Conflicting requirements for Mauritius tax residency: sole domicile vs 183 days?

[Hans Mandel]

I keep finding conflicting requirements for Mauritius tax residency:

Quoting: Mauritius-Residency.pdf (oecd.org)

Whether a person is resident for tax purposes in Mauritius usually depends on how many days he spends in Mauritius in a tax year which is from 1 July to 30 June of the following year. An individual is automatically resident if:

 his domicile is in Mauritius and he does not have a permanent place of abode outside Mauritius. or (!)

 he spends 183 or more days in Mauritius in the tax year; or he spends 270 or more days in Mauritius in the tax year and in the 2 preceding tax years.


My considered setup:
- buy property under RES investment scheme at more than 375 000 $ -> receive right to become resident and make MRU my sole domicile
- quit residency and sell all company shares in EU
- move to MRU and spend 2-3 months per year.
- visit my other holiday home in South Africa for just under 182 days pa. - relying on south africas very explicit regulations to make sure not to become tax resident there.
- travel globally for 3-4 months. never spending more than 3 months in my county of origin.
- live from savings. accumulating passive income abroad - non remitted to MRU.

Questions:
May websites claim tax residency is linked to 183 days in MRU. On which basis?
I can only assume this holds if I also want to control a local company and make sure this operations are controlled from MRU.
Respectively if I became self employed in MRU.
For active income to be taxable in MRU I can relate to the requirement of 182 days.

Any other reasons? your thoughts are highly appreciated.
great forum. Just become addicted to this knowledge base.

 

[369]

Seems WAY to complicated.
What citizenship do you hold ?

183 days is requirement to get a tax residency once you got it you can use their non dom which is demanding 90 days to keep tax residency.


I don't know if your citizenship applies for it but normaly you apply for a premium visa which costs are every small and after that you need to stay the 183 days to get tax resident.

The investment of $375k/500k are mainly used to get the citizenship after 2 years but this is a bit more complicated because based on my source in Mauritius its not guaranteed and you need to be nice to some local politicans by beeing active in positive events like charity to receive their support.

About income for the premium visa you are not allowed to do business inside MRU market but only to foreign markets from MRU.
Money coming from a company outside MRU for your living can be tax free

 

[Martin Everson]

- quit residency and sell all company shares in EU

Quit residency where?

- travel globally for 3-4 months. never spending more than 3 months in my county of origin.

What is your country of origin.

Your not giving full picture. With immigration you can't just be forward looking but you need to be backwards looking at the country you are leaving and its law in terms of tax residency etc. A person can have multiple tax residency and the country of emigration may still consider you a tax resident for many reasons.

P.S Welcome to the forum

 

[Hans Mandel]

great replies. thanks.

Are you implying it is the leaving country having those requirements?

Sorry I have been vague:
- German citizenship, former business owner.
- planing to quit my domicile in Germany (cancelling rented flat, no other ties except family, no investments).
- I was carefully studying german regulations on what to consider when leaving. I didnt find any requirement to spend 183 days in my new domicile. There is a long list to tick in germany for sure.

On the MRU side of things:
I cannot find an original source that requires me to spend a minimum time in MRU - see above where MRU is my sole home. If anything would be challenging this view it would be South Africa. Been living in Cape Town part time now for many years. I understood SA wont be able to make myself a tax resident with my limited durations of visits.

Again - I keep reading these requirements yet I dont seem to understand who or what is requesting such minimum stays.
Clarification would help. I am happy to consult professionals once I understand the basic requirements.

Seems WAY to complicated.
What citizenship do you hold ?

german.

183 days is requirement to get a tax residency once you got it you can use their non dom which is demanding 90 days to keep tax residency.

I keep hearing this. Didnt manage to find the original source. it clearly contradicts with my quoted source.

I don't know if your citizenship applies for it but normaly you apply for a premium visa which costs are every small and after that you need to stay the 183 days to get tax resident.

The investment of $375k/500k are mainly used to get the citizenship after 2 years but this is a bit more complicated because based on my source in Mauritius its not guaranteed and you need to be nice to some local politicans by beeing active in positive events like charity to receive their support.

unfortunate detail: Germany wouldnt even allow me to accept a second citizenship - so this bonus isnt even really helping me. I would all aim for tax residency - withough extended stays. 2-3 months feel right.

About income for the premium visa you are not allowed to do business inside MRU market but only to foreign markets from MRU.
Money coming from a company outside MRU for your living can be tax free

understood that. I wouldnt require active income. I wouldnt mind if now and then I could invoice for some consulting just for the fun of it. I understand if this requires 183 days to be taxable in mru. so I excluded this detail in my main inquiery.

thanks for your effort to clarify things. I feel we arent there yet.

