Taxation in Mauritius: A Paradise for Investors
Mauritius, famous for the beauty of its lagoons and beaches, is also a preferred destination for many foreign investors. In addition to its idyllic living environment, the island offers an attractive tax system that encourages investment and the establishment of foreign residents. In this article, we explore the different aspects of taxation in Mauritius and the tax benefits it offers.
A Stimulating Tax Regime
Mauritius has put in place an advantageous tax regime to stimulate foreign investment, while respecting the standards of the Organisation for Economic Co-operation and Development (OECD). The Mauritian tax system offers a single tax rate of 15% for all residents, whether Mauritian or foreign. This 15% rate also applies to property income of foreign investors residing in their country of origin, subject to the existence of a tax treaty. Whether for income from a professional activity, company profits or income generated by the rental of real estate, the tax rate remains the same. Value added tax (VAT) is also set at 15%.
Real Estate Investment in Mauritius
Mauritius’ openness to foreign investors is not limited to its attractive tax regime. The island has also put in place an appropriate regime for real estate investment. Mauritius’ simple and advantageous taxation, combined with an exceptional living environment, has encouraged many foreigners to invest in real estate on the island.
The Tax Convention between France and Mauritius
It is important to note that Mauritius has concluded tax treaties with several countries, including France. These treaties aim to avoid double taxation and to promote economic and financial exchanges between the signatory countries. For French residents wishing to invest in Mauritius, this convention offers additional tax guarantees.
The Double Taxation Avoidance Agreement between the Republic of Mauritius and France
The Double Taxation Agreement between the Republic of Mauritius and France, in force since 17 September 1982, constitutes the cornerstone of Franco-Mauritian tax cooperation. This agreement confirms that the French tax administration accepts the taxation of Mauritius, which makes the island a tax-respected investment destination.
For French residents wishing to invest in Mauritius, this agreement is particularly advantageous. For example, when purchasing real estate in Mauritius, a French national is only taxable on Mauritian soil. In addition, taxation in Mauritius does not include the Real Estate Wealth Tax (IFI), the real estate capital gains tax (in the event of resale of the property), the property or housing tax, or the inheritance tax, among others.
Tax exemption of IFI through real estate investment
The IFI is an unlimited tax obligation to which persons having their tax residence in France are subject. However, Article 23 of the tax treaty between Mauritius and France specifies that real estate held in Mauritius by French persons, whose tax residence is in France, are located outside the scope of the IFI. It is therefore possible to reduce your IFI tax by investing in real estate in Mauritius, because these real estate assets will not be part of their assets.
Taxation of Rental Income in Mauritius
Real estate investment in Mauritius is not only advantageous from a tax point of view, but also allows you to generate interesting short-term rental income. It is possible to make your property available to tourists who visit the island. In addition, as indicated in Article 6 of the Franco-Mauritian tax treaty, “the income that a French resident derives from real estate located in Mauritius is taxable in Mauritius”. This income is thus taxed at a rate of 15%, compared to the rate of 45% of the French scale, offering investors many advantages in terms of real estate acquisition.
The Advantages of Mauritian Taxation
The Mauritian tax system offers many advantages for investors, including a single tax rate of 15% for all residents, whether Mauritian or foreign, and a VAT also set at 15%. In addition, Mauritius has concluded tax treaties with several countries, including France, to avoid double taxation and promote economic and financial exchanges. These treaties offer additional tax guarantees for French residents wishing to invest in Mauritius. In conclusion, Mauritius offers a favorable tax environment which, combined with its natural beauty and quality of life, makes it a destination of choice for foreign investors. However, it is always recommended to consult a tax advisor to fully understand the tax implications of any investment abroad.
Important Note:
This article is provided for informational purposes only. It is not intended to offer, and should not be construed as, legal or tax advice. We are able to assist you in connecting with legal and tax experts for specific advice.
Although we endeavour to ensure the accuracy and reliability of the information and opinions contained herein, which have been gathered from sources we believe to be reliable, we cannot guarantee their absolute accuracy or completeness.
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Before committing to any real estate investment in Mauritius, French citizens are strongly advised to consult a professional to understand the legal and tax implications of this investment. It is also possible to create a legal entity, such as a company, to acquire real estate. However, the legal and tax regime applicable to the acquired property will vary depending on the legal form chosen.