Many South Africans choose to retire abroad – whether to be closer to family, enjoy a different lifestyle or explore global opportunities. But what happens to your Living Annuity if you emigrate?
A Living Annuity remains a South African product, even if you leave. This guide explains how it works when you’re no longer living in the country, and what to expect when it comes to tax, payments and rules.
Can You Take a Living Annuity Out of South Africa?
No. A Living Annuity cannot be withdrawn as a lump sum if you emigrate. Your capital must remain in South Africa and the income you receive must pay into a South African bank account, or a Rand-blocked account where your income can be converted to foreign currency.
What is Tax Emigration?
Changing your tax residence (not just physically moving abroad) is when you formally notify SARS that you are no longer a South African tax resident. You can be a taxpayer in numerous jurisdictions, but a tax resident of only one country at a time. This can affect how your Living Annuity is taxed and how you receive payments.
South Africa uses two tests to determine tax residency: the Ordinary Residence Test and the Physical Presence Test. If you no longer meet either, and you submit the right documentation, you become a non-resident for tax purposes.
How Are Living Annuity Payments Taxed if You Emigrate?
Your Living Annuity income may still be taxed in South Africa—unless a Double Taxation Agreement (DTA) says otherwise. South Africa has treaties with countries like the UK, Australia, Canada and others. These agreements decide where tax is paid.
You’ll need to provide your service provider with your non-residency status and the necessary tax clearance to apply the correct treatment.
How to Receive Payments Abroad
Once you’ve completed tax emigration, you can receive payments either:
- Into your existing South African bank account
- Or into a Rand-blocked bank account – you can transfer your funds abroad from here
What Happens to Your Living Annuity if You Pass Away?
Living Annuities are not subject to estate duty in South Africa. If you nominate beneficiaries, they can either:
- Take a lump sum (taxed in SA)
- Continue the annuity in their name
- Or a combination
If there are no beneficiaries, the funds fall into your estate. Beneficiaries living abroad should also consider the tax rules in their country of residence.
Use our Living Annuity Calculator to see the long-term effect of fees on your income.
Switching to a Life Annuity After Emigration
Some providers may not allow a Living Annuity to be converted into a Life Annuity after you’ve emigrated. There’s no legal restriction, but this depends on the provider’s policy.
If you want a guaranteed income, it’s often better to switch to a Life Annuity before formal tax emigration, while you’re still a resident.
In Summary
If you emigrate, your Living Annuity stays in South Africa. You can still receive your income, but you must plan for how it’s paid, how it’s taxed and how fees may affect your capital.
Key takeaways:
- Your annuity capital cannot leave South Africa
- Tax depends on residency status and DTAs
- Fees can vary—compare EACs before choosing a provider
- Consider switching to a Life Annuity before tax emigration if guaranteed income is important
Use our Living Annuity Calculator to test drawdown rates, fees and inflation scenarios. Or speak to a qualified adviser at Investonline for help planning around emigration.
