Visa holders · From South Africa
SARS taxes the growth in most of what you own as you leave. After moving to the US from South Africa, taxes on that same growth come due again in the US when you sell.
Section 9H of South Africa’s Income Tax Act treats most of your worldwide assets as sold at market value the day before residence ends. South African immovable property is the main exception. Only 40% of the net gain counts as taxable income, so the exit tax takes at most 18% of it. In the US, your gain still runs from your purchase price, and the treaty has no election to reset it.
Updated · Sources
Getting your money out of South Africa
- 3 years
- of unbroken non-residence must pass, with contributions stopped, before a retirement annuity (RA) can be cashed out early beyond its savings component.
- R2 million
- in total can go abroad as a travel allowance in the calendar year you cease residence, without SARS’s approval.
- R10 million
- more can move abroad each calendar year with SARS’s approval, if you are 18 or older and tax compliant.
Transfers above R10 million face stricter SARS checks and need the Reserve Bank’s approval too.
When does South Africa stop taxing you as a resident?
Tax emigration is the informal name for ceasing to be a tax resident of South Africa. South Africa taxes by residence, and citizenship is not one of its tests.
South Africa stops being your real home
SARS treats you as ordinarily resident while South Africa is your real home, the place you would naturally return to. That residence generally ends on the day you emigrate. SARS weighs your US visa, any home you keep available, where your family lives and your visits back.
Your move to the US is permanent
Two court cases SARS cites, both moves to the US, show that a permanent move ends residence and a temporary one does not. A man who emigrated on a permanent residence permit was not ordinarily resident, despite spending about a third of his time in South Africa. An employee on a 14-month US assignment kept his house, job and bank accounts, and stayed resident.
You were resident only by counting days
If only the physical presence test made you resident, residence ends after 330 full days in a row outside South Africa. It then counts as ended from the day you left.
The treaty’s tie-breaker picks the US
If both countries count you as resident, the tie-breaker picks one, starting with the country where you have a permanent home. When it picks the US, South African residence ends, and SARS asks for Form 6166, the IRS certificate of US residency.
You tell SARS the date
You record the date you ceased residence on the RAV01 form on eFiling, or on your ITR12 return. SARS asks for a signed declaration, a letter of motivation and your passport pages. To approve moving your money abroad later, SARS also wants that date and a calculation of the exit tax.
Financial emigration through the South African Reserve Bank ended on March 1, 2021, and never ended tax residence by itself.
How much of R1 million in growth does South Africa’s exit tax take?
South Africa splits your exit year in two, and the deemed sale falls on the last day of the resident part.
Gain on the deemed sale
R1,000,000
The gain is the R2.5 million market value less your R1.5 million cost.
After the annual exclusion
R950,000
Both parts of the exit year share one R50,000 exclusion.
Added to taxable income
R380,000
You add 40% of the R950,000 to your taxable income.
Exit tax at the 45% top rate
R171,000
That is 17.1% of the R1 million gain. At a lower marginal rate, the tax is less.
The rates are South Africa’s for its tax year from March 1, 2026, to February 28, 2027. SARS applies the R50,000 exclusion and these brackets, announced in the 2026 Budget, while the bill that enacts them is still pending. When you later sell, the US generally treats the gain as US-source income. As a result, the exit tax may not count toward your US foreign tax credit.
Under the US-South Africa tax treaty, South Africa keeps dividends and property, and gives up interest.
Each row assumes you live in the US and have ceased South African residence, so the US taxes all of it.
| South Africa | US | |
|---|---|---|
| Interest from a South African bank | Not taxed Article 11(1) | Taxed |
| Dividends from South African companies | 15% 20% until the payer has your declaration form | Taxed Credit capped at the 15% treaty rate |
| Gains on South African shares and unit trusts | Not taxed Except a 20% stake in a land-rich company | Taxed Measured from your original cost |
| Rent from, or a sale of, South African property | Taxed The buyer withholds 7.5% of a price over R2 million | Taxed With a credit, within US limits |
| A pension from a South African fund | Limited by the treaty Article 18(1) | Taxed The saving clause applies |
South African and US rules collide in four places.
Treating a unit trust like a US fund
The US usually treats a South African unit trust as a corporation, because its manager can change the investments. That usually makes it a passive foreign investment company (PFIC), as is an ETF set up as a collective investment scheme. Each fund generally needs its own Form 8621 every year, even inside a tax-free savings account (TFSA). The US also taxes a TFSA’s income each year.
Leaving your RA out of US tax and the FBAR
In practice, the treaty does not defer US tax on your RA’s growth. Deferral needs a competent authority pension agreement between the two tax agencies, and the IRS lists no such agreement with South Africa. South African funds’ FATCA exemption covers only their own reporting. Your RA, pension or provident fund counts toward Form 8938, and may belong on the FBAR too.
