Important news for South Africans who own property abroad: SARS may soon be at your door
South African taxpayers with holiday homes and investment properties abroad are about to come under far sharper scrutiny
Image: Timothy Bernard / Independent Newspapers
South African taxpayers with holiday homes and investment properties abroad are about to come under far sharper scrutiny, as SARS moves to secure automatic reporting on offshore immovable property from more than 20 countries.
According to Delano Abdoll, Legal Manager for Cross-Border Taxation, and Tasmin Kotze, Tax Legal Associate at Tax Consulting South Africa, South Africa is among 25 jurisdictions that have formally signalled their intention to join the Organisation for Economic Co-operation and Development’s (OECD) new reporting framework, which enables the automatic exchange of information on non-financial assets, including foreign property.
South Africa plans to activate the new reporting rules by 2029 or 2030, after completing its internal legislative process.
"This follows a new international initiative to exchange data on offshore immovable property. It includes your holiday villa in Portugal, your investment apartment in France, and your Airbnb in Spain," Tax Consulting South Africa said.
"If you own foreign immovable property and still remain a South African tax resident, that information will soon be in SARS’s hands and making any rental income or capital gains from these properties fall squarely into South Africa’s residency-based tax net."
Tax Consulting South Africa added that the framework will improve SARS’s ability to identify undeclared offshore assets and ensure compliance, potentially closing loopholes that previously allowed some taxpayers to avoid paying tax on foreign property income.
"This update will further equip SARS with more detailed information on taxpayers’ assets and investment portfolios, particularly offshore property, and will improve SARS’s ability to potentially collect taxes that may otherwise have been lost to the South African fiscus."
"Other participating jurisdictions to the new framework are Belgium, Brazil, Chile, Costa Rica, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Korea, Lithuania, Malta, New Zealand, Norway, Peru, Portugal, Romania, Slovenia, Spain, Sweden and the United Kingdom, and the United Kingdom’s Overseas Territory of Gibraltar".
Tax Consulting South Africa urged South African expats who own property abroad to complete the Financial Emigration process
"If you are a South African expatriate who has left South Africa permanently, no longer intend to return, and have purchased property abroad, undergoing the Financial Emigration procedure should be a priority before automatic global property reporting goes live"
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