Ask a lawyer – Do foreign landlords need to register with SARS?
Regarding FICA, we have a landlord living overseas. Do they have to give proof of their address in SA? Or where they live? Also, if they say they are not registered with SARS, is that ok?
In terms of FICA, you are required to ensure that your client’s details and information are kept up to date and are accurate.
Thus, in the instance of a landlord who lives abroad, I am of the view that you are required to verify:
- Their actual residential address;
- Banking details where their rental income will be paid; and
- Their South African address, if any.
On the question of tax and whether it is necessary for the landlord to be registered with SARS, I note that the landlord is required to pay tax on his/her South African source of income, and therefore must be registered with SARS.
In this regard, I note that South Africa has a residence-based tax system, which means residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. By contrast, non-residents are taxed on their income from a South African source, which is payable to SARS.
To the extent that the landlord may raise issues pertaining to the possibility of double taxation, it is relevant to note that South Africa has entered into Double Tax Agreements with various foreign states. These agreements operate so as to ensure that a non-resident is not taxed twice (i.e. in South Africa and his/her country of residence) on the same source of income.
The issue of double taxation will have to be addressed by the landlord in his/her country of residence, but does not detract from his/her liability to pay income tax to SARS. Therefore, the landlord is required to register with SARS.
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Who is Marlon Shevelew?
Marlon Shevelew is the director of Marlon Shevelew and Associates Inc. a law firm specialising in rental property, contractual, consumer and company law.