You’ve waited years for your offshore share award to vest. The shares are finally yours, you sell them, and suddenly you’re looking at a sizeable balance in US dollars, British pounds or euros sitting with an offshore broker or share-plan administrator.
That can feel like the finish line. In reality, it’s the start of another process: getting the proceeds back to South Africa.
For employees who receive RSUs, share options or other offshore equity awards, this final step can be surprisingly unfamiliar. Where do the proceeds go? What documentation will you need? How do you bring the funds into South Africa? And, perhaps most importantly, how much of the value can be lost along the way through exchange-rate margins and unnecessary fees?
As Harry Scherzer, CEO of Future Forex, puts it: “Selling your vested shares feels like a milestone. But it’s really just the start of a second, less familiar process: moving the money.”
Here are five questions to consider once your shares have been sold:
Where do the proceeds actually sit?
If you’ve decided to sell your vested shares, the proceeds will usually land with an offshore broker or share plan administrator first, like Fidelity, Schwab, or Computershare, rather than going straight into your bank account.
From there, you’ll need to arrange the transfer to South Africa yourself, and have the right paperwork ready to support it. Before initiating the transfer, it’s worth confirming exactly where the proceeds are being held, what currency they are in and what steps your broker requires to release the funds.
What documents prove where the money came from?
Before the money can make its way home, you’ll need to be able to prove its source. For offshore share proceeds, this will generally include documentation such as your vesting or sale confirmation, trade confirmation from the broker or plan administrator, and employment or share-plan documentation showing the original grant and vesting schedule.
Depending on the nature of the transfer, you may be required to supply the IRP5 reflecting the taxable gain on the sale, along with sale agreements, payslips, investment statements and/or bank statements.
This is important because the paperwork must match the declared purpose of the transfer, or it gets held up for verification.
How do the funds actually move to South Africa?
For an inward transfer of legitimate offshore share proceeds, you won’t require a SARB or SARS allowance drawdown, a Tax Compliance Status (TCS) PIN, or an Approval for International Transfer (AIT). Those only apply to funds leaving South Africa.
But that doesn’t mean an inward transfer is documentation-free. The funds still need to move through an authorised channel, such as a bank or licensed foreign exchange provider, and the transaction needs to be correctly classified using the relevant Balance of Payments (BoP) category.
The BoP code is essentially how the transaction is classified for SARB reporting purposes – in this case, identifying the funds as proceeds from an offshore investment.
“The documentation and the Balance of Payments classification are what keep a transfer moving,” says Scherzer. “Get those right before you initiate it, not after.”
A mismatch – such as when the declared BoP category doesn’t match the supporting documentation – can lead to delays, even when the funds are entirely legitimate. As Scherzer points out, this is where working with a specialist forex provider earns its keep over a traditional bank.
“A dedicated forex provider will have teams that specialise in offshore transfers, meaning those kinds of errors are less likely to creep in,” he says. “Because their focus is on exchange control regulations, they’re best equipped to guide the BoP classification and keep the transfer moving.”
Who converts the currency, and at what rate?
Now we get to the actual conversion – and this is where the biggest cost is often hidden. Most people are aware of the SWIFT or admin fee, but according to Scherzer, the less visible cost can be far more significant: the exchange rate margin, otherwise known as the ‘spread’.
The spread is simply the difference between the underlying market exchange rate and the rate you’re actually offered. On a large transaction, even a relatively small difference in the exchange rate can translate into a substantial amount of money.
Say your vested shares sell for $300,000. Your bank may offer a rate R18.20 to the dollar, which converts to R5,460,000. At R18.75 – a realistic rate that a specialist provider could offer on the same day – the proceeds would be worth R5,625,000. That’s a R165,000 difference.
If you’re relying on a bank, the spread typically wouldn’t appear as a line-item fee on your statement. It’s simply the margin built into the exchange rate itself.
“That’s why it’s so important to get more than one quote before converting and compare the all-in rate, not just the advertised fee,” says Scherzer.
Do you need it all immediately?
The exchange rate margin can make a meaningful difference to the value you receive, but so can currency movements. For a large lump sum, it’s worth considering whether to convert the full amount immediately, convert it in tranches, or wait before converting.
This isn’t about trying to time the market. It’s about planning ahead and considering how and when you want to convert the proceeds, rather than making the decision simply because the funds have arrived.
The final details
Finally, it’s important to remember that the vesting of offshore shares can trigger a taxable gain under South Africa’s section 8C rules, with employees’ tax applying where relevant. The exact treatment will depend on the structure of your share award and your circumstances, so it’s worth speaking to your tax practitioner.
Once the proceeds have been converted into Rands, your financial adviser can also help you decide how best to use or allocate the funds.
Ultimately, bringing legitimate offshore share proceeds back to South Africa is a manageable, well-defined process, not the compliance minefield it can sometimes appear to be. The key is getting the fundamentals right from the outset: understanding the requirements, having the right documentation in place and ensuring the transaction is correctly classified. With those pieces in place, the process can be straightforward – and the right foreign exchange partner can help ensure it stays that way.
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