FAQ
frequently asked questions
FINANCIALLY INDEPENDENT PERMIT
With the increase of globalisation, being able to move around the globe is becoming increasingly important for both businesses and individuals alike. South Africa is a popular destination for most migrants and if you are a high net worth individual, having South African permanent residency with that financial independence provides you with an indispensable safeguard to your personal, professional and financial interests. Being a financially independent applicant means that you do not have to go through a temporary visa regime anymore, but you may directly apply for a Permanent Residence Permit based on proven Financial Independence.
Q. WHAT IS A FINANCIALLY INDEPENDENT PERMIT?
This is a permanent permit which allows you to live in South Africa on a permanent basis. It is ideal for high net worth individuals of any age and nationality who wish to stay in South Africa for a prolonged period without working or studying.
Q. HOW DO I QUALIFY FOR THIS PERMIT?
• High net worth individual
You need to be a person of high net worth. A high-net-worth individual is someone with liquid financial assets. Your net worth is the amount by which your assets exceed your liabilities. In simple terms, net worth is the difference between what you own and what you owe.
• ZAR12 million
The qualifying amount to be proved in terms of this application is R12, 000, 000 (12 million rand). There is no requirement that the R12 million must be brought into South Africa. Furthermore, there will be no tax on the applicant’s accumulated wealth other than ongoing requirements in terms of income or capital tax. This will only happen once you have obtained the permanent residence permit and are now deemed a South African resident for tax purposes.
• R120 000 fee
Once the application is approved, you are required to pay a fee of ZAR120,000 to the Department of Home Affairs before issuance of the permit.
Q. ARE THERE ANY DISADVANTAGES ASSOCIATED WITH THIS PERMIT?
It is always good to keep in mind any adverse effects that a permanent status might have on one’s personal and financial circumstances. The high fees and tax consequences are important factors for one to bear in mind when considering this permit.
• Higher fees
The Financially Independent permit does attract higher fees. Apart from the normal application fees payable to the Department of Home Affairs, a further fee of R120 000 is payable to the Department of Home Affairs upon the permit being granted. As this fee is only payable on your Financially Independent Permit being approved, it is never at risk.
• Tax implications
There may be adverse tax and exchange control considerations with this permit. The general rule in South Africa is that a person who is a resident of South Africa is assessable for tax on their worldwide income. A person’s liability for South African tax is determined by their residence status.
A holistic consideration becomes important, that is, the fiscal aspects and tax planning must be considered as part of the service we provide.
Q. HOW DO I APPLY FOR IT?
You may apply for this permit at the South African Mission in your home country.
Q. WHAT ARE THE NEXT STEPS?
Although there might be a couple of disadvantages, the benefits of holding this permit are endless, whether it is the property ownership benefits, travelling freely, business opportunities, the tax residency, access to long-term loans or the social systems such as school and healthcare, or eradication of the short-term temporary residence visas which need to be continuously renewed, the possibilities are endless. It would therefore go without say that having the Financially Independent Permit would be advantageous as it not only grants you permanent residence status in South Africa but also has the added advantage that it gives direct access to the permanent residence status without having to go through temporary residency first, thereby fast tracking your permanent move to South Africa. You are welcome to consult with us in order to establish your eligibility for this permit and answer any questions you may have. You may also complete the quick assessment below, or request a call back for more information.
Q. WHAT ARE THE FINANCIAL BENEFITS OF HAVING THE “FINANCIALLY INDEPENDENT PERMIT”
Not having the Financially Independent Permit means that if you want to stay in South Africa, you need to have a temporary residence visa. With a temporary visa, access to loans is very difficult and if the loan is granted, usually the duration of your temporary visa impacts the repayment period and results in high interest rates which can be a huge and an unnecessary financial burden on you. In some instances, before being granted the loan or finance, you are required to pay a huge deposit due to the fact that your temporary residence visa does not guarantee security of your stay in South Africa. There is no security of tenure for long-term investments and this can be a very precarious place to be.
Given the above, it goes without say that having the Financially Independent Permit would place you in a more secure position financially as it gives you added security in terms of your investments as well as access to long-term finance for property purchases and other long-term investment plans.
1. Investments not tied down
The Financially Independent Permit does not require you to make any investment in South Africa apart from the R120 000 that needs to be paid to the Department of Home Affairs upon issuance of the permit. For a high net worth individual, one might consider the investor permit, which in actual sense is the “business visa”, as an immediate pathway to obtaining South Africa permanent residency due to the less investment amount of R5 million in comparison to the R12 million for the Financially Independent Permit. The business visa requires the immigrant to make a substantial investment in the country and the investment must be made from funds outside of the country you are emigrating from. In addition, you will have to commit the investment to South Africa for a considerable period of time. The disadvantage with this is that your capital is tied up and often with little or no interest.
On the other hand, a Financially Independent Permit does not require you to make any investment, nor transfer any amount of funds to South Africa. Therefore, with the Financially Independent Permit, you achieve the same result as an investor permit, that is, the right to stay on a permanent basis in South Africa and achieve your long-term investment goals without tying up your capital.
2. Great security for long-term investment plans
As indicated, having the Financially Independent Permit guarantees you permanent stay in South Africa. As a permanent resident, you will be issued with a South African identity book endorsed as a “non-citizen”. The ID card states your South Africa ID-Number which is very important as you have financial advantages that enable you to comfortably invest with a long-term horizon, acquire property in South Africa with low to zero deposit/equity compared to a temporary residence holder, making it financially viable for you.
