Offshore Investing for South Africans: A Complete HNWI Guide (2025)

Why this matters: For South African high-net-worth investors, offshore exposure isn’t a nice-to-have—it’s how you protect purchasing power, diversify political and concentration risk, and unlock sectors unavailable locally.

This guide covers how much you can externalise, the paperwork, structures and tax, retirement fund limits, US-specific traps, reporting rules (CRS), and portfolio design principles—all in one place.

Individuals (18+) have two annual channels:

Single Discretionary Allowance (SDA): up to R1 million per calendar year, no prior SARS TCS approval required (still subject to your bank’s AML/KYC).

Foreign Investment Allowance (FIA): up to R10 million per calendar year, requires a SARS Tax Compliance Status (TCS) – “Approval International Transfer (AIT)” with supporting documents (proof of funds, statement of assets/liabilities, SA tax status, etc.).

Above R10 million: applications can be made on a case-by-case basis and may need additional SARB financial surveillance approvals; banks will escalate these with enhanced due diligence.

Tip: Calendar year = 1 Jan–31 Dec; plan tranches to optimise FX pricing and paperwork.

If you invest via retirement annuities/pension/provident funds, Regulation 28 now permits up to 45% of the portfolio in offshore assets (aggregate foreign), plus an additional allowance for Africa (ex-SA) up to 10% (manager rules apply). This materially increases diversification potential inside tax-advantaged wrappers.

Using the SDA (≤ R1m):

Ask your bank/forex provider to process under SDA.

Provide FICA/KYC docs; no TCS pin needed for SDA.

Using the FIA (≤ R10m):

Apply online for TCS – Approval International Transfer (AIT) via eFiling.

Upload SARS-required supporting documents (source of funds, asset/liability statement, tax return status, etc.).

On approval, SARS issues a TCS PIN your bank validates before remittance.

Processing times vary—grey-listing has added diligence at banks and counterparties, though SA is now in the final delisting phase pending FATF’s on-site assessment (expected October 2025 outcome). Build in buffer time for cross-checks.

A) Direct account in your name (global brokerage/bank platform)

Pros: full menu (equities, ETFs, bonds, funds, alternatives), fee transparency, portability.

Cons: DIY compliance; US estate tax risk if holding US-situs assets directly (see §7).

B) South African feeder funds/locally wrapped offshore funds

Pros: simpler admin and tax slips; ZAR-dealt.

Cons: share-class/withholding drag and sometimes narrower choice.

C) Offshore trust/company (e.g., Channel Islands, Mauritius)

Pros: succession planning, continuity, multi-beneficiary access, currency flexibility.

Cons: set-up/ongoing costs; complex compliance (CFC/attribution rules may apply in some cases—specialist advice required).

D) Retirement wrappers (Reg 28 vehicles)

Pros: tax-efficient growth; manager handles rebalancing within 45% offshore allowance.

Cons: liquidity and access rules; strategy constrained by Reg 28.

South African residents are taxed on worldwide income. You’ll report foreign dividends, interest and gains to SARS, with foreign tax credits where treaties apply (seek bespoke tax advice).

US dividends: The US–SA income tax treaty generally limits US dividend withholding to 15% for portfolio investors (proper W-8BEN and residency documentation required).

SA dividends tax: Dividends from South African companies are subject to 20% dividends tax (various exemptions/reductions exist for certain entities/treaties).

Estate Duty (SA): On death, 20% on the first R30 million of dutiable estate; 25% above that, with an R3.5 million abatement (plus spousal and other deductions). Offshore liquidity planning is critical to avoid forced asset sales.

South Africa participates in the OECD Common Reporting Standard (CRS). Foreign financial institutions identify SA tax residents and report account details to their local authority, which are exchanged with SARS annually. Expect banks/platforms to request tax residency self-certifications and TINs; non-compliance attracts penalties.

If you hold US-situs assets directly (e.g., US shares/ETFs, US-domiciled mutual funds), your estate may face US estate tax with only a ~$60,000 exemption—far lower than for US citizens. Planning options include using non-US-domiciled funds/ETFs, life assurance wrappers, or appropriate holding structures. Take specialist advice before building large US exposures.

Note: The US–SA treaty reduces income withholding taxes (e.g., 15% on many dividends) but does not give South Africans the same estate-tax exemption as US persons. Structure selection matters.

South Africa’s FSCA has declared crypto assets financial products under the FAIS Act (Oct 2022), and has been licensing Crypto Asset Service Providers (CASPs). If you use crypto platforms or advice, ensure they are properly licensed and FIC-registered, and address custody/insurance.

A) Strategic Core & Satellite (illustrative only)

Core (long-term): 60–75% in global equity/bond funds or segregated mandates (UCITS/Irish-domiciled often preferred for estate tax reasons vs US-domiciled).

Satellites: 10–25% in alternatives (private equity/credit, infrastructure, hedge funds) for diversification; 0–10% in thematics (AI, healthcare, renewables).

Liquidity sleeve: 5–10% in short-duration USD/EUR MMFs or T-Bills equivalents for opportunistic rebalances.

B) Currency policy

Match long-term spending liabilities: hold hard-currency assets (USD, EUR, GBP, CHF) to hedge ZAR depreciation risk; consider partial hedges for foreign bonds to dampen volatility.

C) Tax wrappers & location

Prefer non-US-domiciled funds/ETFs to avoid US estate-tax exposure (check PFIC implications if you’re also a US person).

Use life assurance/offshore bond structures where appropriate for simplified reporting and potential tax deferral (case-by-case, jurisdiction-specific).

These are frameworks, not advice. Allocation, domicile and wrappers must be tailored to personal tax residency, family structures, and liquidity needs.

Decide the channel: SDA (≤ R1m) or FIA (≤ R10m)—or both. Secure TCS-AIT if using FIA.

Select the platform/structure: Direct account, local feeder funds, or offshore trust/company; confirm treaty and estate-tax consequences for target markets.

Choose fund domiciles: Consider UCITS (Ireland/Luxembourg) products for broad exposure and potential estate-tax mitigation relative to US-domiciled funds.

Define currency policy: Decide how much to keep in hard currency, and whether to hedge part of fixed income.

Set governance: IPS (investment policy statement), rebalancing rules, manager mandates, consolidated reporting.

Comply & report: CRS self-certs, annual SARS filings (worldwide income), and document retention.

Review annually: Revisit FX, liquidity needs, tax changes, and FATF/AML developments that can affect transfer frictions.

Q: Can I split my R10m FIA across multiple transfers?Yes. The allowance is annual; you can tranche transfers as long as the bank can validate your TCS PIN and remaining limit.

Q: Are retirement funds the easiest way to gain offshore?For many, yes—Reg 28’s 45% offshore cap lets professional managers diversify globally inside a tax-efficient wrapper, with fewer admin burdens than direct externalisation.

Q: Will grey-listing block my transfer?No, but it can lengthen AML/KYC timelines. SA has substantially completed its FATF action plan and is undergoing on-site assessment ahead of the October 2025 decision.

We design bespoke, multi-jurisdictional portfolios that integrate investment selection, tax-aware structuring, currency policy, and estate planning—end-to-end. If you want a precision-built offshore strategy with institutional-grade execution and reporting, we’ll architect it for you.

The information provided in this publication is for educational and informational purposes only and does not constitute financial, investment, tax, legal, or other professional advice. While every effort has been made to ensure the accuracy of information at the time of publication, Vereles Wealth makes no representation or warranty, express or implied, regarding its completeness, reliability, or suitability for any purpose.

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