An 11 hour flight from Paris, Mauritius is renowned for its turquoise waters, white sand beaches and the hospitality of its people. And also for its attractive tax regime, even if some recent measures have spoiled the picture a bit. You can buy an apartment there from 150,000 euros for 150 m2 in depth, and those who can afford it will pay from 2 to 10 million euros for a luxurious residence on the coast. “It is no longer necessary to take a PCR test to travel to Mauritius. The geopolitical situation is stable. Only two hours time difference with France and more than 150 kilometers of beach! “, – boasts Ximeng Gao, a consultant for real estate agency Marc Foujols. “We see a lot of French entrepreneurs and young couples wanting to settle, especially near Grand Bay, the most developed tourist area in the north of the island,” she continues.
About ten years ago, the Mauritian government decided to encourage the arrival and settlement of foreigners by providing the opportunity to invest in real estate. To prevent Mauritians from becoming victims of speculation, the country has decided to regulate the flow of investment from international clients. Foreigners can only buy in certain very specific areas, and they are only allowed access to properties listed on official development “schemes”. These are new programs sold out of plan. These private complexes include at least five lots with complex services.
Non-local customers can also access smaller operations called “R+2”. These are small new-build condominiums on at least two levels. Currently, there are about 120 residential projects, which is equivalent to about 1000 lots.
“When the Mauritius real estate market opened up to foreign investors in the 2000s, programs focused on luxury properties by the sea and investment has subsequently become more democratic. The offer has expanded with construction projects that have developed throughout the country and in the center of the island,” explains Herun Gurburrun, Counselor at the Mauritius Embassy and member of the Mauritius National Economic Development Agency (EDB). The government agency responsible for promoting investment on the island is preparing to launch a series of roadshows in France from 9 to 18 May (see box).
Less profitable rental investment
“During the Covid crisis, the real estate sector did not collapse. There were practically no refusals from unscheduled sales. The promoters took the opportunity to rethink their projects, and the virtual visits allowed the activities to continue. While there are many uncertainties due to the war in Ukraine and soaring inflation, there are encouraging signs. says Herun Gurburrun. According to some developers, by October the number of transactions may return to the level of 2019.
“The property is well kept. Prices did not fall during the crisis, but the rental market is still in decline because there are fewer tourists. “ emphasizes Ximeng Gao at Marc Foujols. Rental income is slightly lower than in the past. Now they fluctuate between 2 and 3%.
“The real estate market is emerging from the great stupor that the first two years of Covid plunged us all over the world into. In addition, travel restrictions to Mauritius, which have long remained very tight in the country’s destinations, have significantly limited the ability to buy or sell property. Travel resumes. In fact, contacts, and therefore intelligence, began to grow again. notes Robert Ferra, business lawyer for Legis and Partners Ltd in the capital of Port Louis, in the northwest of the island.
The former French colony, which also had to contend with an oil spill in 2020, managed to weather the crisis, even at the cost of heavy debt. “There was no shock thanks to government measures that first came to the rescue of the hotel and tourism sector, which almost stopped for 18 months. “, – clarified Robert Ferrat. Assistance from the Mauritian state was mainly in the form of loans and very little in the form of grants.
However, Mauritius is not immune to the turbulence of the war in Ukraine. There is significant imported inflation. The most pessimistic forecasts count on 6-8%, and even up to 10% of annual inflation. As elsewhere, prices for most consumer goods have risen due to the combined impact of inflation in Europe, rising global shipping costs, disruption in supply chains, spikes in energy prices and the depreciation of the rupiah against the dollar. which the authorities have been trying to fix since April.
“The rupiah unscrewed during the health crisis before bouncing back a bit. This remains very interesting if you buy property in euros. Transactions can also be made in dollars. ”, says Mathilde Parent Lagesse, a business lawyer from Tamarin-Rivière-Noire in the west of the country. “Real estate is booming,” explains a lawyer who handles numerous real estate transactions and real estate programs.
