Pinel Law versus investing in Mauritius
France has set up a number of laws so as to encourage real estate investments. One of them is known as the Pinel Law, which aims to incite French taxpayers to invest in new real estate units in order to get the number of social housing growing.
Meanwhile, investing in foreign territories, and particularly in Mauritius, has proved to be a popular alternative among French investors.
To benefit under the Pinel Law, the total investment made on the French territory should not exceed 300 000 euros. Moreover, the legislation limits to two the number of possible investments per year. Finally, the buying price for each meter square should be less or equal to 5 500 euros. If the investment is in relation to older real estate, the 300 000 euros limit will include all renovation works.
Acquire a property without making any contribution
One of the main advantages of the Pinel Law is that it enables French taxpayers to acquire a property without having to make a contribution, thanks to a bank loan. As a result, the rents generated will then be used to reimburse the bank.
Let’s take for example an individual who earns 50 000 euros annually. He would be subjected to a 30% income tax, that is 9 300 euros.
If this taxpayer bought a 20 000 euros share in SCPI Pinel in 2017, he would make an economy of 3 600 euros (20 000 x 18% = 3 600 euros). Split over 9 years, this tax advantage would translate into a yearly tax reduction of 400 euros (3.600/9) until the revenue earned in 2025.
Avantages when investing for French investors
If a growing number of French investors are investing in real estate in Mauritius, it is because the island offers a soft tax legislation.
Here are the main advantages offered to foreign investors:
- Income from a Mauritian source cannot be taxed in countries with which Mauritius has signed a non-double tax treaty.
- French investors are exempted from paying the ISF on properties that they own in Mauritius.
- A tax band of 15% on income up to Rs 3.5 millions.
- No tax on dividends.
- There’s no capital gains on profits of the property when it is sold at a later stage.
- No inheritance duties.
- No property tax or council tax.
