Residence abroad as ‘plan B’ – this is where South Africans are headed

Portugal is popular with many South Africans looking for a route to residency in the European Union.

  • Over the past decade, the main trend in the South African investment space has been the growing number of local investors seeking to invest abroad to hedge their income against a volatile rand.
  • The next big trend is a strong interest in residency or citizenship through investment programs, says a director of Sovereign Trust SA, an international firm specializing in business structuring.
  • Portugal, Mauritius, Cyrus, and the Seychelles are among the popular options.

According to Coreen van der Merwe, director of Sovereign Trust SA, an international company specializing in business structuring, there is a misconception that people invest in Residency and Citizenship by Investment (RCBI) programs for the sole purpose of to allow their families to emigrate.

While this is a requirement of some programs – in the UK and US, for example – in most cases it is not.

“Over the past decade, the major trend in the South African investment space has been the growing number of local investors seeking to invest overseas to hedge their profits against a volatile rand. Now we are seeing the next big trend: a strong interest in RCBI programs, as people seek second residency or citizenship for personal and professional reasons, ”says Van der Merwe.

“We see Portugal and Mauritius emerging as two of the most popular destinations for South Africans, not only looking for a ‘plan B’, but also looking for greater tax efficiency, investment and business opportunities, improved lifestyles, education options and greater freedom of movement.

Portugal

Portugal is popular with many South Africans looking for a route to European Union residency – and citizenship – for themselves and their families. Real estate investment remains one of the easiest, with a minimum investment of € 500,000 – reduced to € 400,000 if the property is located in a designated area with low GDP or low population density.

Dr Andrew Golding, Managing Director of Pam Golding Property Group, says that in 2021 his first clients have successfully completed their journey under the Portuguese program and obtained Portuguese and EU citizenship.

“The main motivation is the ability to enable their children to study, live and work abroad,” says Golding.

Maurice

Part of Mauritius’ appeal to foreign investors has always been its straightforward tax system, according to Van der Merwe. Corporate, personal, capital gains and dividend income are all taxed at the 15% rate, with other tax breaks available. Mauritius tax residents are only taxed on Mauritian source income, and there is no capital gains tax, no property tax, and no inheritance tax.

Regarding non-Mauritian source income, we are only taxed on funds that are deposited in a Mauritius account. In addition, there is no exchange control.

“South Africans are already among the main foreign buyers of real estate on the island and there is already a large South African expatriate community,” says Van der Merwe.

Cyprus

The Cypriot government recently presented its new action plan to attract businesses to Cyprus with a focus, among others, on high technology, maritime transport, innovation and research and development, with the aim of to make the island a center of sustainable business and commerce in the wider region and in Europe, according to Van der Merwe.

The scheme allows the employment of third country nationals who have the requisite academic skills or at least two years of relevant experience and who receive a minimum gross monthly salary of € 2,500 (approximately Rand 45,000). Third country nationals who have obtained a residence and work permit will have the right to bring their family to Cyprus and spouses and partners will have immediate and free access to the Cypriot labor market.

South Africans who wish to live in Cyprus but work for companies operating abroad may be eligible for the introduction of a new type of residence permit.

“South Africans who are self-employed or employees who work remotely using information and communication technologies, with employers or clients outside of Cyprus will benefit greatly,” said Van der Merwe . The initial allocation is for a maximum of 100 visas.

To benefit from a visa, a natural person must have a minimum income from abroad of at least € 3,500 per month – increased by an additional 20% for a spouse and 15% for any minor child – be a holder medical insurance and have a valid criminal record. registration certificate from their country of residence.

People on a “digital nomad visa” will have the right to stay in Cyprus for up to one year, with the right to renew for two years. They may be accompanied by members of their family, who may be granted, on request, a residence permit which expires at the same time as that of the visa holder.

The spouse or partner and minor children of the holder of the digital nomad visa cannot work or exercise any economic activity in Cyprus. If they stay in Cyprus for a period longer than 183 days in the same tax year, they will be considered tax residents of Cyprus, provided they are not tax residents elsewhere.

Seychelles

Golding says Pam Golding Properties’ sales in Seychelles have been consistent throughout the pandemic.

“We are in 2021 so far about 30% on sales compared to 2020. We expect continued interest from a lifestyle perspective, dollar-based investing and buying properties. offshore, with more and more people able to work remotely allowing them the opportunity to live an island life part of the year, ”he explains.

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