What if making a loan to Mauritius was possible?

Investing abroad raises many questions from all points of view and notes from a tax perspective. However, it is an interesting choice. Here we will try to answer the recurring questions that most investors have about bank lending in Mauritius.

Sign your real estate loan in Mauritius, benefits and conditions

If you are a foreign investor and want to acquire luxury real estate in Mauritius, you will have to meet the criteria imposed by local regulation.

Eligibility conditions for your real estate loan in Mauritius

As a non-resident of Mauritius, the conditions for obtaining your loan are set in a framework that has little flexibility. A list of non-negotiable prerequisites includes:

• The age of the borrower must be at least 65 years
• The maximum duration of the loan may not exceed 15 years
• You will not be able to borrow more 70% of the total amount of property that you are considering acquiring (the total loan is therefore not possible)
• You must be able to justifying your ability to repay

There are other criteria which, without being systematic, may be payable:

• A financial guarantee may be required if you borrow more than 50% of the capital needed to acquire your property
• Depending on the age of the borrower, the maximum loan term may be fixed by the banking institution, never exceeding 15 years, as previously indicated

These conditions are set exclusively by banks, which will certainly guide the choice of bank with which you will do business.
If you are already a resident of Mauritius, you will have to justify a local professional activity and a sufficient source of income to prove your creditworthiness.

The main differences are in the following items:

• The borrowing period, which can be up to 25 or 30 years, depending on the flexibility of the banking institution
• You will not be able to owe more than 40% if you receive a monthly income below 200 000 Mauritian rupees, which is equivalent to 4050 euros

Opening a bank account in Mauritius

To make a real estate loan in Mauritius, opening a bank account will be mandatory.

In any case, having an on-site bank account can be very useful for current transactions, especially if you invest as a rental. This also limits international transactions, often complex and costly. You can also open an account in rupees or currency, depending on the tax declination you think is the most relevant.

In either case, the balance of the account must be credited and you will have to make a deposit of at least 1000 Mauritian rupees (± 20 €) to complete the opening of the account.

Investing in Mauritius: what goods, what economic situation, what benefits?

Making Mauritius its secondary residence is of course extremely tempting.

The island is also full of great splendid mansions, to the exceptional equipment, in a framework where it would be useless to boast the merits as it goes without saying.

Infrastructure, transport and services are particularly well developed on the island, which does not close your door to the location of the goods you would like to acquire.

The economic situation of Mauritius

When you plan to invest in a country, it remains relevant to be interested in its economic health. The purchasing power of premises, currency conversion rate, local equipment and infrastructure, are all factors that can guide your choice as they are decisive to satisfy your future customers potential. From this point of view, Mauritius has no bleak economic policy.  

In fact, investing in Mauritius is building on a booming economy:

• Constant growth over the last 40 years, with a stable average rate of +4.5% over the last 10 years
• Sugar cane production: it accounts for about 25% of export revenues.
• Services, especially tourism, account for 70% of GDP on average

The list is not exhaustive, but it confirms one thing, the economic climate of the island is exponential!

Tax advantages

Since December 1980, real estate transactions between France and Mauritius have been regulated by the Franco-Mauritian Convention. In particular, the latter provides that rental income for property located in Mauritius will be taxable only in Mauritius! Since double taxation has expired, investors are pushing to open up a loan to Mauritius and invest on the spot. This explains in part the economic boom observed on the island at the end of the 20th century, with growth peaks between 5 and 6%. However, this fantastic evolution is not the only one.

Here are some examples of the benefits that await you if you choose to invest in Mauritius:

• Tax rate capped at 15%
• The surplus-value is not taxable
• There is no housing tax or property tax
• No applicable inheritance tax
• Currency of the loan left at the discretion of the purchaser (according to the banking institution)
• A borrowing rate reduced to 4 or 5% (versus 7% for non-residents)

By combining the benefits granted by the Convention with the already very favourable fiscal context, you can consider your future transactions in complete peace in order to build a solid heritage for your future and that of your loved ones.

Making a loan to Mauritius: under which tax regime to invest?

If you choose Mauritius to invest in real estate, you will have a choice between several tax regimes.