The decision to emigrate is one of the most significant and challenging choices an individual can make. It is often both emotionally taxing and logistically complex, requiring thorough planning and a well-prepared exit strategy.

In South Africa, this trend has been increasing, especially among medical and engineering professionals seeking opportunities abroad.

If you’re considering emigration, it’s vital to understand the relevant implications — including citizenship, tax residency, and exchange control — before making this life-changing move.

Citizenship

In South Africa, citizenship is granted in three ways:

• By birth
• Through a parent’s citizenship
• By naturalisation

Importantly, South Africa allows dual citizenship, meaning you can be a citizen of South Africa and another country simultaneously. However, if you intend to obtain citizenship elsewhere, you must apply to the Department of Home Affairs for retention of citizenship prior to acquiring the new nationality. Failing to do so will result in the automatic loss of your South African citizenship.

Tax residence

An individual is a resident for tax purposes in South Africa either by way of ordinarily residence or by way of physical presence. You are ordinarily resident in South Africa if it is the country to which you will return after your wanderings. Physical presence means you will be considered a tax resident during a particular tax year if you have been inside South Africa for more than 91 days in that tax year, and each of the five preceding tax years.

You could be a South African tax resident without being a South African citizen or an exchange control resident.

Accessing your retirement annuity and preservation funds

You are only allowed access to your benefits once you cease to be a South African tax resident for an uninterrupted period of three years.

Factors that will be taken into consideration to determine whether a taxpayer has ceased to be a tax resident of South Africa include:

• A letter from an authorised dealer confirming that the emigration was recognised by the SARB for the purpose of exchange control
• A copy of the Tax Compliance Status (TCS) PIN issued by SARS
• A residency certificate from the relevant authority in your country
  
  

Tax implications on a lump sum withdrawal

If you choose to withdraw from your Retirement Annuity before retirement, SARS will apply the following tax table:

Taxable Income from lump sum benefits – Rate of tax
R0 – R27 500 → 0%
R27 501 – R726 000 → 18% of taxable income exceeding R27 500
R726 001 – R1 089 000 → R125 730 + 27% of taxable income exceeding R726 000
R1 089 001+ → R223 740 + 36% of taxable income exceeding R1 089 000

Processing Times and Documentation

SARS currently provides the procedural requirements to process this type of withdrawal instruction, but we may require additional supporting documentation. Once we have received your instruction, we will contact you to advise if any further documentation will be required.

This withdrawal will also need to be approved by SARS, and the successful processing of this instruction is at their discretion. It takes SARS a minimum of 21 business days to assess and provide feedback on these tax directive applications. We will contact you if we experience any additional delays or if we experience any issues processing your tax directive application with SARS.

Financial emigration is a significant decision that demands meticulous planning, expert advice and preparation. By understanding the implications for citizenship, tax residency and access to retirement benefits, you can ensure a seamless transition for yourself and your family.