Second Residency for South Africans
In a world of political uncertainty and restrictions on travel and the movement of assets, internationally mobile individuals, their families and businesses have developed a genuine need for liberating, flexible solutions.
Acquiring an alternative residency and/or citizenship provides a broad spectrum of immediate and future benefits and opportunities – security, lifestyle, mobility, education, healthcare, travel, business, investment, tax planning and retirement – and has become an increasingly popular choice for South Africans seeking opportunities outside South Africa.
When planned and implemented correctly, such opportunities are not just available to the main applicant, but also their family and succeeding generations.
Many governments wish to attract wealthy, self-sufficient and entrepreneurial individuals, who will enable them to:
Government-approved residency and citizenship programmes enable foreign nationals to gain full residency rights in a new country in return for making a capital investment, establishing a local business and/or injecting capital into the economy. Available programmes include:
For South Africans currently living overseas or planning to emigrate, it is essential to understand the distinction between citizenship and residency, especially residency for tax purposes. While citizenship determines your legal rights in a country, residency determines where you are taxed.
Second Citizenship
Moving overseas brings new opportunities, but also important decisions about documentation, residence and citizenship. For many years there was uncertainty about the status of South Africans who acquired a second citizenship; Section 6(1)(a) of the South African Citizenship Act 88 of 1995 provided that South African citizenship was automatically lost if an individual took up the citizenship of another country.
In May 2025, however, the Constitutional Court of South Africa confirmed, in its ruling in Democratic Alliance v Minister of Home Affairs & Another [2025] ZACC 8, that the section of the South African Citizenship Act was inconsistent with the Constitution. It was struck down with immediate effect and the ruling applied retrospectively to any South African who had forfeited their citizenship under the previous rules.
Importance of Double Taxation Agreements
Deciding to move overseas is one thing; deciding where to move to, is quite another and there are many issues that need to be considered. South African tax residents working abroad will typically pay some form of local income tax. This should be deductible against South African income tax but only if a Double Taxation Agreement (DTA) is in force between South Africa and the country in question.
South Africa has DTAs with over 80 countries – including the UK, the US, Australia, Canada, Mauritius, Portugal, Cyprus, Malta, Hong Kong, Singapore and the United Arab Emirates.
South Africa’s ‘Expat Tax’
However, South Africa’s ‘expat tax’, which was introduced in 2020 and applies South African income tax at rates up to 45% on foreign employment income that exceeds the threshold of ZAR1.25 million, has led many South Africans living or working overseas to formalise their tax emigration status by becoming non-tax resident in South Africa.
Who is a South African tax resident?
An individual is a resident for tax purposes in South Africa either by way of ordinarily residence or by way of physical presence. The concept of ‘ordinarily residence; is not clearly defined and the determination of whether or not an individual is an ordinarily resident for tax purposes must be done on a case-by-case basis.
A number of factors must be taken into account to make such a determination, including:
An individual can also become a tax resident by way of physical presence. The requirements refer to the number of days that a natural person must actually be present in South Africa, during a year of assessment and also during the five years of assessment preceding the year of assessment under consideration.
These requirements are that the person must be physically present in South Africa for a period or periods exceeding:
- 91 days in aggregate during the year of assessment under consideration.
- 91 days in aggregate during each of the five years of assessment preceding the year of assessment under consideration.
- 915 days in aggregate during the five preceding years of assessment.
An individual who is deemed to be exclusively a resident of another country for purposes of a DTA is excluded from the definition of ‘resident’. It follows that while an individual may qualify as a resident under the ordinarily resident or physical presence tests, that individual will not be regarded as a resident for South African tax purposes if that person is a resident of another country when applying a DTA.
How do I cease to be a tax resident in South Africa?
The determination of whether an individual ceases to be a tax resident in South Africa is based on the manner in which such individual has been a tax resident in South Africa. If the taxpayer has been an ordinarily tax resident, it is a factual enquiry on whether or not that person’s subjective intention to cease to be ordinarily resident in South Africa and no longer make South Africa his or her real home, is supported by various objective factors. If a person has ceased to be an ordinarily tax resident, it will be from the day such person ceased his or her residence.
Factors that will be taken into account to determine whether a taxpayer has ceased to be a tax resident of South Africa:
- The type of visa on which the taxpayer has gone to the foreign country.
- Proof of permanent residence in the foreign country (if applicable).
- A certificate of tax residence from the foreign revenue authority or a letter from the authority that indicates that you are regarded as a tax resident in that country (if available).
- Details of any property that you may still have available in South Africa and the purpose for which it is being used.
- Details of any business interests – investment and employment – that you may still have in South Africa.
- Details of family – indicate whether any family members are in South Africa and why.
- Details of social interests – subscriptions, contracts, clubs and societies – and location of your personal belongings.
- Details of any return visits to South Africa, their frequency and the reason for undertaking such visits.
An individual, who is resident by virtue of the physical presence test, ceases to be a resident when that person is physically outside South Africa for a continuous period of at least 330 full days. The individual will be deemed to have ceased to be a resident from the day such person left South Africa.
An individual who has become a tax resident of another country through the application of a double tax agreement will also cease to be a resident for tax purposes in South Africa.
What are the consequences of ceasing to be a tax resident?
A deemed disposal for capital gains tax purposes takes place at the time when an individual breaks his or her tax residence. The individual will be deemed to have disposed of his or her worldwide assets, excluding immovable property situated in South Africa.
Once a person has ceased to be a tax resident in South Africa, such person is no longer taxed in South Africa on his or her worldwide income, but only on South African sourced income.
How to declare cessation of tax residency to SARS?
A taxpayer who has ceased to be a tax resident of South Africa, should inform SARS through the Registration, Amendments And Verification Form (RAV01), which will capture the date on which the taxpayer ceased to be a tax resident. SARS will open a case and may request supporting documents.
The purpose of the declaration is to inform SARS of the change in tax residency that will impact the basis on which you will be subject to tax in South Africa and how your returns will be assessed going forward. The year in which you have ceased to be a tax resident may also result in a possible deemed capital gains tax disposal depending on the type of assets you held and where they are located at the time.
If successful, SARS will issue a Notice of Non-Resident Tax Status. Previously, these notices typically reflected only the taxpayer’s personal details and the effective date of the cessation of tax residency but, since 2025, they also record whether a taxpayer ceased residency under the ordinarily resident test, the physical presence test, or under a DTA.
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
