Externalize assets to your bespoke offshore legal entity using our team of experts to provide tax efficient solutions and many other benefits

Externalize assets to your bespoke offshore legal entity using our team of experts to provide tax efficient solutions and many other benefits

Externalization of assets

Offshore investing has been a cornerstone of our strategy over the past years, and we constantly seek new opportunities to enhance wealth creation for our clients. Externalizing assets to offshore jurisdictions through company and/or trust structures offers one of the best opportunities for South Africans to future-proof their wealth. This process should not be confused with emigration (financial or physical), but rather seen as a mechanism for individual and corporate clients to protect, invest, and maximize their assets while reducing costs and taxes.

The upside

The solution is aimed at discerning investors who wish to build up wealth for themselves and their families over generations irrespective of where they live. This solution provides you with a family office and almost absolute flexibility in the way that you can conduct your investment and business affairs internationally.

In some jurisdictions this solution also provides you with a means to obtain residency in that jurisdiction.

What structure? When is it beneficial?

The benefits of offshore structures are evident, and many South African investors will likely need such a mechanism over the long term. However, the setup and management fees should be considered to determine short-term viability. The fees depend on the purpose, number, and complexity of entities, making it essential to consult before estimating costs accurately. Nevertheless, a ballpark figure can be determined based on the following:

VEGA’s offshore structuring solutions provides a complete family office approach:

Trust setup for offshore investments and family wealth creation

For offshore investments (e.g., equity portfolios, real estate) and family wealth creation for future generations, a Trust setup might suffice. The cost of setting up and managing a trust in Mauritius ranges between $2,000 – $4,000 per annum, and an investment of R5 million over time will justify the fees based on current capital gains tax savings.

Combination of global business company (GBC) and trust for complex structures

If you have a more complex structure need (e.g., generating business income outside South Africa or externalizing local assets), a combination of a Global Business Company (GBC) and Trust might be necessary to maximize benefits. The setup and management fees for such a structure range between $12,000 – $15,000 per annum.

Income threshold for business income generation outside South Africa

For generating business income outside South Africa, an annual taxable income of over $100,000 would justify such a structure based on income tax savings.

Asset value threshold for
externalizing local assets

For externalizing local assets, a local asset value of R10 million would justify the structure.

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Mauritius as the base for the international Family Office

Mauritius stands out among the available jurisdictions because it offers great flexibility with company and trust structures. Apart from its strategic location, quality lifestyle, and social stability, Mauritius boasts a dynamic, diverse, and growing economy, establishing itself as a trusted and well-regulated international financial center. Most importantly, it provides cost-effective services and an attractive tax regime, such as:

  • No capital gains tax

  • No inheritance tax

  • No donations tax

  • Tax-free dividends

  • Personal income tax fixed at 15%

  • Corporate income tax at 15% (standard) or 3% (for investment trading and foreign sourced income)

  • Double taxation avoidance agreements with more than 45 countries, including South Africa

Please note that the chosen jurisdiction does not determine or limit your investment destination countries but merely serves as a place where these structures are incorporated and regulated.

Service and assistance

The specialized nature of tax and legal structures requires expert knowledge. Therefore, we have assembled a team of suitably qualified partners to design, set up, and manage your bespoke investment structure. This structure will hold your investment portfolio, which will be optimally managed by VEGA as our core business function. In addition to core portfolio management, we offer a range of services through our network of specialist partners, including:

  • Tax structuring of local and offshore assets

  • Offshore company and trust setup and management

  • Trustees, directors, and registered offices offshore

  • Administrative and regulatory services offshore

  • Application for SARS single discretionary allowance (R1m per person per annum)

  • Assist with SARS foreign tax clearance certificate regarding foreign capital allowance (R10m per person per annum)

  • Foreign exchange transfers and SARS tax clearances

  • Opening of offshore bank and investment accounts

  • Permanent residence and work permit application

  • Real estate investment assistance

Conclusion

Given South Africa’s recent grey-listing and increased international scrutiny, it has become more challenging for South Africans to invest internationally using offshore bank accounts to externalize their assets. Starting the process of externalizing assets sooner will yield greater tax efficiency over time. We encourage you to explore this opportunity and are available to assist with any questions or consultations.

Investments through the family office

The family office can invest into almost any asset class in almost any country in the world. Investments can be designed according to the your preferences. Guidance can be provided and the investments can be constructed by the family office’s advisors who can also function as its investment committee. With the Legacy Preserver Package, the family office management team is assisted in its research by VEGA Asset Management.

Investments through the family office

The family office can invest into almost any asset class in almost any country in the world. Investments can be designed according to the your preferences. Guidance can be provided and the investments can be constructed by the family office’s advisors who can also function as its investment committee. With the Legacy Preserver Package, the family office management team is assisted in its research by VEGA Asset Management.

Legacy Preserver package benefits

Estate planning

Estate planning

The Legacy Preserver Package ensures that almost no assets, including the property, fall within your estate on your passing.

Capital gains benefits

Should you sell the property through the Legacy Preserver Package at a later stage, no capital gains effects will be triggered in South Africa and/or Mauritius. The same can apply for certain South African assets and properties.

Exchange control benefits

All income derived from the investments be received in major currencies (USD, EUR, GBP etc). The income does not need to be taken back to South Africa in Rand should you ever return to South Africa. It is however possible to take the money back to South Africa should you wish to do so.

Debt funding benefits

Using the Legacy Preserver Package, you may be able to obtain loans in major currencies. By using this package, investments into the investment products offered by Storm Capital can be used as security for Lombard loans.

Fees

As your circumstance are unique, we suggest that we meet with you to discuss your requirements and intentions. We can then work on a fee proposal suited to your needs.