A favorable tax convention.
Mauritius, we know it, has always attracted French investors. In fact, an increasing number have opted to settle on the island for fiscal reasons as a tax convention signed on December 11th in Port-Louis by the French and Mauritian Government aims at avoiding double taxation as regards to income tax and tax on wealth. It should be noted that this convention has been amended and consolidated by the June 23th 2011 supplementary clause. Thanks to this agreement binding the two countries, Mauritius cannot be considered as a tax heaven.
The tax on wealth is replaced by the tax on real estate wealth
The main objective of the tax convention is to prohibit double taxation as regards to income which originates from another State and which is collected by someone residing for tax purposes in another State. France recently reviewed its fiscal regime by replacing the tax on wealth by a new tax on real estate wealth. This new piece of legislation aims at exonerating stock shares and keeping the tax policy only on real estate properties. “We are now dealing with a fiscal regime which better fits the method of wealth accumulation. In fact, wealth is nowadays essentially built on property assets. As a result, it was high time for the French government to adapt its tax policy to this emerging fact”, explains Vanessen Tirvassen, jurist.
The convention signed between France and Mauritius stipulates, according to the June 23th 2011, Article 23, that “The wealth derived from real estate under Article 6, owed by a State’s resident, and which is found in another State is taxable in this another State”. In brief, real estates owned by French nationals residing in Mauritius are found outside the scope of the French tax on real estate wealth. As a result, investing in Mauritius remains a very good idea.
Furthermore, income derived from the renting of a real estate property in Mauritius is taxable only in Mauritius and not in France. It should be kept in mind that tax payers n Mauritius are taxable up to 15%.
No capital gains tax in Mauritius
Under Article 13 of the convention, “the gains that a resident of a State derives from the alienation of real estate property concerned by Article 6 and situated in another State are taxable in that other State”. Additionally, if a French national, who owns a property in Mauritius, choose to sell it, he will not be subject to any capital gains tax. In France, capital gains tax on real estate sales reaches a proportional rate of 19%, which grow even higher (34,5%) when adding all the social deductions. In Mauritius, all the proceeds of the resale of a property belong to the seller. However, it should be noted that a registration tax of 5% of the total selling price is compulsory in any commercial transactions involving real estates.
No inheritance tax in Mauritius
The June 23rd 20011 supplementary clause does not make provision for inheritance tax or gift. Consequently, all real estates owned by French nationals are subject to the French inheritance tax policy. However, this will depend in which country the owners’ properties and the heirs are found. In fact, if the owner’s property and his heir are both in Mauritius, the property will not be subject to the inheritance tax. However, if the heirs reside in France, the property will be subject to the French policy on inheritance.
For more information on the various investment opportunities in the residential real estate sector in Mauritius, contact Diamond Estates who will guide you in your project implementation.