Why invest offshore?
Knowing how much to invest offshore, how to get your money offshore and what to invest your money in is not easy. We are here to simplify the complexities of offshore investing. The articles below will assist you in gaining an understanding of how best to structure your offshore wealth. For personalised analysis and advice, contact Anchor today.
The rand has moved quickly, should I take money offshore?
Diversification and protection from a weakening currency are the two primary reasons for having offshore exposure. SA is less than 1% of the global economy and by focusing all your investments locally, you are missing out on some of the best businesses in the world.
Options available for South African investors to invest offshore:
- Externalise your money
- Invest in rand-denominated funds with offshore exposure
- Utilise an asset swap facility
The essentials of offshore investing
Investing offshore for the first time can be daunting. Not only is there a huge variety of investment products available vast but there is a common misconception that investing money into hard currency offshore is an onerous exercise. While this has been true in the past, it is no longer the case and several mechanisms are available for investors to achieve global diversification:
- Single discretionary allowance
- Foreign investment allowance (FIA)
- FIAs in excess of R10mn
- Asset swap
How can loop structures save me money?
A loop structure is where an exchange control resident holds, for example, South African (SA) assets via an offshore structure, or where an SA resident has an interest in an SA asset indirectly via their interest in an offshore entity. In January 2021, the prohibition of loop structures was removed from the exchange control regulatory framework. It is a welcome development that South Africans can now structure their estate plans and other ownership affairs free of such encumbrances.
What does it mean to financially emigrate?
A circular issued by the SA Reserve Bank’s Financial Surveillance Department (FinSurv) at the end of February 2021, has resulted in the concept of emigration practically being done away with. The exchange control requirement to submit a MP 336(b) form has completely fallen away, while the tax side of the process essentially remains and is the only process required to be undertaken. This entails submitting a tax return to the SA Revenue Service (SARS) notifying it of your emigration, which, in turn, triggers a so-called exit tax, whereby all assets, excluding immovable property, were deemed to be sold and capital gains tax (CGT) was then due.