Taxes and international transfers when you’re passing down your estate.
As a South African living abroad you may be faced with one of the following scenarios:
- You receive an inheritance from someone with assets in South Africa
- You have assets left in South Africa (fixed property, shares, pensions or policies) that you want to make sure will be dealt with according to your wishes upon your death.
In both instances, you’ll have to plan carefully to ensure a smooth process.
How do I transfer an inheritance overseas from South Africa?
If you have left South Africa without financial emigration, or if you have a blocked Rand bank account in South Africa as a result of successful emigration, an inheritance can be paid to you locally into a South African bank account. You can then use your foreign investment allowances to remit the proceeds overseas without any personal tax consequences.
However, if you do not have a blocked bank account in South Africa, you can either use your annual foreign investment allowance to shift capital offshore, or you can apply for financial emigration in order to transfer your money out of South Africa, on approval.
How do I wind up an estate in South Africa from overseas?
If you die abroad, your assets in South Africa must be dealt with in terms of the Administration of Estates Act, which means that an estate must be registered and wound up in South Africa.
The proceeds of the estate can be remitted to your nominated beneficiaries overseas and your assets will be dealt with in terms of your will. It is generally accepted that a will drafted in the jurisdiction where the assets are, will provide for an easier administration process. However, it is possible to use one single will to deal with all assets.
Your estate in South Africa will be subject to estate duty as regulated by the Estate Duty Act in South Africa. Estate duty (inheritance tax in South Africa) is levied at a rate of 20% on the dutiable estate up to R30 million and 25% on the dutiable estate value in excess of R30 million.
Do South African residents pay tax on inheritances?
Since an inheritance doesn’t count as an income, you will not be taxed on it. CGT is also not paid by the person who received the inheritance.
We’ll answer all your questions. Your personal consultation is complimentary and without obligation.
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