchange controls consequences, and sound guidance and advice are crucial going into such an application.

CMV can assist you with the entire financial emigration process, with a customised solution, based on your specific needs.
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