Planning to Move Overseas? Here’s What You Should Do About SARS Tax Residency

If you’re planning to leave South Africa to work or live overseas, your tax residency status is something you should deal with intentionally, not leave to chance. Many people only realise years later that they never formally updated SARS, which can create avoidable complications.

The key principle is this: you don’t automatically stop being a South African tax resident just because you leave the country. Your residency is based on your facts and circumstances, and SARS expects you to actively manage the transition when your life moves abroad.

1. Understand when you actually cease tax residency

You generally stop being a South African tax resident when you no longer meet either:

The “ordinary residence” test (South Africa is no longer your real home), or
The physical presence test (time-based criteria over a 5-year period)

Most permanent relocations trigger cessation under the ordinary residence test from the date you leave and establish your life elsewhere.

2. Know what still gets taxed in South Africa

Even after you become a non-resident, South Africa still taxes:

Income from South African investments
Rental income from SA property
Certain capital gains on SA assets

Your foreign employment income, however, is generally not taxable in South Africa once you are a non-resident, especially where a Double Tax Agreement applies (for example, between South Africa and Germany).

3. Don’t confuse leaving the country with notifying SARS

One of the most common mistakes is assuming that leaving South Africa automatically updates your tax status. It doesn’t.

You are expected to formally notify SARS of your cessation of tax residency. If you don’t, you can end up in a long-term “limbo” where SARS still treats you as a resident on record, even if your facts say otherwise.

4. Be aware of the “exit tax” before you act

When you formally cease tax residency, SARS applies a deemed disposal of your worldwide assets under Section 9H. This is often referred to as “exit tax.”

In simple terms:

SARS treats your global assets as if they were sold the day before you became non-resident
Capital Gains Tax may apply
The calculation is based on your actual cessation date, even if you notify SARS years later

This is why timing and planning matter.

5. The process is now fully with SARS (not financial emigration)

The old “financial emigration” process through the Reserve Bank no longer exists. Today, cessation of tax residency is done through SARS eFiling.

Typically, you will need to:

Update your RAV01 details
Submit a declaration of cessation of tax residency
Potentially submit a schedule of worldwide assets for CGT purposes

SARS may request additional information, and the process can take time to finalise.

6. Plan before you leave, not after

The best time to deal with tax residency is before or at the point of departure. This allows you to:

Confirm your cessation date properly
Understand any potential exit tax exposure
Structure your move in a tax-efficient way
Avoid uncertainty or retrospective compliance issues

Bottom line

Moving overseas is a major life transition, and your tax residency should be part of the plan, not an afterthought. With the right preparation, the process is usually straightforward and manageable. Without it, you can end up untangling years of uncertainty later on.

If you’re planning a move, it’s worth getting proper tax advice upfront so you know exactly where you stand before you leave.