Almost every second buyer of real estate in Mauritius has French citizenship. According to the EDB, French investors are far ahead of South Africans (20%) and the British (7.8%). “The health crisis has given many French people a yearning for other places and spaces. In Mauritius, private schools offer large green spaces and outdoor sports are available all year round. The disconnect happens quickly once you’re on the edge of the turquoise lagoon. The latest health restrictions still in place at the beginning of May are quite hard to understand (wearing a mask outdoors, banning gatherings of more than 50 people, no sporting events). “Judge Robert Ferrat.
Taxation remains favorable and the economic environment is very dynamic for entrepreneurs. “Setting up a company locally is very easy,” explains Mathilde Parent Lagesse.
The tax agreement between Mauritius and France allows French taxpayers to avoid double taxation. In the case of buying a property worth more than 340,000 euros, the owner automatically receives a residence permit. And if he stays in Mauritius for at least 6 months a year, he will benefit from local taxation in terms of income tax. There is no residence tax, property tax or capital gains tax on the resale of real estate. Income and corporate tax is 15%.
There is also no inheritance tax for direct heirs, provided they also reside in Mauritius. In accordance with the Franco-Mauritian double tax treaty, real estate in Mauritius is not subject to the French real estate tax base (IFI). However, it will have to be paid for real estate in France if the taxpayer’s assets exceed 1.3 million euros, even if you have the status of a tax resident of Mauritius.
New tax on dividends and CSG
“The country can no longer boast easy and beneficial taxation for individuals. The weight of taxation of income and expenses in general has increased significantly over the past 5 years. “, tempers Robert Ferrat. From July 2020, individuals whose net taxable income and dividends from Mauritian sources exceed 3 million rupees, or about 67,000 euros per year, are subject to a solidarity levy. The base refers to excess income above the threshold of 3 million rupees. This tax is limited to 10% of the amount of net income and dividends received by an individual.
“This increase in taxation has prompted some of our clients to rethink their business model and return to France. “, – explains Catherine de Rosnay, tax specialist and director of Legis and Partners Ltd. Especially since two more events have recently occurred: one concerns the taxation of dividends paid by Mauritian companies. These dividends are now included in the basis for calculating the solidarity tax, while in the past they were not taxed.
The second measure relates to social contributions to wages, which also increased with the entry into force in September 2020 of the GSC (general social contribution) of 9% of wages (3% paid by the employee and 6% paid by the employee). employer), instead of the fee, which was capped at Rs 1,791 (€40).
Finally, unlike in France, there are very few tax cuts, Mauritius law provides for only a few cuts with little impact on the overall level of taxation and no tax breaks. Things to remember before jumping into the water.
Good to know: The legal system of Mauritius, inherited from the Napoleonic Code, is close to French law. You will need to contact a notary to complete the real estate transaction.
Golden Pension Permit
Mauritius intends to attract more and more foreign entrepreneurs, remote workers, as well as foreign retirees who want to settle here. “We have a lot of inquiries from French people in their 50s and 60s who want to buy property on the island to prepare for their retirement,” says Ximeng Gao, consultant for Marc Foujols.
Administrative procedures are simplified. People over 50 who are not working can use the residence permit for pensioners. Initially issued for ten years, it is renewed for another ten years with the possibility of applying for permanent residence for 20 years.
The only conditions that need to be met: commit to transfer $1,500 monthly, or a total of $18,000, to your bank account in Mauritius every year. About 2,000 French pensioners live in Mauritius.
Mauritius puts on a show
Marseille, Nice, Bordeaux, Lyon and Paris. Proponents of real estate investment in Mauritius are at the start of their tour of France. From May 9 to 18, about 140 trade representatives will take part in round tables and business meetings with investors: representatives of the state, developers, notaries, tax experts.
On the menu of discussions: how to invest in Mauritius real estate, how to become a resident, create a business or even retire in Mauritius. Individuals have until May 8 to register for these free events open to the public on the decouvrirmaurice.com website.