Foreign Residency: Unlock More Benefits
Foreign residency and citizenship by investment (RCBI) programmes have become increasingly popular in South Africa in recent years, as people look for a second residency or citizenship for personal and business reasons. But few people and advisers are aware of the full range of lifestyle, business, investment and tax benefits to be gained when the programmes are utilised correctly.
The ‘citizenship by investment’ industry started in 1984, when the Caribbean nation of St Kitts & Nevis launched its programme. But it only really started gaining traction with the introduction of the first European citizenship programme, in Cyprus, in 2011. Today, a host of countries offer residency and citizenship by investment, including Portugal, Mauritius, Malta and Gibraltar.
Tim Mertens, Chairman of Sovereign Trust SA, says Portugal and Mauritius are emerging as two of the most popular destinations for South Africans not only looking for a so-called ‘Plan B’, but also looking to benefit from greater tax efficiency, investment and business opportunities, improved lifestyles, education options and greater freedom of movement.
“There is a common misconception that individuals invest in RCBI programmes with the sole intention of enabling their families to emigrate. Whilst this is a requirement of certain programmes – the UK and US, for example – in most instances this is not the case. Most people who invest in government-authorised RCBI programmes do so to benefit from the flexibility and freedom they provide and to receive additional benefits that are not currently available to them,” said Mertens.
Portugal is popular with many South Africans looking for a path to European Union residency – and ultimately, citizenship – for themselves and their families. Portuguese residency unlocks visa-free mobility across the entire European Schengen area, and offers an excellent quality of life with relatively low tax burdens and investment barriers. While there are several routes to get Portuguese residency, real estate investment remains one of the easiest, with a minimum investment of €350,000.
Mauritius is wooing a growing number of local investors through its relatively close proximity to South Africa, attractive tax regime and laid-back lifestyle. Occupation and residence permits are freely available to foreigners wishing to work, invest, live or retire in Mauritius.
Part of the attraction of Mauritius for foreign investors has always been its simple taxation system: company, personal income, capital gains and dividend incomes are all taxed at a rate of 15%, with further tax concessions available. Mauritian tax residents are taxed on Mauritius-sourced income only, and there is no capital gains tax, no property tax and no inheritance tax. In addition, there are no foreign exchange controls.
South Africans are among the leading foreign buyers of property on the island, says Mertens. Setting up a business there is quick and easy, and there’s already a sizeable community of South African expats, making it familiar and easily accessible.
“The most important thing is not to make life-changing decisions based on a friend’s recommendation. You have to take advice from the experts, who can unpack the various country and investment options available to you based on your specific needs. That way, you can end up unlocking a range of benefits you didn’t know were even possible,” said Mertens.
SOURCE: Sovereign Trust