A First-hand Experience Of The Crown Dependencies For South African Investors
Tax Consulting South Africa recently deployed a team on a week-long fact-finding mission to the Crown Dependencies, specifically Jersey and Guernsey.
“This is not our first time on the islands; we visit regularly to ensure we can offer fresh, accurate insights on migrating wealth to these popular investment destinations,” said Darren Britz, the firm’s Head of Legal. Other party members included Roxanna Naidoo, Admitted Attorney, and Colleen Kaufmann, Tax Attorney.
Accompanying the group was Keith Engel, CEO of the South African Institute of Taxation (SAIT), who is also a big believer in obtaining first-hand information. “It’s crucial our members understand these key financial hubs and what they hold for clients who are eager to invest through them,” said Engel.
“Actually, being here gives us a much richer feel for the wealth and investment opportunities available to South Africans,” said Britz. He indicated they met with key industry players who are abreast of the latest legislation and regulations affecting foreigners living or investing in these jurisdictions. At the same time, the team took the opportunity to soak up the sights, lifestyle and culture that must be experienced to be appreciated.
Engel noted that a large number of South Africans already reside on the islands, with about 3,000 in Jersey and around 2,600 in Guernsey.
“The typically sociable South African won’t want for company as the smaller area of each island lends itself to a much higher population density,” he said. Yet, they are not cramped by any means. In fact, their equally vibrant nightlife, exquisite dining scene and varied leisure activities mean there is plenty to do and many friendships to be fostered. And, according to expats the team met, the work-life balance equates favourably with South Africa.
It’s no secret that a lot of big money moving out of South Africa finds its way to the Crown Dependencies.
Many South Africans use a preferred isle either as a stop-off point on their journey further afield or as a springboard for entering the UK. In the latter case, those residing in one of these locations for more than 5 years may qualify to apply for a British passport.
That said, some expatriates remain there for retirement or due to work, with a large number of South African financial professionals seconded from the Big Four firms. Then, there are those expats who stay simply because they enjoy the lifestyle and, in the case of the Channel Islands, a climate bordering on Mediterranean.
Yet, the biggest influx of wealth comes from investors who remain in South Africa. This is mainly due to a robust financial services industry hosting a diverse range of financial products and investment opportunities from within strong economies.
“Having touched base with some of the top fund managers and financial services providers, we’re seeing a level of expertise you’ll seldom find concentrated in such small regions,” said Britz, noting that firms with South African connections are hungry for business.
“And there are no shady dealings; these are Blue Chip level firms with world-class products and services that offer a certain level of security because of their isolation from neighbouring states,” added Engel.
Naidoo said she was surprised at the size of the cities, advanced infrastructure and level of economic development taking place. “Standing here, among such modern buildings, is a tangible reminder that these small islands are also thriving economies with much to offer serious investors,” she said.
Rubbing shoulders with locals revealed nuanced attitudes South Africans don’t usually see in the media, like which of the isles is considered better to invest in and what types of investors focus on each. “We heard from various locals that while the normal working South African prefers Jersey, HNWIs tend to favour Guernsey,” said Naidoo.
She also mentioned important property considerations. For example, Guernsey has Local Market housing whose purchase is restricted to people born or employed on the island, or those with strong family ties.
Open Market housing, however, is available to anyone, making it the only choice for HNWIs. Comprising just 7% of the residential market, these properties are generally larger but more expensive.
Culture and safety
Kaufmann was impressed with the strong cultural pride and community spirit on all the islands, with local residents working together to keep their neighbourhoods safe. This has led to a low level of crime across the isles.
“Just walking back from a restaurant at night, there’s a sense of peace and ease we’ve long been unaccustomed to in South Africa,” said Kaufmann.
And, when it comes to restaurants, the team even did research on that. “Steak-loving South Africans who visit Guernsey: just mention Red Grill to any local and they’ll immediately point you in the right direction,” said Naidoo.
Time well spent
After 7 days, the SAIT/Tax Consulting SA members returned to South Africa. “We are excited to transfer everything we’ve learned to our services and offerings, to help our clients make the best possible wealth and tax decisions available to them,” said Britz.
“There’s a major difference between reading about the Crown Dependencies and gaining wisdom directly from conversations with finance professionals, tax officials or expats who know the systems and structures from experience,” said Engel.