Ceasing Tax Residency

Leaving South Africa? Get your tax residency, exit tax and retirement savings right.

South African tax residents are taxed on their worldwide income. Moving abroad does not automatically end your tax residency. Since the old SARB “financial emigration” process was phased out in 2021, ceasing to be a tax resident depends on the tax residency tests and on notifying SARS. Getting this wrong can lead to double taxation or an unexpected tax bill.

Key issues we advise on

  • Residency tests: whether you are still “ordinarily resident” or meet the physical presence test.
  • Exit tax: the deemed disposal of your worldwide assets when you cease to be resident.
  • Notifying SARS: declaring the date you ceased residency and filing the required returns.
  • Double tax agreements: using treaty tie-breaker rules where two countries treat you as resident.
  • Retirement savings: accessing retirement annuities and preservation funds as a non-resident.
  • Exchange control: moving funds offshore within the allowances and approval processes.

The exit tax

On the day before you cease to be a tax resident, you are treated as having sold most of your worldwide assets at market value, which can trigger capital gains tax. South African immovable property is an important exception because it remains taxable in South Africa when it is later sold.

Two residency tests

You are resident if you are “ordinarily resident”, meaning South Africa is your real home, or if you meet the physical presence test based on days spent in South Africa over the current and previous five tax years. Under the physical presence test, residency ends after a continuous absence of at least 330 full days.

Who we help

We assist:

  • South Africans relocating abroad permanently.
  • Employees on long-term foreign assignments.
  • Professionals working remotely from another country.
  • Returning South Africans re-establishing residency.
  • Families with assets and investments in more than one country.
  • Business owners restructuring their affairs before emigrating.

How the process works

Planning before you leave.

  1. Residency analysis
    We assess your residency status and the date on which residency ends, taking into account any double tax agreement.
  2. Exit tax planning
    We identify assets subject to the deemed disposal and quantify the capital gains tax, ideally before you leave.
  3. Notify SARS
    Your change in residency is declared to SARS and a final return as a resident is submitted.
  4. Move funds
    We advise on taking funds offshore through your bank using the applicable allowances and tax compliance processes.
  5. Ongoing obligations
    As a non-resident you may still need to file returns for South African income, such as rental income or interest.

Non-residents who sell South African property are subject to a withholding tax that the buyer must pay over to SARS from the purchase price. Planning ahead can reduce cash-flow problems on a sale.

GET IN TOUCH

What to prepare

Helpful information for a first meeting.

  • Your travel history and dates of departure.
  • Details of your new country of residence and employment.
  • A list of your local and offshore assets and their values.
  • Details of retirement annuities, pension and provident funds.
  • Your recent tax returns and SARS correspondence.

Common Questions

No. You must cease to be ordinarily resident, or no longer meet the physical presence test, and you should declare the change to SARS. Keeping strong ties to South Africa can mean you remain ordinarily resident.
When you cease to be a resident, you are deemed to have disposed of most of your worldwide assets at market value, which can trigger capital gains tax even though you have not sold anything.
Generally, you can withdraw from a retirement annuity once you have ceased to be a tax resident for an uninterrupted period of three years, subject to tax on the withdrawal.
No. The SARB financial emigration process was phased out from 1 March 2021. The focus is now on your tax residency status and SARS compliance.
Non-residents are taxed only on South African-source income, such as rental income from South African property, subject to any applicable double tax agreement.

PLANNING TO LEAVE SOUTH AFRICA?

We help individuals and families cease tax residency correctly, plan for the exit tax and move their wealth offshore lawfully.

Read more: SARS disputes · Expanding abroad

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This page is general information and not legal advice.

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