The latest legislative changes regarding real estate transactions by foreigners in Mauritius. Starting on December 13, 2024, new provisions apply to the purchase and resale of residential properties under RES, PDS, IHS, IRS, and Smart City schemes.
This article aims to provide a clear and educational overview of these new rules, while highlighting their advantages and benefits for both foreign and Mauritian investors. We also encourage you to consult government websites—such as the Mauritius Economic Development Board (EDB)—for additional details.
1. First-Time Sale by the Developer (RES, PDS, IHS, IRS, Smart City)
When purchasing a residential unit directly from a developer (first-time sale), there are now two possible scenarios for setting and paying the purchase price:
1.1 Purchase Price Denominated in Mauritian Rupees (MUR)
- The purchase price can be stated in Rupees (MUR).
- However, the payment of the purchase price and the purchaser’s tax (Registration Duty) must be made via a transfer in “hard currency” (USD, EUR, GBP, etc.) originating from abroad.
- The South African Rand (ZAR) is not considered a “hard currency” under current regulations.
- Important: You cannot use Mauritian Rupees already held in Mauritius to buy foreign currencies locally to pay the purchase price or registration duty. The funds must be sent directly from abroad in a hard currency.
Impact on Registration Duty
- The duty is calculated using the equivalent value of the purchase price in USD (or other hard currency), based on the SBM selling rate (notes) on the date of the final signature.
- An indicative amount for this duty will be provided to the buyer, who must pay in USD (or another hard currency) into the specified account.
- Any excess arising from the actual exchange rate will be refunded to the buyer, and if there is a shortfall, the buyer will be asked to make an additional payment accordingly.
Advantage:
- This procedure ensures transparency of the money flow and protects the investor, the developer, and the tax authorities alike.
1.2 Purchase Price Denominated in USD/EUR or Other Hard Currency
- The developer may also set the purchase price in a hard currency.
- The payment (purchase price + registration duty) is then made in this same currency.
- These hard currencies must necessarily originate from abroad, under the same principle as above.
Advantage:
- Investors do not need to convert their funds into Rupees; they can simply transfer funds from abroad in a hard currency.
1.3 Special Case: Financing with a Bank in Mauritius
If you choose to borrow from a Mauritian bank, the new provisions specify:
- You must cover at least USD 750,000 of the purchase price through a transfer in foreign hard currency from abroad.
- Any amount above that USD 750,000 threshold can be borrowed in Mauritian Rupees, provided that it is repaidin foreign hard currency.
Advantage:
- You benefit from leveraging local financing while complying with the regulations, which require fresh foreign currency to fund real estate investments.
1.4 Next Steps for Ongoing Transactions
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Conclusion on First-Time Sales
These rules aim to ensure the traceability of funds and promote foreign investment under clear and secure conditions. For investors, the main benefits include enhanced protection of capital and clearer tax procedures.
2. Resale of a Residential Property (RES, PDS, IHS, IRS, Smart City)
When it comes to reselling a property—i.e., when you buy from an existing owner rather than directly from the developer—three scenarios arise:
2.1 Resale from a Non-Citizen to Another Non-Citizen
- The sale price must be denominated in a hard currency.
- Taxes (registration duty, etc.) are paid in the same currency.
- In principle, there is no restriction on the source of these funds, and a Mauritian bank may provide financing for such a transaction.
Recommendation: Advise your clients not to convert their currency into Rupees beforehand; otherwise, they will need to convert it back into a hard currency, incurring additional fees.
Advantage:
- This approach aligns with the regulations on currency control and simplifies the financial flow between foreign sellers and buyers.
2.2 Resale from a Mauritian Citizen to a Non-Citizen
- The price can be in Mauritian Rupees or in a hard currency.
- There are no specific restrictions on the source of these funds.
Benefit for the Buyer:
- Flexibility in the choice of payment currency.
- Possibility of negotiating with the seller for the most advantageous currency arrangement.
2.3 Resale from a Non-Citizen to a Mauritian Citizen
- The price can be in Mauritian Rupees or in a hard currency.
- There are no specific restrictions on the source of funds.
Benefit for the Mauritian Buyer:
- Freedom to select the payment currency.
- No obligation to arrange for a transfer from abroad if funds are already in Mauritius.
3. Sale of Non-Residential Properties
At this time, no significant changes have been announced regarding non-residential properties (commercial, industrial, etc.). The usual rules continue to apply. However, we advise you to regularly check the EDB website or consult a legal professional for any updates.
4. Key Takeaways
- Foreign Currency Transfers: For first-time sales, funds must come directly from abroad in hard currency.
- Calculation of Registration Duty: Even if the sale price is in Rupees, the duty is calculated and paid in a hard currency, using the official exchange rate at the time of signing.
- USD 750,000 Threshold: If you use local financing, you must inject at least USD 750,000 from abroad in hard currency before borrowing in Rupees.
- Resales: Rules differ depending on the nationalities of the seller and buyer. If both are foreign, the transaction must be in a hard currency; if at least one is Mauritian, greater flexibility is allowed.
- More Flexibility: Resales involving a Mauritian citizen allow more freedom regarding the currency and source of funds.
5. Advantages and Benefits for Investors
- Legal Certainty: The new regulations ensure capital traceability, reinforcing the credibility of real estate projects.
- Capital Protection: Requiring fresh funds in hard currency protects against local currency fluctuations.
- Local Financing Available: Buyers can still benefit from borrowing in Mauritius, provided they meet the minimum currency injection requirement.
- Market Stability: By enforcing strict source-of-funds requirements, the Mauritian government aims to bolster the strength and transparency of the real estate market.
6. Frequently Asked Questions (FAQ)
Can I use my existing Rupees in Mauritius to pay?
- No. For first-time sales priced in Rupees, you must use funds transferred from abroad in a hard currency.
What if I want a loan from a Mauritian bank?
- You can finance part of the property locally, but at least USD 750,000 must come from your own foreign currency transferred from abroad. The rest can be borrowed in Rupees if it is repaid in hard currency.
Can I pay the registration duty in Rupees if the price is in Rupees?
- No. You must also settle the registration duty in a hard currency, based on the official exchange rate at the time of signing.
Are the rules different for resales?
- Yes, it largely depends on the nationalities of the buyer and the seller. If both are foreign, the transaction must be conducted in a hard currency. If one party is Mauritian, there is more flexibility.
Conclusion
Mauritius offers far more than just an unparalleled luxury experience for discerning travelers; it also provides exceptional opportunities for investors seeking a dynamic, secure real estate market. From upscale accommodations and seasonal rentals to prestigious residential developments, the island stands out for its favorable tax framework and remarkable economic stability.
By choosing JLSK Group, you benefit from personalized support in acquiring, managing, and enhancing your property. Whether you aim to generate rental income from a premium asset or build a lasting portfolio in the Mauritian sunshine, our team brings its expertise to optimize every stage of your investment journey.
Contact JLSK Group today to make your real estate vision a reality and to start planning your next magical stay in Mauritius. Combine the allure of a tropical paradise with the assurance of a reliable, profitable investment—and let us elevate your experience every step of the way.
