Anyone who acquires citizenship of another country automatically loses South African citizenship. This includes all rights and privileges associated with South African citizenship, including the loss of the right to a South African passport, the right to vote, etc.
This condition is set out in section 3: Loss of South African citizenship, section 6(1) of the South African Citizenship Act 1995. This does not include those who acquire foreign citizenship through marriage, nor does this section apply to minor children.
Renunciation of citizenship does not provide any tax benefits for those who wish to cease their tax residency. In addition, you will be deprived of certain rights that you may consider your inheritance and not worth sacrificing them for.
So, as you develop your road map to full financial emigration, whether it’s just the financial movement of your money or the physical relocation of your family, it’s vital that you take a deep look at what South African citizenship means to you. You should also be well informed about the options available to you, as these decisions affect the rest of your life as well as generations to come.
Residence vs. Citizenship
Foreign citizenship should not be confused with permanent residence abroad.
Many South Africans emigrate under the host country’s permanent residency program, which requires them to have an appropriate visa. They cannot apply for a passport of that jurisdiction and can generally be denied rights reserved for full citizens, such as the right to vote. Simply moving to another country does not result in the loss of South African citizenship. A good example is Mauritius, where a retirement visa can be obtained relatively easily and without investment in real estate. However, this does not entitle you to Mauritian citizenship.
If you officially accept the citizenship of another country, you can get its passport and enjoy all the benefits of citizenship. But you will be giving up your South African citizenship with this act alone. Although the Act provides for the restoration of your citizenship, this is not possible while you remain a foreign national.
However, there is a way to avoid this situation, but you have to act fast.
Section 6 (2) of the Citizenship Act allows you to apply to the Home Secretary to retain your South African citizenship. That’s provided you do it before you lose it for taking a foreign citizenship. Because if it is lost, it is lost forever or a process that no one will willingly undertake.
If the Minister considers it appropriate, he will issue an order to retain your citizenship, as shown in the example certificate of exemption below.
The priority of this application will allow you to enjoy the best of both nationalities.
It may be tempting to assume that renunciation of citizenship is sufficient grounds for ceasing tax residency in South Africa. Or that becoming a foreign citizen releases you from any unpaid tax or legal obligations.
This is not true, and you should not sacrifice your citizenship for it.
Section 12 of the Act provides that a person is not relieved “of any liability, obligation or liability in respect of any act done or done before he or she ceased to be a citizen of South Africa”.
This includes your tax liability to Sars, which remains even after you become a foreign national, until it is settled.
There are significant benefits to having a second passport, often referred to as a ‘Plan B’, for those who do not physically leave South Africa; but simply keep their wealth outside of South Africa or are on the road map to migrate their family abroad. Costs largely depend on your goals for the other passport and the status of the country you wish to gain access to.
As a practice specializing in international employees, business owners with international interests and high net worth families, we see the second passport strategy as an important part of the road map. In addition, we often help expatriate South Africans to retain their South African passport, as you never know what the future holds and there are no tax benefits to giving up South African citizenship.
Colleen Danica Kaufman, tax specialist, recognized attorney at Tax Consulting SA; and Marisa Jacobs, managing director of Xpatweb.