If you have permanently relocated from South Africa (or you’re planning such a move), one of your biggest concerns is likely to be how you’re going to deal with moving money offshore from South Africa. All money that moves in and out of the Republic is controlled by the South African Reserve Bank (SARB), and while the exchange control regulations have been relaxed, the South African Revenue Service (SARS) has since stepped in to take an interest in the cross-border movement of money to ensure tax compliance of individuals transferring money overseas.. So what do you need to know about international money transfers from South Africa? Let’s unpack the exchange control allowances and tax clearance requirements.
There are two main exchange control allowances that you can use for moving money offshore from South Africa:
- Single discretionary allowance: This allowance permits South Africans of 18 years and older to transfer up to R1 million per calendar year abroad for any legal purpose without providing tax clearance. This can be used for travel expenses, gifts, study expenses, and more. (This allowance doesn’t apply to non-residents)
- Foreign capital allowance (also referred to as the foreign investment allowance): This allowance permits individuals who have completed tax emigration from South Africa to move offshore up to R10 million per calendar year, subject to certain conditions and requirements, one of which is to furnish proof of tax clearance from SARS.
What is an emigration tax clearance certificate?
SARS used to issue certificates to exiting migrants that listed all of their assets and liabilities. This was necessary to use the exchange control allowances, and also for the purposes of cashing in retirement annuities before the age of 55. The concept of a tax clearance certificate has been replaced with a digital Tax Compliance Status PIN system.
What is an Emigration Tax Compliance Status PIN?
This is how SARS now provides tax clearance in respect of verifying an individual’s compliance status. With the former tax clearance certificate, the individual was only truly compliant on the day the certificate was issued and any non-compliance thereafter was not recorded on such certificate. Today, the Tax Compliance Status PIN provides the means for third parties to verify an individual’s tax status in real time, not just on the date it was issued.
- The Emigration Tax Compliance Status (TCS) PIN is a unique identification number issued by SARS to individuals who have emigrated from South Africa for tax purposes.
- It serves to confirm that a taxpayer has undergone the formal tax emigration process with SARS; declared their remaining assets and paid exit tax.
- The Emigration TCS PIN is valid for a period of 12 months from the date of issue and is required for certain transactions, such as the early withdrawal of retirement funds or the transfer of funds out of South Africa.
- The Emigration TCS PIN is only issued to individuals who have emigrated from South Africa for tax purposes. If you are a South African resident or a non-resident who has not formally emigrated, you will not be issued this PIN.
What is the Foreign Investment Allowance TCS PIN?
This digital PIN is issued by SARS to confirm that the funds available in your bank account were declared to the revenue authority and they conducted an inquiry into the source of your funds and found the source to be legitimate. In order to have this PIN issued, you must have funds available in your South African bank account that you wish to move offshore.
Getting tax clearance from SARS: When do you need which Tax Compliance Status PIN?
That’s a lot of PINs to remember, right? How do they even work for tax clearance? Let’s take a look, with some examples:
- You have ceased tax residency with SARS, but you did not apply for a Tax Compliance Status PIN at the time of completing tax emigration through SARS.
- You now wish to transfer abroad funds received from liquid assets in South Africa.
Your next step: Apply for Emigration Tax Compliance Status PIN to move funds from South Africa.
- You ceased tax residency with SARS and applied for an Emigration Tax Clearance Certificate/Emigration Tax Compliance Status PIN at the same time.
- You have funds that you wish to transfer abroad BUT your Emigration Tax Compliance Status PIN has expired.
Your next steps:
- Apply for a Foreign Investment Allowance Tax Compliance Status PIN.
- Move your money from South Africa using the foreign capital allowance.
- You have ceased tax residency with SARS and applied for an emigration tax clearance certificate/emigration Tax Compliance Status PIN at the same time.
- Your emigration TCS PIN is still valid, but you sold your house after you ceased tax residency and now it is a liquid asset and you wish to transfer the money overseas.
Your next step:
Apply for a Foreign Investment Allowance TCS PIN because the asset only became liquid after you applied for an emigration TCS PIN.
Long story short about tax compliance, and moving money out of South Africa after you’ve emigrated?
- If you emigrated before 01 March 2021, and you want to transfer ‘Emigrant’s Remaining Assets’ (this used to be referred to as Blocked Funds) you need to request a TCS for FIA via eFiling.
- This transfer is now treated like any other foreign capital transfer and you will select the applicable ‘source of capital to be invested,’ as the option for ‘Emigrant’s Remaining Assets’ is no longer an option on eFiling.
- You will be issued with an overall tax compliance status and a PIN, once SARS approves your request.
- You can view it on your “Tax Compliance Status Request” dashboard on your eFiling profile, have it sent to you via SMS or print it as a TCS result letter.
- The Tax Compliance Status PIN: everything SARS wants you to know about tax clearance.
- SARS Tax Compliance Status PIN: what is it and how do I get it?
- What documents do you need to submit with your Tax Compliance Status (TCS) in respect of emigration?
- Letter or PIN? The SARS non-resident confirmation letter and the Emigration Tax Compliance PIN.
FinGlobal: tax emigration specialists
Tax clearance, tax compliance – it can get very confusing when you already have a lot on your plate to deal with. Hand your tax matters over to the professionals. FinGlobal can assist you with getting your tax compliance with SARS up to date, and getting the necessary tax clearances so you can move your money out of South Africa safely, without worry.
To get started, leave your contact details in the form below and we’ll be in touch to discuss how we can help.
Send us a message
Leave your details below including a short message and a financial consultant will contact you.
Licensed South African Financial Services Provider FSP # 42872
You have Successfully Subscribed!
FinGlobal Newsletter Subscription
Subscribe to the FinGlobal newsletter to receive all the latest news and information regarding our services and South African Expats.