Mauritius, a real estate eldorado : how to acquire with complete peace of mind

April 6 2022

Mauritius seduces with its offer in high-end real estate. Our dedicated agency provides you with flawless support in the context of your acquisitions of prestigious villas and apartments in Mauritius. To serve you better, Lloyd & Davis surrounds itself with the best advice, particularly in legal matters. As such, we share with you an exclusive interview with the notaries of the Office Notarial de l’Isle-de-France, specialists in real estate and private heritage.
Me Ashvin Krishna Dwarka (LL.M. Tax - London School of Economics, DESS notarial - Sorbonne) is the founding partner of the Office Notarial de l’Isle-de-France, the only notarial study in Mauritius approved as a Law Firm. With 20 years of professional experience, Me Dwarka was an associate at the law firm Freshfields Bruckhaus Deringer in Paris for 5 years, before settling as a notary in Mauritius. Me Dwarka was Chairman of the Management Committee of the Financial Services Fund, under the aegis of the Financial Services Commission (FSC). He was also Chairman of the Board of Directors of a private bank.
Specializations: wealth advice (structuring of international assets and investments, cross-border taxation), and business notaries (complex real estate programs, structured financing).
Me Urvashi Bissoonauth (LL.B. (Hons) – Univ. of Mauritius) runs a Firm affiliated with the Notarial Office of Islede- France. Having obtained her notary diploma in 2014, she created her own firm and developed a practice focused on real estate programs and co-ownership. She was for 4 years a lecturer in security and real estate law at the Faculty of Law of the University of Mauritius.
Specializations: real estate law (acquisitions, co-ownerships, mortgage law), and family and inheritance law (particularly internationally).

Lloyd & Davis: What do we say to our clients
considering an acquisition in Mauritius?

Me Urvashi Bissoonauth: If you come from a Frenchspeaking state, you will be pleasantly surprised to see that your purchase will take place under the same conditions of protection and legal certainty
as in your country of origin. The norm here is full real estate ownership, and freedom of transmission (rental, resale, or transmission to heirs). Your rights are guaranteed by the Constitution, but also by our international treaties for the protection of foreign investment.
Mr. Ashvin Krishna Dwarka: Mauritius was Isle-de- France for a century. From this period, we have kept the practice of the French language, the Civil Code, and the protective role of the notary in the real estate field. Thus, notarial deeds are mainly drawn up in French. You also benefit from a wide range of legal tools to structure your acquisition. There is obviously the classic split ownership between usufruct and bare ownership, as well as the real estate civil partnership (SCI), very useful for the purchase of a property by a couple, to anticipate the gradual transmission to children, or quite simply to manage the good from a distance. But our hybrid law system also gives access to mechanisms such as limited companies or trusts under English law.

In short, the Mauritian notary has the same role as in France?
Me Bissoonauth: Yes, it is the same role of protecting and securing real estate acquisition. As in France, and other civil law countries (Switzerland, Belgium, Luxembourg), the notary checks the title of the seller, the absence of mortgages encumbering the property, and guarantees you an unassailable title. The notary remains bound by a duty of impartial advice, even when he has been chosen by a property developer.
Me Dwarka: Without the intervention of the notary, a buyer could not be certain of the quality of his title deed (which would oblige him to take out very expensive insurance simply to cover his right of
ownership, as in the USA or Australia).

We understand that home ownership by foreign buyers requires special administrative authorization. What about?
Me Bissoonauth: Note that this approval procedure is simple and fast. Once the administrative approval has been obtained, the foreigner fully enjoys the same owner prerogatives as a Mauritian. In addition, the transmission of the property by succession does not require any approval. I would add that this approval procedure also constitutes a guarantee of security for the foreign buyer, since the EDB will have previously checked the viability of the real estate programs regulated under the so-called PDS, RES, Smart City, IRS, IHS regimes.
Me Dwarka: Under a law that originated in the 1970s, the direct or indirect acquisition (through intermediaries) of real estate by foreigners is regulated. This control in no way proceeds from a discriminatory will, but simply from the laudable wish to avoid hyperinflation would have excluded Mauritians from their own real estate market. In practice, this means that foreigners are mainly allowed to acquire property in programs carried out under the regulatory regimes known as PDS, RES, Smart City, IRS, IHS, and in so-called «R+2» buildings, after an administrative procedure approval from abroad by the Economic Development Board (EDB), the investment promotion and control authority in Mauritius. These programs exist in all regions of the island, thus offering a wide range of possibilities.