 

[meze99]

There is no need to invest 375k or buy overpriced property to have domicile in Mauritius.
Rent long term and register a company and get a business residence permit.

 

[Hans Mandel]

There is no need to invest 375k or buy overpriced property to have domicile in Mauritius.
Rent long term and register a company and get a business residence permit.

I hear you. I may consider this.
If I want a business run and operated (by myself) I understand substantial requirements - like 183 days.

My question remains: where/what is the technical requirement to stay more than lets say 2 months pa - given that I dont have any active income in MRU? I cannot seem to find it. Am I misreading my quoted source? I find the statement quite clear - yet everybody insists on 183 + 90 consecutively.

updated research: OECD terms are fully reflected in the DTT Germany-MRU:

Article 4 Resident
Individuals resident in Mauritius are taxed on their worldwide income. However, certain specific exemptions from tax are provided under the Income Tax Act.
An individual is treated for tax purposes as being resident in Mauritius in a particular tax year if the individual:
• has his/her domicile in Mauritius, but not if his/her permanent place of abode is outside Mauritius;
• is present in Mauritius in that year for 183 days or more; or• is present in Mauritius in that year and the two preceding years for 270 days or more.

=> IF I were to buy under the investment scheme - this investment should put a lot of substance to my move. no?
the premium visa sounds very affordable but doesnt seem to match my long term plan to reside 10+ years and also seems to be targeted for an audience who specifically wants to NOT BECOME a tax resident < 6month visit. so that is the opposite of my goal.

I am aware of - but confident to qualify for this detail of the DTT:
article 22 provides that relief from German tax will be available to a person resident in Mauritius only if that resident proves that it was not the main purpose of its business to obtain treaty benefits;

 

[meze99]

I think you can be registered as a local taxpayer in Mauritius even if you spend 2 days there if they don't specify the minimum stay requirements in their tax laws for this domicile option. I still don't get why you want to buy a property there if it is not mentioned in their tax laws? It won't give you any special treatment. And owning a business there is pretty much the same thing as owning a property - it is a tie to the country that comes with a free residence permit.

 

[Hans Mandel]

I think you can be registered as a local taxpayer in Mauritius even if you spend 2 days there if they don't specify the minimum stay requirements in their tax laws for this domicile option. I still don't get why you want to buy a property there if it is not mentioned in their tax laws? It won't give you any special treatment. And owning a business there is pretty much the same thing as owning a property - it is a tie to the country that comes with a free residence permit.

This helps indeed.

So you agree the afformentioned 182 day rule would not apply to become a tax resident?
This is what I understand but noone else seems to be able to back up.

I may actual use a company there but would need to find a local actual director to get the PE requirements for the company right. Actually is quite doable as I already have qualified friends on the island and enough international business opportunities to get substantial turnover of 100 $ in consulting. I will keep digging deeper. I understand the annual cost of maintaining a local business is quite substantial at up to 10 000 $ pa. ?

thx everybody.

 

[369]

1.no the claim you get instantly a tax resident is false
2.you don't need a company or RE to get a resident.Normal premium visa is enough where you show you have income from outside MRU and will work from MRU remotly (even you can hire people there)
3.having a company in MRU is nonsense.Why do you want to pay high taxes?Have a company outside of MRU and pay 0% expecially when it's legal there

 

[Hans Mandel]

1.no the claim you get instantly a tax resident is false

Let me clarify: you are also saying :I need to first stay 183 days to become a tax resident. but on which basis? I keep digging everywhere and cannot find the reason.
Original quote clearly sais: OR (!) between the conditions.

I found a claim that my origin country Germany may challenge my tax status in MRU. But I cannot find it in the DTT. So?

2.you don't need a company or RE to get a resident.Normal premium visa is enough where you show you have income from outside MRU and will work from MRU remotly (even you can hire people there)

3.having a company in MRU is nonsense.Why do you want to pay high taxes?Have a company outside of MRU and pay 0% expecially when it's legal there

both valuable thoughts. thanks. putting substance to an offshore company may be more challenging though.

 

[meze99]

Here is a document that may help you better understand their Tax Laws: https://www.mra.mu/download/OutllineofMauritiusIncomeTaxSystem.pdf

To be on the safe side give a call to Tax Office or send an email to

• Tax Administration
  + 230 207 6000
  [email protected]

Just ask them for clarification about domicile status, namely if it is not available for some types of residence permits OR for residents who have spent less than 30/60/90/183 days in the country before applying for that status.

