The cost of relocating to a foreign country
Erik Olwagen from Standard Bank outlines key tax and financial issues to bear in mind when either leaving South Africa or coming back.
NOMPU SIZIBA: Relocating to another country is a big decision, with its pros and cons. And, as the global economy opens up, job opportunities or other opportunities may arise that individuals seek to take advantage of. But what are some of the key issues that should be borne in mind when considering relocation?
Well, to share some tips on this issue I’m joined on the line by Erik Olwagen, the head of South Africa sales and distribution International personal banking, at Standard Bank. Thank you so much for joining us, Erik. A decision of this magnitude should certainly not be a knee-jerk one. So, having a plan for any move and its ultimate execution will no doubt be very important.
ERIK OLWAGEN: Yes, that’s absolutely correct. Having gone through it myself personally, and returning to South Africa after nearly 10 years abroad, I can assure you, there are several things to consider before packing your bag and buying your air ticket.
First, maybe just to give a level of complexity, it depends on your life stage, obviously. If you are single with little or no fixed assets, it is much easier to pick up and go. However, if you have a salary and some fixed assets, it’s a lot harder to actually just pick up and leave.
NOMPU SIZIBA: So what about money matters? What considerations do you need to make around money and exchange rates, and so forth?
ERIK OLWAGEN: There are quite a few things when it comes down to your financial situation. And, in my view, they are two overarching considerations. Firstly, it’s your local situation. And then it’s your new international situation that you will be moving into.
To just touch on a couple of your local considerations, there are things like your property. So you should be asking yourselves some simple questions. Are you going to sell your property or rent it out? What will happen if it does not sell, for instance? And then also something simple that people forget about is where you will stay just before you need to go to the airport, which will likely not be in your property any more.
And then a couple of other local things would be like your medical aid: will you be covered in a new jurisdiction? Will you need to keep medical aid active locally?
And then also things like updating your will. This is something that people forget. You need to update your will to cover yourself for worldwide assets, for example.
And then a few simple international things that you need to keep account of would be just your simple living expenses, such as accommodation, school fees and transport, which can take up a big chunk of your budget if you don’t plan for them properly.
And then one of the most important things would be your banking situation. How are you going to spend money in that currency? We generally advise our clients to set up a bank account in that hard currency well in advance, to avoid the situation where the rand would depreciate and then you are stuck with just rands and your South African bank card. And so it would be best to set up a debit card, for instance, in US dollars or British pounds, if you move to those countries, to not be at risk in that situation.
And then obviously set up internet and mobile banking, just to make your life a lot easier, managing your finances. So with Standard Bank, for example, you can view both your local and your international bank accounts with one app. That really makes life a lot easier once you move to another country,
NOMPU SIZIBA: You’ve covered so many things there. Let’s dissect them a little bit. The issue of renting a property. You’re leaving South Africa for maybe a few years; you’ve got an opportunity overseas, and you decide to rent. What are the tax implications around that?
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