Do these regulated real estate programs have advantages for our clients?
Me Bissoonauth: Of course. First, because the EDB only validates programs that meet regulatory requirements in terms of infrastructure and equipment. In addition, the ownership of real estate
acquired in these regulated programs (PDS, RES, Smart City, IRS) for a price of at least 375,000 US dollars (or the equivalent in another currency) comes with a permanent resident permit in Mauritius, both
for the purchaser and for his family.
Under the so-called «R+2» scheme, which allows the acquisition of apartments in a condominium building comprising a ground floor and two or more floors, any purchase of an amount greater than US$375,000 entitles a 10-year renewable visa. Among these programs are some rare pearls, located by the sea («feet in the water», as we say here!) and nevertheless accessible to foreigners. The Covid pandemic has led to a major questioning of traditional habits, and teleworking is now even done internationally. Many expatriates therefore settle in Mauritius, to work in an environment that is more pleasant for them.
Me Dwarka: Smart City programs even allow the purchase of building land, either for the construction of a single-family house or for the realization of a residential or mixed program. Thus, a foreign promoter can acquire a few hectares of land within a Smart City, and carry out his own project of apartments, villas, and/or offices and shops, intended for resale in condominium lots. Such a foreign promoter may, under certain conditions, benefit from a tax exemption on income from his project, for a period of up to 8 years.
Is the purchase of a villa or an apartment under construction secure?
Me Bissoonauth: The sale in the future state of completion (VEFA) regime, you can acquire in complete safety provided that the real estate program is covered by a financial guarantee of completion
(GFA) issued by a bank or a leading insurance company. So, check with your notary that the GFA covers your lot, and you will be safe from any default by the promoter. In practice, the simple fact that the
GFA exists means that the bank has verified upstream that the promoter presents a zero level of risk.
Me Dwarka: If the program is not covered by a GFA, we recommend the forward sale regime. You pay your purchase price in escrow with the notary, and the disbursement to the developer will only take place on the condition that he completes the building within the contractual period.

You are therefore completely secure. After completion, whether off-plan or on a term sale, you benefit from several legal guarantees: guarantee of perfect completion, two-year guarantee for minor works and equipment, and above all, the ten-year guarantee on the structural work.
Is investment for rental purposes interesting for our clients?
Me Bissoonauth: If you respect the basic rules of prudence applicable to rental investment in your country of origin, yes, buying with a the intend of renting out can be very interesting. Being careful
means: a well-considered choice of the region of purchase, a careful examination of the co-ownership regulations of the building (to verify that the rental of the lot is authorized), taking prior advice as to the administrative permits necessary to seasonal rental.
Me Dwarka: The tax interest of real estate investment in Mauritius is threefold. First, rental income is taxed at the common law rate of 15% (excluding social or exceptional contributions). In addition, the resale of the property only entails transfer duties of 5%, and no taxation of capital gains in Mauritius. Finally, under the existing tax treaty between France and Mauritius, real estate held in Mauritius by French tax residents is exempt from wealth tax.
Precisely, we hear a lot about the tax attractiveness of Mauritius. Is this reputation justified?
Me Bissoonauth: Let’s dispel misconceptions. Mauritius is not a tax haven: the tax rate is 15% (or even 25% if you include the solidarity contribution during the pandemic period), and social security contributions are levied at the maximum rate by 9%. We are a long way from the 2% to 6% that the GAFAMs were able to benefit from in Europe itself! Let’s not forget that we live in the era of automatic exchange of information between tax administrations in most countries of the world. Therefore, to benefit from possible possibilities of tax optimization, it is necessary, as in Europe, to avoid stepping outside the nails.
Me Dwarka: Mauritius certainly has a favorable tax environment, but on the strict condition of complying with the laws both local and of its country of residence, and scrupulously respecting the requirements of international tax treaties. You can thus legally benefit from tax rate caps on dividends, interest and royalties, which is particularly attractive when a European company invests in Mauritius via a subsidiary. I have already mentioned the IFI exemption on real estate held here by French residents. Finally, there is no inheritance tax in Mauritius, which facilitates the transmission of property to heirs provided that they are not domiciled in a country which imposes transmissions mortis causa.

L&D: In an overseas real estate investment context, Lloyd & Davis relies on a network of partners in various countries. Tell us about your international interactions.
Me Bissoonauth: In our daily practice, we are regularly called upon to participate in videoconferences with the foreign notaries or lawyers of our international clients. This reinforces the climate of trust conducive to an acquisition in Mauritius: the European notaries of our clients are reassured to find that their Mauritian colleagues perform the same functions. In addition, Mauritian law is basically very close to French law, which makes our exchanges with foreign counsel more fluid.
Me Dwarka: My 5 years in Paris in an international firm familiarized me with the working methods of my European colleagues, and I kept excellent contacts among them. Given the number of foreigners living in Mauritius, the interaction between European law and Mauritian law is constant. We therefore often work in a network with French or European notaries and lawyers, South African or Australian attorneys or lawyers, in order to provide optimal advice to foreigners investing in Mauritius.
With regard to the structuring of international assets, it should be noted that the law of succession can be modified by the effect of private international law, which governs the interaction between various legal systems. In short, the famous case of the Johnny Hallyday estate is a perfect illustration of this: it demonstrates how a Frenchman, settled permanently abroad, can legally choose to submit his estate either to the law of his country of residence, or to its national law, in application of a European regulation which allows it. Our Notarial Office works in tandem with a French notary specializing in private international law, in order to better advise our clients with significant assets.

Phone : +230 208 7238

E-mail :

Adress : Notary office, Mr Ashvin Dwarka United Docks Business Park Caudan Marina. Port Louis. Mauritius

Mauritius, a real estate eldorado : how to acquire with complete peace of mind