For South Africans, this country is becoming increasingly popular!

 

If anything has been shown by the Covid-19 pandemic, it is that we can work productively from anywhere. A growing number of South Africans are emigrating or at least moving to another country to experience a new lifestyle and explore new possibilities. houses

However, although there are many attractive options available for residence, such as Portugal and Cyprus, it is critical that immigrant South Africans take a close look at the tax implications before they move to South Africa, said sovereign trust consultant Ralph Wichtmann.

Citizens who do not emigrate tax could be tax residents both locally and in their new home country, so they are taxed on the same income twice.

"Although you live in another country, you still could be considered a tax resident of South Africa. It is crucial that you comply with the tax residence rules and any double tax treatises in place to ensure that you don't receive an unpleasant surprise in the form of an unexpected tax bill." said Wichtmann.

One of two tests can determine South African tax residence. One is the ordinary residence test, which examines 'the country to which an individual returns naturally and naturally from his or her walks.' If your property, family and permanent home are in South Africa, you will be considered to be a tax resident in South Africa.

The second test is the physical presence test, which takes into consideration the number of days you spend over a certain period in South Africa.

In most tax treaties there is a "tie-breaker" clause that gives taxing rights to the country of permanent residence. If the taxpayer has a permanent home in both countries, taxation rights are granted to the country where the "center of vital interests" (personal and economic ties) of the taxpayer is closer.

If you do not have a permanent residence or cannot determine a center of vital concern, you will be taxed in the 'habitual residence' you have and, otherwise, the country where you are a national.

There are a few factors that taxpayers should take into account when emigrating, Wichtmann said:

Charge exit. Upon becoming a non-resident in South Africa, all your global assets are sold at market value, and a capital gains tax is actually payable.

Taxes on capital. The tax regime in the country where you are moving to is also important to note, in particular whether they collect wealth or capital taxes or legacy tax and estate duties. In Spain and France, for example, you are charged annual tax on the capital value of your estate worldwide.

Many countries provide new residents with special tax regimes, including different routes through 'golden visa' schemes or their equivalent.

Portugal offers a system of non-habitual residents which offers a ten-year tax-free holiday to new residents through careful structuring (apart from pension income, which is now taxed at 10 percent ).

In return for an investment of €350,000 – €500,000 in an agreed investment that covers property, the Golden Visa Scheme also gives permanent residence to new non-EU residents.

Wichtmann pointed out that Cyprus is becoming increasingly popular with South Africans who either invest in real estate, one of several investment options, and that this can be facilitated by appropriate offshore structuring.

In general, the United Kingdom will treat any new resident as non-domiciled in the UK and therefore subject only to income tax in the UK or foreign income returned to the UK.

High net worth individuals can structure themselves so that they pay little or no taxes in the UK and are also outside the scope of the IHT regime, which is 40% of the capital value of their global estate. This 'non-dom' status can last 15 years or longer with appropriate planning.

Greece will grant permanent residence to anyone who invests €250,000 in immobilization, Wichtmann said. New residents also have a number of tax incentives available, including pensioners taxed only at a rate of 7% and entrepreneurs taxed only on 50 percent of their income.

 

"Some countries, such as Hong Kong, Singapore and Thailand, are taxing only territorially. Those who do not work in the country can therefore avoid all taxes. Then there are a few countries, including Dubai, Monaco and many Caribbean countries, that don't charge income tax, but if you are still tax-resident of South Africa, you may still be liable for your worldwide income tax," Wichtmann said.

"There are a lot to consider before deciding to emigrate – and it is always advisable to seek professional support before going abroad."