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Procedure to cease tax residency with SARS

When you are earning your salary in Germany, and you are still a tax resident in South Africa, you need to declare your foreign income to SARS by submitting an annual Tax return to SARS.
If you earn less than R1.25 million per year in Germany, you do not pay any taxes on this foreign income in South Africa.
If you earn above that, the taxes you already paid in Germany are taken into account as a tax credit when calculating the taxes due on the amount above R1.25 million. Detailed info on Foreign Employment Income Exemption from SARS

Disclaimer - We are not tax consultants; always refer to a professional Tax consultant concerning your taxes Before making financial decisions, speak to a professional to get expert advice about your specific situation.

Previous Process for Ceasing Tax Residency

  • Previously, the taxpayer could inform SARS of its decision to cease residency through the following two channels:
  • By capturing the date on the ITR12 tax return (which, from 2017, requests one to check the box as to residence status), a letter will be sent to the taxpayer requesting them to submit supporting documentation corroborating their claims. However, SARS has recently indicated that this information will be prepopulated on the ITR12 and cannot be amended.
  •  Via the Registration, Amendments and Verification Form (RAV01), which can be found on e-Filing. The date on which they ceased to be resident must be captured under the “Income Tax Liability Details” section. A non-resident declaration form must be completed and submitted with the relevant supporting documents on e-Filing. The taxpayer should also inform SARS by capturing the applicable date on their next ITR12 tax return (if applicable).
  •  

New Procedure

A taxpayer should therefore now capture the emigration by amending the RAV01 particulars, which should then, once reviewed by SARS, follow through to the ITR12.

Taxpayers ceasing tax residency in terms of the physical presence test need only to supply the standard documents listed below.

Taxpayers ceasing residency as a result of the application of a Double Taxation Agreement will need the standard documents and a certificate of tax residency from the relevant Foreign Revenue Authority, or if they do not produce such certificates, a letter from the Foreign Revenue Authority stating that they are tax resident in that country. To our knowledge, in Germany, this is called an Ansässigkeitsbescheinigung, which is issued by the German tax authorities.

Taxpayers ceasing residency in terms of the ordinary residence test will need to supply a motivational letter and further specific supporting documents listed below.

Supporting documentation

The onus is on the taxpayer to prove that s/he is not subject to tax in South Africa, and by implication, the onus is on the taxpayer to prove that s/he has become non-resident for South African tax purposes as and when declared.

Standard supporting documents include:

  • Signed non-resident declaration indicating on what basis the taxpayer qualifies to cease tax residency
  • A letter of motivation setting out the facts and circumstances in detail to support the disclosure
  • A copy of the taxpayer’s passport and travel diary.
  • Specific supporting documents and details include:
    • The type of visa applied for to go to a foreign country
    • Where the taxpayer has already taken up permanent residence, submission of proof is required. (For example, residential address, employment contract, etc.)
    • A certificate of tax residency from the Foreign Revenue Authority or a letter from the same that indicates that the taxpayer is regarded as a tax resident in that country
    • Details of any property still available in South Africa, and the purpose of such property, i.e. rental property, holiday house
    • Details of all business interests remaining in South Africa, including employment or investments
    • Details of immediate family members who remain in South Africa, and why
    • Details of social interests, for example, gym contracts, church membership, recreational clubs and the location of personal belongings
    • Details of all return visits to South Africa – nature, reason, and frequency

References

Information supplied by LSG Integrated, on 28.07.2022.  The information was correct at the time of writing, and will be updated as we become aware of changes

Tax Emigration Workshop

Pieter and Richell from Beztforex recently hosted a Tax Emigration Workshop for our community, guiding us through the labyrinth of rules, requirements, and those little “gotchas” that only seasoned professionals see coming.
Here are their contact details should you wish to reach out for personalised support.

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