Taking a gift of shares from a parent in South Africa
South African donations tax falls on a resident parent, at 20% of gifts above the 2026 Budget’s R150,000 yearly exemption. The part of a parent’s gifts since March 2018 above R30 million is taxed at 25%. On shares, the parent also owes capital gains tax on any gain. When you sell, the US taxes the same growth again from your parent’s original cost. Form 3520 reports gifts from family abroad once they pass $100,000 in a year.
Retiring to South Africa on US Social Security
Without US citizenship, a South African retiring abroad generally gets US benefits only after 40 US credits or 10 years in the US. With no totalization agreement, your years of work in South Africa do not count toward a US benefit. While you work here, your US pay generally owes Social Security and Medicare.
Your South African TFSA and RA go on your US return, and we prepare it.
Valim’s licensed CPAs prepare US returns for people who have left South Africa, with their TFSAs and retirement annuities reported on them.
- We coordinate with whoever files your ITR12 and RAV01, and prepare your US returns from the year you arrive.
- We prepare the FBAR and Form 8938 for your South African bank, unit trust and retirement accounts, plus each Form 8621 a fund needs. We file Form 3520 once family gifts pass $100,000 in a year. The instant quote adds an amount for each account and fund you list.
- Before you leave, we price the US tax on keeping your shares against selling them while you still live in South Africa.
- When your RA pays out, we claim a credit for South Africa’s tax on Form 1116, within US limits. We also set that year’s estimated payments.
- If the IRS or your state questions a return we prepared, including its TFSA income, we answer within the fee.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
What changes for your tax when you emigrate from South Africa?
What are the tax implications of emigrating from South Africa?
Emigrating generally ends your South African tax residence. From that date, which you report to SARS, South Africa taxes only your South African income. Section 9H’s exit tax treats most of your worldwide assets as sold on your last day as a resident. From your US residency starting date, the US taxes your worldwide income. The US usually counts South African unit trusts as passive foreign investment companies.
Does the USA have a tax treaty with South Africa?
Yes. The South Africa-US tax treaty has applied since January 1, 1998, and ended a decade with no treaty. The 1946 treaty had ended on July 1, 1987, under a 1986 US anti-apartheid law. Signed at Cape Town on February 17, 1997, the treaty has never been amended. It limits South African tax on your dividends to 15% and leaves interest to the country where you live. Its saving clause lets only the US go on taxing its own residents under its own law, with listed exceptions.
What taxes do South African citizens pay while living abroad?
Citizenship does not decide South African tax: a citizen who has ceased tax residence pays it only on South African income. That includes rent, pay for work done there, South African dividends and gains on South African property. A citizen who is still resident is taxed on worldwide income, with a credit for foreign tax. A resident employee working abroad pays no South African tax on the first R1.25 million of foreign employment income. The work abroad must last over 183 full days in 12 months, over 60 of them in a row.
Can I withdraw my retirement annuity when I emigrate to the US?
Before retirement, only the savings component pays out, once a tax year, until you stop contributing and have been non-resident for three unbroken years. SARS refuses the fund a tax directive if you never reported ceasing residence. The fund also needs Form 6166, the IRS certificate of US residency. For the 2027 tax year, South Africa taxes the payout as a withdrawal benefit: 0% on the first R27,500, then 18% to 36%. Earlier lump sums count toward those bands. The US taxes it too, with a foreign tax credit for South Africa’s tax, within limits.
Sources
- US-South Africa income tax convention (1997)
- SARS, Cease to be an SA tax resident and reinstatement of SA tax resident
- SARS, Interpretation Note 3 (Issue 2), ordinarily resident
- SARS, Inclusion rate for capital gains tax
- SARS, Budget 2026 tax guide
- SARS, Supporting documents for approval of international transfers (AIT)
- SARS, Tax directive guide for ceasing to be resident (IT-AE-33-G01, Revision 13)
- SARS, Tax implications of the two-pot retirement system (September 2, 2024)
- South African Reserve Bank, Currency and Exchanges Manual for Authorised Dealers (June 2026)
- SARS, Withholding when a non-resident sells property in South Africa (IT-PP-02-G01, Revision 05)
- SARS, Foreign employment income exemption
- Social Security Administration, Your payments while you are outside the United States (Publication 05-10137)
- IRS, Competent authority arrangements
- IRS, Form 6166, Certification of U.S. Tax Residency
- 26 U.S.C. § 865, Source rules for personal property sales
- 26 U.S.C. § 1012, Basis of property: cost
- 26 U.S.C. § 1015, Basis of property acquired by gifts and transfers in trust
- 26 U.S.C. § 1297, Passive foreign investment company
- 26 C.F.R. § 1.1298-1, Section 1298(f) annual reporting for PFIC shareholders (Form 8621)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- IRS, Instructions for Form 8938
- IRS, Instructions for Form 3520
Reviewed and updated September 2026. General information, not advice for your situation.