Some of the questions we regularly encounter include:

• I no longer have a bank account in South Africa, what do I do?
• I left South Africa as a child and don’t have a South African ID.
• I’m not sure whether I’m still considered a South African tax resident.
• I financially emigrated years ago, isn’t that sufficient?

Where do you start?

There is often a misconception that proceeds from a deceased estate, life policy or trust can simply be paid directly into the beneficiary’s offshore bank account.

In many cases the funds will first need to be paid into an appropriate South African bank account in the beneficiary’s name before they can be transferred abroad.

To establish the correct banking arrangements and determine the appropriate route for transferring the funds offshore, one of the first considerations is the beneficiary’s South African tax residency status.

Why is tax residency relevant?

Since March 2021, the previous exchange-control concept of ‘financial emigration’ has been phased out, with an individual’s tax residency status now playing an important role in determining the process that applies when transferring assets from South Africa.

Establishing whether the beneficiary is currently a South African tax resident, has ceased to be tax resident, or has never been a South African tax resident helps determine the process and documentation required.

What if you left South Africa as a child?

Many South Africans who left the country as minors are now adults living permanently abroad. Some may never have obtained a South African ID, registered as taxpayers or maintained a South African bank account.

When they subsequently become beneficiaries of a South African deceased estate or life policy, this can initially appear problematic.

These circumstances can, however, be accommodated. Subject to meeting the relevant requirements and providing the necessary supporting documentation, appropriate banking arrangements can be established and the inheritance transferred abroad.

What if you have never lived in South Africa?

Foreign beneficiaries who have never lived or been tax resident in South Africa may also inherit from a South African deceased estate.

For someone unfamiliar with South Africa’s exchange-control and banking requirements, the process can understandably seem complicated. Establishing the beneficiary’s circumstances early and ensuring that the correct documentation and banking arrangements are in place can help prevent unnecessary delays.

The bottom line

Every inheritance transfer is different. The beneficiary’s tax residency, banking position and personal circumstances can all influence the route that needs to be followed.

The good news is that, with the correct process established from the outset, transferring a South African inheritance abroad does not need to be daunting.

Having someone experienced in cross-border transfers involved early can help identify obstacles before they cause delays, coordinate the necessary banking and regulatory requirements and make the eventual transfer abroad considerably smoother.

Disclaimer: Merchant West Treasury Solutions (Pty) Ltd. (Reg no. 2012/188288/07) is an Authorised Financial Services Provider (FSP13011)