Areas of unforeseen expenditure during the emigration process

Moving abroad can be expensive as it is, and costs are often compounded by unforeseen expenditure that comes from unfamiliar territory. Writing in Moneyweb, Craig Torr of financial advisory firm Crue Invest lists a range of costs that might blindside South Africans looking to move abroad. 

Crue Invest offers a range of personal finance advisory services such as investment support, retirement planning, estate planning, risk protection, tax structuring and a range of others. Craig Torr started the Cape-Town-based firm in 2004 alongside his wife Sue Torr, and the duo have developed a comprehensive overview of what it means to move abroad.

Craig Torr writes that there are as many as eighteen “hidden costs” that emerge when moving abroad, some more complex than others. The relatively stratightforward items on the list include scouting costs when examining a location before moving, the time invested in moving, application & visa costs, shipping costs, and travel & associated costs, to name a few.

Once at the destination, costs that emerge often include those of a new drivers license, the general cost of living, health insurance costs, school fees, the cost of utilities & services and flights to make visits back home, among others. These costs apply broadly to most looking to emigrate.

Some costs emerge in more specific cases, such as emigration consultant fees, for those who seek external advice on factors such as visa applications, business relocation, legal support, exchange control advice, and a number of others. Estate agents commission is another cost specific to some cases.

“If you are selling your home and/or other properties, bear in mind that as the seller of the property you are responsible for paying the agent’s commission, which could be anywhere between 4% and 7%. As a seller, it is advisable to negotiate the agent’s commission upfront and in writing as it constitutes a sizeable chunk of money,” writes Torr.

Pet relocation costs are also specific to some individuals. The most complex category of costs relates to financial emigration. Much has been made recently of the expat tax to be introduced in South Africa and the tax burden to be faced by South Africans living abroad. This is one of many considerations.

One thing for South Africans to consider is if their emigration ends up being branded as 'failed'. Finding steady employment abroad is a challenge, particularly now in light of the expat tax, and many South Africans return within a period of five years having been unsuccessful in settling abroad. This is known as failed emigration.

"If you return to South African within five years of financial emigration, your situation will be deemed a failed emigration and all tax which would have been payable in South Africa will become payable retrospectively," explains Torr. He also advises that a termination of tax residence status with the South African Revenue Service has its own set of unforeseen costs. 

"For instance, if you complete the financial emigration process early in your efforts to move overseas, your local banking and access to credit will be affected as you will be considered a non-resident. As such, you will be subject to the lending laws governing a non-resident of the country. This, in turn, may affect your ability to transact and conduct your financial affairs efficiently," writes Torr.