The Benefits of Moving Money Offshore in South Africa
Many South Africans who come into some money, find themselves diversifying their investments, which often includes moving money offshore. While Hollywood movies may have villainized offshore funds with tax-evasion efforts, moving money is not only legal when done right, but it is also highly beneficial to the investor. Besides diversifying, there are many benefits to moving assets and funds off South African shores, and here are our top 5 benefits.
What does it mean to move money offshore?
Moving money offshore means that you strategically transfer money from your home country into an investment portfolio or bank account in a country other than where the funds were accumulated.
The Top 5 Benefits of Moving Money Offshore
- Tax benefits
According to the tax justice network study of 2021, global corporations and super wealthy South Africans managed to move more than R50 billion into countries that offer tax incentives to foreign investors, or commonly known as tax havens.
By offering tax incentives for foreign investment, smaller populated countries with little to no resources are able to substantially increase economic activity.
- A broader range of investment
Many investors move their money offshore to diversify their investment portfolios. This means that investors are able to invest in portfolios that might not be available on the South African market, as local restrictions may hinder a truly diversified investment portfolio.
- Flexible Investing
The flexibility of offshore investing allows investors to transfer capital to a minor, with the benefit of allowances that may be tied to the age of the minor. It also allows the option to invest on a regular basis or to make a once-off lump sum investment.
The investor is able to choose the asset classes that they want to invest in, as well as the currency that they would like to invest in.
- The protection of assets
Moving assets offshore could potentially lead to its protection. People who transfer their assets through trusts, foundations or even corporations could prevent creditors from repossessing their assets.
While assets are protected from banks, in the case where crimes like fraud and money laundering are proven, they are not completely protected from formal investigations and lawsuits. The criteria for the protection of assets vary on a case-by-case basis and are according to the investment laws of the offshore jurisdiction.
Your assets and wealth are also protected against mitigating factors like the depreciating rand and the unstable political and economic environment.
- Privacy
Tax havens offer foreign investors a level of confidentiality that South African banks might not be able to. Countries classified as tax havens have firm banking confidentiality laws in place to make their offering even more appealing to foreign investors.
How much money can you transfer out of South Africa?
If you are considering moving your money abroad, there are certain necessary channels, processes, and costs imposed by the South African Reserve Bank (SARB) that will need to be followed, including up-to-date documents and taxes. It is also imperative to keep an eye on the amount of money that your transfer offshore.
SARB allows a discretionary allowance of R1 million and up to R10 million with tax clearance per year.
TransferMe can offer and guarantee you a high standard of personal service, excellent rates on your transfers, free registration, a highly experienced team to assist you through the process, expert advice, and of course, safety and security on your money transfers.
Contact us today: support@transferme.co.za