On their website they don't list any additional conditions regarding domicile status:

Foreign Income​

---

Foreign income means income derived from outside Mauritius. It shall include emoluments, directors’ fees, annuity, and pension in respect of past services, business income, rental income, investment income and interest income. The foreign income is taxable in the hand of the resident.

Residence
Resident individual, means a person who has his domicile in Mauritius unless his permanent place of abode is outside Mauritius or has been present in Mauritius in that income year, for a period of, or an aggregate period of 183 days or more; or for an aggregate period of 270 days or more in the 2 preceding income years.

When the residence rule criteria is satisfied then the resident individual will be subject to income tax in Mauritius on all his income derived in Mauritius or remitted to Mauritius. Furthermore, he will be entitled to Reliefs, Deductions & Allowances.

Where a person wishes to be certified as a resident in Mauritius in respect of an income year, he should apply to the Director-General for a Tax Residence Certificate.

Nonresidents will only be subject to income tax on net income, derived from or accruing in Mauritius but he will not be entitled to Reliefs, Deductions & Allowances.

 

[369]

Let me clarify: you are also saying :I need to first stay 183 days to become a tax resident. but on which basis? I keep digging everywhere and cannot find the reason.
Original quote clearly sais: OR (!) between the conditions.

I found a claim that my origin country Germany may challenge my tax status in MRU. But I cannot find it in the DTT. So?



both valuable thoughts. thanks. putting substance to an offshore company may be more challenging though.

Their requirements are changing quickly and there is many outdated info out there.
Best is to give them a direct call and ask directly.
There are also possibilities you won't find on the internet.
For example i could not find anything about the non dom possibility in Mauritius before talking with my advisor
who is living in Mauritius and working for a wealth/tax company there.
Mauritius is a country like east europe 30 years ago where things are done silently and directly.

 

[Hans Mandel]

Here is a document that may help you better understand their Tax Laws: https://www.mra.mu/download/OutllineofMauritiusIncomeTaxSystem.pdf

Dear Meze,

this is a great suggestion. Will happily do so and follow up here with updated results on the matter.
Must I become a premium member to send PMs btw?

great community,
Hans

Their requirements are changing quickly and there is many outdated info out there.
Best is to give them a direct call and ask directly.
There are also possibilities you won't find on the internet.
For example i could not find anything about the non dom possibility in Mauritius before talking with my advisor
who is living in Mauritius and working for a wealth/tax company there.
Mauritius is a country like east europe 30 years ago where things are done silently and directly.

Impessive. I would like to get in touch with you / your advisor. How to PM you?

 

[Hans Mandel]

update:

1) new input: Tax Certificate is critical
One source explained that the 183 rule is applied when I personally want to apply for my MRU TAX Certificate.
I didnt find it in writing but this makes sense.
Only when I have my personal certificate as the director I may apply for the company tax certificate.

2) backup option
Implications are: I could open a global business with local director - like anywhere in the world to meet PE requirements - at higher operational cost and little substance.
Tax wise this setup may be preferable (flat 15%) compared to local company. Some source stated that social security cost add up to effectively 17-25%. Not sure about that. Also no DTT benefits seem to apply for the global business company. I am not sure if this is attractive.

next steps:
I did not speak to the MRU authorities myself yet. I am waiting for more consultancy from a local advisor first.

 

[Borg]

update:

1) new input: Tax Certificate is critical
One source explained that the 183 rule is applied when I personally want to apply for my MRU TAX Certificate.
I didnt find it in writing but this makes sense.
Only when I have my personal certificate as the director I may apply for the company tax certificate.

2) backup option
Implications are: I could open a global business with local director - like anywhere in the world to meet PE requirements - at higher operational cost and little substance.
Tax wise this setup may be preferable (flat 15%) compared to local company. Some source stated that social security cost add up to effectively 17-25%. Not sure about that. Also no DTT benefits seem to apply for the global business company. I am not sure if this is attractive.

next steps:
I did not speak to the MRU authorities myself yet. I am waiting for more consultancy from a local advisor first.

IDK if this is still actual for you. You can get tax residency status there almost immediately if you go on the self-employed scheme. The application process can be started from abroad and is very easy. Once your initial submission is approved you will come to Mauritius and register as a self employed (takes around 2 hours) and open an bank account with MCB (takes around a week) after that you will receive a tx number by email from the tax authorities and you are a resident.

The only requirement is to transfer USD 35000 to your local account that can be withdrawn and used by you right after the transfer.

Check out EDB website for more details.