Portugal’s warm culture, Mediterranean climate, and low crime rate have made it a natural choice for many South Africans seeking a better quality of life. But as you settle into the slower pace and peace of mind that Portugal offers, one thing that shouldn’t keep you up at night is whether you’ve properly cut your financial ties with South Africa – or if an unwelcome letter from SARS might still be on its way.

Many South African expats mistakenly think that moving abroad automatically ends their tax obligations at home. However, South Africa taxes residents on their worldwide income. That means SARS can still claim tax on your earnings – including income from Portugal – unless you formally end your South African tax residency.

This is where the critical process of tax emigration comes into play.

Tax emigration - the cornerstone of financial clarity

What is tax emigration?

Tax emigration involves submitting a formal application to SARS, updating your eFiling profile, and providing proof that you are now tax resident elsewhere (such as in Portugal). Once SARS confirms you no longer have strong ties to South Africa, they’ll issue an official notice confirming the change in your tax status.

Why it matters for South Africans in Portugal

1. Income tax reporting and double taxation: If you don’t officially end your South African tax residency, SARS can still tax your global income – even what you earn in Portugal. Although the Double Taxation Agreement (DTA) between South Africa and Portugal and South Africa aims to prevent double taxation, its complexity means that, without professional guidance, South Africans may still have to report their global income to SARS and face unnecessary stress or the risk of being taxed twice.

Once you complete tax emigration, you are no longer a South African tax resident. You’ll only pay tax in South Africa on income earned there, like rent from property you still own. All your earnings in Portugal, including salary or passive income, will be taxed only under Portuguese law, making your finances much easier to manage.

2. Estate planning benefits: Once you’ve officially ended your South African tax residency, estate planning becomes simpler and often more tax-efficient. Only assets remaining in South Africa, like property or investments, may be subject to South African Estate Duty.

Your other assets can be managed under Portuguese rules, where inheritance taxes are often lower or even exempt for close family. Planning your estate after tax emigration helps protect your wealth, reduce unnecessary taxes, and ensure more is passed on to your loved ones.

Navigating Portuguese Inheritance Tax (IHT)

Once your South African affairs are settled, you can focus on your new life in Portugal. Understanding local inheritance rules is just as important. Fortunately, Portugal is generally very favourable when it comes to inheritance tax: transfers to a spouse, children, grandchildren, or parents are exempt from Stamp Duty, which functions like Portuguese estate tax. Transfers to other beneficiaries, or non-property assets, may still be subject to a flat 10% Stamp Duty.

The key is that Portugal's tax system differs significantly from South Africa’s, and professional planning is essential to ensure the favourable Portuguese rules aren’t undermined by lingering South African obligations. Taking a holistic approach that considers both jurisdictions is the only way to structure your global wealth efficiently.

Exclusive tax and wealth event in Portugal

Sable International is hosting a three-day cross-border tax and wealth event to help South African expats navigate the complexities of managing finances in Portugal while staying compliant with SARS.

Meet Sable International’s experts one-on-one, get your questions answered, and leave with confidence that your financial affairs are structured efficiently across both countries – so you can enjoy your life in Portugal without worrying about unexpected tax issues.

Book your spot today:
 ● 4 November – Estoril | InterContinental Cascais-Estoril
● 5 November – Avenida | Praia D’El Rey Marriott Golf & Beach Resort
● 7 November – Almancil | Wyndham Grand Algarve

For more information, please click here or email: wealth@sableinternational.com