Unanticipated and hidden costs – compounded by the currency conversion – can throw your plans off-kilter.
The decision to emigrate is never one taken lightly.
From a financial planning perspective, there is an enormous amount of work that needs to be done to ensure a smooth financial transition.
Here are some not-so-obvious costs that you may want to consider before deciding to emigrate.
Before making the life-changing decision of relocating permanently to a foreign country, you will likely visit the country first to do some scouting around, set up some interviews, investigate the business and/or work opportunities, visit schools and get a general feel for the country.
You will need to consider the costs of flights, tourist visas and hotel accommodation, as well as the increased cost of living while you are there.
The time factor
What is often not factored into the budget is the enormous amount of time spent on the entire process, including administration and paperwork, consulting and queuing, overseas travel, reading and research, selling your home, packing, negotiating, getting quotes, selling furniture and enrolling your children in schools.
This time can translate directly into a loss of income and earnings at a time where your expenses are mounting by the day.
Application and visa costs
The costs of applying for work visas and permanent residence vary from country to country, although generally include the actual cost of the visa and/or permit application, agency fees, biometrics, language tests, passport costs, medical examinations, police clearances, as well as an assessment of experience and qualifications.
Some are upfront, whereas others are payable later in the application process.
If your application is not successful, these costs are not recoverable, and you will need to restart the process in respect of your country of second choice.
Consider the likelihood of what is referred to as failed emigration. For those who choose the route of financial emigration, bear in mind that financial emigration triggers a deemed disposal of your worldwide assets (excluding fixed property) for capital gains tax (CGT).
This means you may be liable for CGT on assets you only expect to dispose of at a future date. If you return to South Africa within five years of financial emigration, your situation will be deemed a failed emigration and all tax which would have been payable in this country will become payable retrospectively.
Packing and removal costs
The costs of packing up your furniture, appliances, clothing and personal belongings will largely depend on how much you plan to take with you. Emigration experts advise South Africans to be selective when choosing what to take with them.
When it comes to appliances, many don’t work in foreign countries. Also, SA homes are much bigger than those in other countries.
On the downside, you are likely to sell your furniture and appliances in South Africa for a fraction of what they are worth, while having to pay full price in a foreign currency on the other side.
Pet relocation fees
Every country has its own set of rules concerning pets – and some countries, such as Australia, require a period of quarantine for your pet.
Besides the cost of physically moving your pet to another country, you will also need to budget for vet fees, microchipping, vaccinations and rabies testing, import permits, quarantine accommodation and health certificates.
Vehicle and drivers’ licence
If you plan on purchasing a vehicle in your new country, don’t forget to consider the cost of vehicle registration and licensing, which in some countries, such as Australia, can be enormous.
You may also be required to convert your driver’s licence to a local one, and there will be costs associated with doing this.
Every country has its own set of rules regarding immigrants and health insurance. You may be required to pay an upfront surcharge before entering the country to have access to the country’s healthcare system.
Your visa may also require that you hold private healthcare insurance and it is wise to investigate the costs of like-for-like cover in your new country, considering any pre-existing conditions that you or your family may have.
Financial emigration costs
If you are a member of a pension or provident fund before your normal retirement age and decide to emigrate, you are permitted to withdraw the full value.
In respect of retirement annuities and preservation funds, if your financial emigration has been recognised by the Reserve Bank, you will be able to withdraw the full value of your fund.
Bear in mind, however, that you will have to pay tax per the pre-retirement withdrawal benefit table.
Torr is a founding director at Crue Invest
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