South Africa actively promotes investment in its economy, giving benefits to businesspeople ready to invest. The benefits include the unique combination of developed-world infrastructure and logistics networks, a diversified and growing emerging market economy offering low sectoral centration risks and a sophisticated banking sector with a major footprint in Africa. Therefore, having the financially independent permit will place you on the same platform with South African citizens for these and other benefits.
3. Less complex process – time is money!
Obtaining this permit is less complex and is a much more flexible and quicker route to obtain permanent residency in South Africa. Seeing as you are getting direct residence status, and not applying for any further temporary residence visas to legalise your stay in South Africa, it means that you will not have to spend more money to continuously renew your temporary residence visa. The constant renewal of temporary visas and the documents required each time often results in huge financial implications – therefore, if you apply for the Financially Independent Permit, it is a once-off application, and once granted and all necessary fees paid, you know that you do not need to pay any further fees for your continued stay in South Africa . This gives you that peace of mind to focus on the more important aspects of your growing your investments.
4. Flexibility
There is also no obligation for you to physically reside in South Africa thereby giving you that added flexibility to have your permanent residence status and reside anywhere in the world and still be able to access all the benefits in South Africa. The only requirement is that you at least enter South Africa once every three years to avoid you losing your permanent residence status. The permit grants you immediate permanent residence status in South Africa, giving you the flexibility to retire in South Africa, start a business, work or study. Having permanent residence status grants you with all the rights and duties of a South African citizen, except the right to vote.
The effects of Covid-19 on permit and visa applications
To say this has been an uncertain time for individuals, their businesses and investments, would be an understatement. The last few months have seen a major disruption on all aspects of human lives caused by the novel coronavirus. Human movement within and across geographical spaces has been at its lowest in a century, people are adapting to new lifestyles with social, political, and economic challenges in the mix. For individuals who had made plans to migrate to South Africa this year or in the near future, there is great uncertainty on whether they will still be able to do so amid this pandemic.
The financially independent migrant is one of many who has been gravely affected by this pandemic due to the fact that hopes and dreams to come and live in South Africa and capitalise on the many freedoms and flexibilities that come with this permit, seem a distant reality.
There is growing fear amongst investors on the possible loss of investments and life earnings, how the bureaucratic visa processes might delay their move to South Africa thereby impacting business opportunities, and how the current covid-19 pandemic might make the visa processes more stringent, thereby making it difficult to acquire their residence status and derailing investment prospects.
It is widely expected that the financial consequences of the ongoing coronavirus pandemic will be worse than the 2008 global financial crisis. This, coupled with the possibility of the implementation of the changed immigration laws in South Africa – which seek to remove the permanent residence permit completely, creates such uncertainty for anyone who is planning their move to South Africa.
ADOPT A PROACTIVE APPROACH
While the current restrictions on visa and permit applications might have hampered your immediate travel plans to South Africa, it is important to make sure that you use this time to effectively plan for your move to South Africa when the situation improves. Having the Financially Independent Permit will allow you to live in South Africa on a permanent basis. Unlike some other Permanent Residency categories, Permanent Residence under Financial Independence does not contain additional certain conditions making it an attractive option. Therefore, for qualifying migrants, this would be a perfect opportunity to make the permanent move to South Africa.
THE BENEFIT OF A FINANCIALLY INDEPENDENT PERMIT AS SECURITY FOR THE FUTURE
Amid the coronavirus pandemic, you can still apply for this permit and the benefits of having the permanent residence permit as a financially independent person are endless, whether it is the property ownership benefits or being able to travel freely – this will become very valuable given the current tight restrictions on movement due to the coronavirus pandemic. With the increase of globalisation, being able to move around the globe is becoming increasingly important for both businesses and individuals alike.
There are also ample business opportunities that come from having this permit, access to long-term loans or the social systems such as school and healthcare, the possibilities are endless. Therefore, having permanent residency with that financial independence provides an indispensable safeguard to one’s personal, financial and investment interests.
It would therefore go without say that having the Financially Independent Permit would be advantageous at this stage as it is a permanent permit which grants you permanent residency in South Africa thereby giving you that security around your long-term investments, property financing and business opportunities.
HOW CAN WE HELP YOU? – PREPARING FOR AN INFLUX OF APPLICATIONS
The effects of the coronavirus have been extremely devastating on the visa and permit application processes, forcing many migrants to put their relocation plans on hold. Although there is so much uncertainty on the future, in order to limit the length and severity of the disruption, one will need to plan now to ensure that their delayed plans can come to fruition once the situation normalises.
Whilst the situation remains precarious regarding global travel and migrant movement, we know that understanding and paying attention to the news, trends and responsiveness of one’s migration options and plans is vital to limit any financial and unintended personal risks. Having different options available and being able to operate and reside in another country will therefore be a real valuable asset.
We therefore highly recommend that should you be considering your move to South Africa, whether now or in the near future, you begin this process now so as to ensure that you are in control and can plan for the continued effects of the pandemic.
This time can be used to start the application process by ensuring that all requirements are complied with and to enable you to submit your visa/permit application as soon as the lockdown restrictions have been uplifted. It is anticipated that South African Missions and the VFS Offices will receive an influx of applications once the travel bans are uplifted and a proactive approach will ensure that you are prepared and, in the forefront, to submit your application.
