The tax incentive is one of the top 5 reasons for South Africans to move to Mauritius. Buying property priced from USD375,000 upwards also comes with the privilege of permanent residency.
Before you make the final decision on the move, the purchase, or both, make sure you seek expert advice to fully understand the Mauritian and South African legislation that might affect you.
If you are in the market for a property, these are the top 5 things to consider:
Do you want to buy a second home, purely for investment purposes, which means it can generate rental returns?
Will you buy a property as your primary residence alongside your intention to emigrate to Mauritius?
Are you a South African tax resident and will you remain one for the foreseeable future?
Do you have other offshore assets in your portfolio, and what existing structures – if any – do you have in place to house these? Do you intend to grow this international asset portfolio?
How many days a year do you intend to be resident in Mauritius?
A natural person, whether a citizen of Mauritius, a noncitizen or a member of the Mauritian diaspora
A company incorporated or registered under the Companies Act
A société, where its deed of formation is deposited with the Registrar of Companies
A limited partnership under the Limited Partnerships Act
A trust, where the trusteeship services are provided by a qualified trustee
A foundation under the Foundations Act
Note: A qualified global business as defined under the Financial Services Act 2007 holding a Global Business Licence may acquire property under the PDS.
Tax advantages
No capital gains tax
No inheritance, wealth or gift tax
Flat 15% individual tax rate
Corporate tax rate of 15% or lower
No exchange control
Strong tax treaty network
No dividend, interest or royalties withholding taxes.
What happens to your property if you die?
Sanlam Private Wealth points out that there is no inheritance tax in Mauritius. And yet, the “forced heirship” rules mean that “you’re not completely free to decide how your assets are disposed of upon death. A certain portion will be reserved for your heirs. The unreserved portion may, however, be freely bequeathed to any person or entity. This reserved portion varies depending on the number of heirs you have, and it is important to note that this does not include your spouse. Immovable property in Mauritius is governed by this law, and movable property can also be affected depending on the last domicile of the deceased.
It is therefore advisable to draw up a Mauritian will to deal with the ‘unreserved portion’ of any assets affected by the Mauritian succession laws.
In Mauritius, a loan to a Mauritian trust or company (to buy the property), and the shares in the company, are both considered movable assets.”
SA rules
Make sure you investigate what SA legislation will impact buying property in Mauritius.
If you buy a property in your own name, it will form part of your estate so remember the Mauritian forced heirship rules when drafting your South African will. In addition, while estate duty will be payable on it in SA there is no estate duty in Mauritius.
If you buy the property through a Mauritian company owned by a South African resident, the shares in the company will form part of your estate in SA.
English