Increasingly popular Plan B destinations for South Africans

While there has been a huge outflow of wealthy South Africans to countries like Canada, Australia, the UK and the US, many are opting to stay in South Africa – but have a Plan B as insurance.

Destinations increasingly popular for residence or dual citizenship include Malta, Mauritius, the Caribbean and Portugal. Namibia has become a viable and affordable option in recent times, but its residence-by-investment programme does not lead to citizenship.

Read: SA’s finance expats are flocking to the Isle of Man

The top emigration destinations for South Africans became a talking point during this year’s Tax Indaba, hosted by the South African Institute of Taxation in Sandton.

According to Amanda Smit, managing partner of Henley & Partners in South Africa, the top two residence programmes the firm assists South Africans with are those offered by Malta and Portugal.

Malta

The benefits of the Malta programme include residence in any European Union country and visa-free travel within Europe’s Schengen Area. A successful candidate can stay indefinitely in Malta, and family members are included.

But it comes at a rather steep price. The applicant must prove that they have capital of €500 000 (a little over R10 million), of which €150 000 (R3 million) must be in financial assets.

The applicant must also purchase property of €350 000 (R7 million) or lease property to the value of €12 000 (R242 000) per annum. This is besides the additional and substantial contributions to the government, a donation to a non-government organisation and a non-refundable administrative fee.

The total bill can amount to around €1 million (R20 million, give or take).

Read/listen: Spike in HNWIs interested in leaving SA

“The application ends with citizenship in about 16 to 18 months’ time, there is a very low stay requirement, no language requirement, and it extends to the family members. So [for those with sufficient funds], the benefits outweigh the investment requirement,” says Smit.

Portugal

The future of the Portuguese residence permit had been uncertain, but there is finally clarity. The permit and its benefits remain. This includes the right to live, work, and study in Portugal and allows free movement in the Schengen Area.

One will have to pass a Portuguese language test when applying for citizenship after five years as a legal resident, but the investment threshold is at least much lower.

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Looking for residency abroad?
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“Learning a new language is not easy, and if you are not spending enough time in the country to hear the language, it can be difficult,” says Smit. Although the prospective resident has five years to learn it, ‘tourist speak’ will not be sufficient. You must be able to speak, write and read in Portuguese.

Closer-to-home options

Namibia is becoming quite attractive because the culture, language and weather are “closer to home”.  The programme offers residence through property investment at a minimum value of N$365 000 (R365 000).

Mauritius has been luring South Africans with its beautiful beaches and offers several other options besides property investments.

Read: Mauritius is making residency even more attractive to South Africans

Caribbean countries

The Caribbean countries are growing in popularity, as citizenship comes at a much lower investment threshold than in Europe.

“All the Caribbean countries have strong passports, which means you get dual citizenship, and you have access to all the countries in Europe and some more,” says Smit.

“The dual citizenship applications take about nine months [and] you don’t have to spend time in the country or learn a language.”

Read: South African passport inches up the global rankings

Or invest offshore …

People have also contemplated their investment plans while considering emigration or their ‘Plan B’. The debate about offshore versus local investments has been raging in SA, with some advisors advocating taking all investments offshore. Others have been more optimistic about investment opportunities in SA.

Piet Viljoen, executive director and portfolio manager at Merchant West Investments, warns that there is no “clear-cut” answer to whether to only invest offshore. There are lower-risk opportunities for fairly good returns in SA.

“You need to examine why you want to take money offshore. There are diversification benefits, and there are risk mitigation benefits, but it [is] not as straightforward as taking everything out because everything is going to hell [in SA],” he said during the Tax Indaba.

Sean Peche, portfolio manager at Ranmore Fund Management, also warns that markets move on fear and greed. Investors should guard against “knee-jerk decisions at the wrong time”.

Read:
Should I move all my assets offshore?
Inheritance issues to know if you are a non-resident
The importance of an exit roadmap and financial strategy when emigrating