How to Invest Offshore as a South African

By Dave Nyam •  Updated: 05/29/24 •  6 min read

This offshore investment strategy has helped South African investors achieve benefits such as diversification, the potential to make a higher return, and hedging against local economic uncertainties. This essentially means South Africans spread their investments in foreign markets across a variety of economies and a series of sectors, thereby reducing the associated risk of losing investments in case of the poor performance of these economies and sectors. This article attempts to give the South African reader the lowdown on offshore investing: what’s in it for him or her, what’s the degree of risk versus reward, and what amount of money can leave the country.

- ADVERTISEMENT -

How to Invest Offshore

There are two options. They can use their Single Discretionary Allowance of up to R1m a year to send their money offshore without the need for a tax clearance certificate. This facility is granted by the South African Reserve Bank and would allow one to invest in markets abroad without the hassle of a tax clearance certificate. This can make the process of investing offshore much quicker and easier. For amounts above R1 million, there is an FIA that covers up to R10 million per calendar year, though it does require a tax clearance certificate. This allowance is also one supplied by the South African Reserve Bank. However, since the amount is bigger in this instance, a tax clearance certificate is required.

Is it Good to Invest Offshore?

Yes, because it comes with several benefits. These include tax incentives, protection of assets, privacy, and the opportunity to venture in countries where investment is a great possibility. It also protects against political instability and economic misfortunes in the home country. The disadvantages, however, are the enormous costs and increasing regulatory attention that come with offshore jurisdictions and accounts.

Why Should South Africans Invest Offshore?

Of course, there are many reasons for this :

What are the Risks of Offshore Investments?

They include:

How Much Money Can I Take Offshore?

South Africans are allowed up to R1 million offshore annually without a tax clearance certificate. The process is termed the Single Discretionary Allowance (SDA). The South African Reserve Bank provides SDA, which gives South Africans a chance to invest in foreign markets without a hustle for a tax clearance certificate. This can make the offshore investment process quicker and easier. Besides, all South African residents have an annual Foreign Investment Allowance (FIA) of R10 million that can be taken outside the country. However, a tax clearance certificate is required to externalize funds through your FIA. 

- ADVERTISEMENT -

Keep Reading

Internal Rate of Return [IRR] – Calculation

Internal Rate of Return [IRR] – Calculation

This broad-based guide examines how to calculate IRR, what it means, how different it is from ROI, and finally, what a good IRR will be.

How Much Investment Bankers Get Paid in South Africa

How Much Investment Bankers Get Paid in South Africa

This article will detail how much the bankers can make in SA and the pathway to becoming a professional, and it will provide an overview of this environment.

How to Invest in Amazon Shares in South Africa

How to Invest in Amazon Shares in South Africa

The following guide discusses how one goes about investing in Amazon shares from South Africa.

How to Buy Coca-Cola Shares in SA

How to Buy Coca-Cola Shares in SA

One may invest in Coca-Cola shares from South Africa, provided it is done right. This guide shall give an overview of how this may be done.

ETF vs FoF: Key Differences

ETF vs FoF: Key Differences

Understanding the distinction between these two can help you make the right decision based on your monetary goals, risk tolerance, and venturing horizon.

How to Invest in a Mutual Fund and Save Tax

How to Invest in a Mutual Fund and Save Tax

Also, different kinds of mutual funds, such as equity, bond, and balanced funds, are available for investors based on what they can handle.

How to Choose the Best Retirement Annuity

How to Choose the Best Retirement Annuity

So, let's look deeper into how getting the right RA could secure you a comfortable and financially stable retirement.

How to Purchase Shares in a Company in South Africa?

How to Purchase Shares in a Company in South Africa?

It involves several steps, irrespective of whether you want to acquire from a publicly listed agency or a privately owned firm

What Are the Best South African Shares to Buy Now?

What Are the Best South African Shares to Buy Now?

We look at how you can identify top-performing shares, how to make money from them, and possible returns from such stock investments.

Is It Better to Rent or Purchase a House in South Africa?

Is It Better to Rent or Purchase a House in South Africa?

Let's find out what is better: to rent or secure a homestead in SA, one of the significant features of the current landscape of property

How Do REITs Work?

How Do REITs Work?

On the one hand, REITs pay investors regular dividends, found within current income, with the same proposition offering the probable capital appreciation in the long run.

How to Invest in S&P 500 In South Africa?

How to Invest in S&P 500 In South Africa?

This post discusses how to venture into the S&P-500 from a South African perspective, including the process, costs, and available platforms for local investors.

How to Buy US Shares in South Africa

How to Buy US Shares in South Africa

In this regard, the article unfolds with a step-by-step approach to answering some of the most critical questions on investing in US stocks within the specific context

A Complete Guide to Index Investing

A Complete Guide to Index Investing

This makes index venturing an attractive and cost-effective avenue into the equity market for an increasing number of South Africans who seek to grow their wealth.

How to Buy Old Mutual Shares

How to Buy Old Mutual Shares

Buying or selling Old Mutual Shares in South Africa is relatively easy, whether you are a first-time investor or already an active one in the security markets.