By Lorna Pillay, Head of Corporates, Private and Institutional Asset Owners, Africa, India and Middle East
The 19th century witnessed the rise of industrial titans like the Morgans, Rockefellers, and Vanderbilts, whose vast fortunes demanded the creation of sophisticated wealth management structures. Since then, family offices have evolved significantly.
In the late 1800s, these firms primarily focused on investment management. Today however, they tend to offer a broad range of services including investment management (of both traditional investments and alternative investments such as private equity and sustainable assets), tax planning, estate planning, succession planning, philanthropy, business management, and concierge services.
Given their broad remit, family offices are now used by a wide range of individuals including company founders, tech entrepreneurs, hedge fund managers, athletes, actors, musicians, and trust beneficiaries. Harnessing the power of cutting-edge technology, they are helping all kinds of families navigate the complex financial environment and achieve their long-term financial objectives.
Choosing a jurisdiction for a family office
When establishing a family office today, families have an unprecedented global landscape of potential jurisdictions to choose from. Historically, the U.S. and Europe have been the main hubs for family offices. However, these days, more and more firms are appearing in other financial hotspots such as Hong Kong, Singapore, Dubai and Mauritius.
This shift is being driven by several factors, including the emergence of jurisdictions offering competitive tax regimes and regulatory environments specifically tailored to family offices. According to PwC, a robust regulatory framework and an attractive tax regime are some of the most important factors when considering a jurisdiction. Other key factors include access to professional services, access to talented and skilled professionals, economic and political stability, immigration rules, and lifestyle.
Mauritius: a key player in the family office space
Considering these factors, it’s no surprise that Mauritius is gaining traction as a family office hub. It fulfils most – if not all – of the requirements that families have.
For a start, the country has a strong regulatory framework. The regulatory framework for family offices in Mauritius is the Financial Services (Family Office) Rules 2020. Under this framework, firms must be licensed by the Financial Services Commission (FSC) to carry out family office services in the country, whether they are single family offices (SFOs) or multi-family offices (MFOs). They are required to submit an annual compliance statement to the FSC no later than six months after the end of the financial year.
Firms must always have a Money Laundering Reporting Officer (MLRO) or deputy MLRO. As with other major financial hubs, there is a strong commitment to anti-money laundering and combating the financing of terrorism (AML/CFT). There are also robust asset protection laws designed to safeguard assets from potential creditors or legal claims. Overall, the regulatory framework aims to strike a balance between providing a conducive environment for family offices to operate in and ensuring adequate oversight to maintain the integrity of the financial sector.
Mauritius also has a very attractive tax landscape. Currently, corporations are liable to income tax on their net income at a flat rate of 15% (family offices in Mauritius can be structured as companies, trusts, private trust companies, foundations, and more recently, variable capital companies (VCCs)). However, income derived by a corporation under its family licence is exempt from tax for 10 income years subject to meeting the conditions relating to substance of its activities and employment.
There is also a tax holiday of five years for foreign ultra-high-net-worth individuals investing a minimum of US$25 million in the country subject to the terms and conditions prescribed by the Economic Development Board. Additionally, there are double taxation avoidance agreements in place. Currently, there are 46 agreements, and more are under consideration.
On top of this, the island is home to a vast network of professional services firms. Within the Mauritius International Financial Centre (MIFC) – which has been in existence for over 30 years now – you can find specialists from all areas of the financial world. There are investment managers, wealth managers, tax advisors, trust experts, auditors, lawyers, and more. Whether you’re looking to set up a VCC or seeking estate planning advice, MIFC has the expertise to help you achieve your financial objectives.
One area of financial services that is absolutely booming in Mauritius is asset management. Today, there are over a thousand funds in the jurisdiction, with collective assets under management (AUM) of more than $80 billion.
Finally, Mauritius has economic and political stability, an attractive climate (it enjoys a mild tropical maritime climate year-round), a harmonious blend of cultures, language compatibility, low operational costs for firms (rental space, salaries, compliance costs, etc.), and clear immigration rules.
It’s worth pointing out that foreign nationals can live and work in Mauritius through an Occupation Permit, which grants residency for up to 10 years. The country also offers a ‘Resident by Investment’ programme that allows foreign nationals to make a real estate investment in the country and then apply for a residence permit (successful applicants and their families are granted full residence rights including the right to live, work and retire in Mauritius).
How IQ-EQ can help
At IQ-EQ, we have decades of experience helping families launch family offices. And our Mauritius team is ready to guide you through the process.
We can help you navigate the intricacies of setting up a family office in Mauritius. To learn more about our services in Mauritius, we invite you to download our factsheets on Mauritius as a family office destination and the merits of choosing Mauritius.
Furthermore, we can provide you with proprietary technology solutions such as our portfolio monitoring platform, IQ-EQ Cosmos, and our RegTech system, MaxComply, to help you focus on your firm’s core activities.
IQ-EQ provides a full suite of services to help manage all challenges associated with family offices, be they single or multi-family. Partnering with IQ-EQ Family Office Services mobilises a combination of global and local expertise across sectors with cutting-edge technology to enhance the efficacy and support the objectives of your family office. Check out our interactive Single Family Office brochure for more information.
