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Luxembourg and Mauritius in 2023 – Competitors or brothers in arms


What would you say if Thales Capital proposes you to serve your interests in Mauritius? Would this be a scam? Not at all. Professionals in financial sector know that Mauritius is a destination where your company can be very properly served.

Apart from being an internationally renowned tourist destination, Mauritius has built a solid reputation as a reliable and secure financial centre. Indeed, there are so many good reasons to settle or invest there.

Several factors make Mauritius a business hub for the region and an essential platform for international trade. The Mauritian government has put in place a favorable ecosystem and incentives to encourage foreign direct investment as well as institutional investors (tax advantages, political system, double law system, etc…).

The main news from what we as financial professionals are concerned, is that the Financial Action task Force (FATF) has confirmed Mauritius’ removal from its list of jurisdictions under increased monitoring due to strategic AML/CFT deficiencies. This is a tremendous milestone achieved by the country.

Due to its strategic location between Africa and Asia, the country is an increasingly attractive destination for foreign investors and is the perfect platform for investing in these two regions. Luxembourg based companies and funds are using the economic bridge the country offers for the last 30 years.

In addition to its diversified economy, the Mauritius International Financial Center also consists of other elements such as:

  • its robust and hybrid legal system (common law and civil law),
  • its international arbitration center, and
  • its bilateral and multilateral relations with many countries:
  • double taxation agreements (DTAA), namely with Luxembourg as amended in 2014,
  • Investment Promotion and Protection Agreements (IPPA),
  • and being a member ofthe Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the African Growth and Opportunity Act (AGOA), the Indian-Ocean Rim Association (IORA), and the Indian Ocean Commission (IOC).

The Bank of Mauritius and the Financial Services Commission are bodies applied to the supervision of the banking sector and non-banking financial services. Anti-money laundering and counter-terrorist financing (AML/CFT) laws are strict. Mauritius fully supports international initiatives such as the Financial Action Task Force (FATF-FATF) and the OECD – which classifies Mauritius as ‘Globally Compliant’, and is a member of the Anti-Money Laundering Task Force of Eastern and Southern African Silver (ESAAMLG).

Mauritius: regional service hub and considered as Luxembourg of its region

The banking system has been strengthened over the years and today includes around twenty banks, both local and international. Insurance activities as well as the wealth management market are developing rapidly. The Stock Exchange of Mauritius is an attractive capital raising and IPO platform for local and international issuers. It is also one of the few exchanges in Africa to offer a multi-currency listing, and to be open to trading in dual currencies.

Mauritius has also made significant advances in the information and communication technology (ICT) and Business Process Outsourcing sector. Moreover, the economic activity of the country extends to several other poles such as the construction (in particular of luxury residences intended for an international clientele), free port activities, medical tourism and education with the presence of private international schools and universities (French and English speaking).

Stable political, economical and social environment, the island is an example of social peace and unity in a multicultural landscape. Does that remind you of anyone, all things considered? The Grand Duchy obviously, but its splendor is not yet threatened. The student has not surpassed the master yet.

Why choose Mauritius for business creation?

Business creation in Mauritius is the preferred platform for entrepreneurs and multinationals for the following reasons:

  • Foreign investment promotion and protection agreements;
  • A favorable investment and business environment
  • A solid regulatory framework ensuring good governance;
  • A hybrid legal system, combining the advantages of English common law and the French civil code;
  • A qualified, experienced and bilingual workforce (French and English);
  • A wide range of banking services and presences of international banks;
  • A time zone and a strategic location that allows international transactions (GMT+4);
  • Among the most regulated countries to open an offshore bank account;
  • Competitive business start-up and office rental costs;
  • Political and social stability;
  • Member of various international organizations, including SADC, COMESA, the African Union and the African Continental Free Trade Area;
  • Modern island with state-of-the-art technology and equipment;
  • A benchmark platform for listing and raising capital (Mauritius Stock Exchange);
  • No restriction on trade;
  • No capital gains tax;
  • Income tax for natural and legal persons, as well as value added tax, set at 15%;
  • Free repatriation of dividends, capital and profits;
  • No tax on dividends;
  • No inheritance tax;
  • Double taxation treaties signed with several countries in Africa, Europe and Asia.

Business creation in Mauritius: how to proceed?

Setting up a business in Mauritius takes an average of 3 working days, depending on the type of company. No minimum investment is required and Mauritian law allows 100% foreign ownership. However, before setting up a resident company in Mauritius, you must first determine the type of company appropriate for your professional activities. The types of companies are:

Regional head office

The Global Headquarters Administration license has proven to be crucial in enabling several multinational companies to strategically optimize their business by establishing their regional headquarters in Mauritius.

Offshore company “Global Business Company”

A Global Business Company is an offshore company whose main business operations are carried out mainly from Mauritius, and which benefits from double taxation treaties. It is an ideal business structure for international tax planning.

Offshore company “Authorized Company” in Mauritius

An Authorized Company is another type of offshore company that conducts its business activities, control, and management outside of Mauritius. It is considered foreign for tax purposes.

Investment Funds

Fund structures in Mauritius allow investors and fund managers to channel their investments to Africa and Asia, among others.

What links Luxembourg and Mauritius even more, is the investment fund structuring. The famous Master-Feeder structures are not to be presented anymore, it is a fact. How does it concretely work and what are the types of funds we can find in Mauritius?

Investment funds in Mauritius

Mauritius is the base to some of the most influential and important funds in the world. With more than a thousand funds, collective assets under management of more than 80 billion US dollars, Mauritius is considered as a reference in the management of funds. Funds are structured like investment companies and can be either open-ended, falling within the category of Collective Investment Schemes, or closed-ended, commonly referred to as Private Equity funds. Sub-Funds domiciled in Mauritius are eligible for all the advantages enjoyed by Global Business Companies. Global funds domiciled in Mauritius can also take advantage of the flexible listing rules of the Mauritius Stock Exchange (SEM) to list on one of the leading platforms in Africa.

The different investment funds in Mauritius:

  • Collective Investment Scheme (“CIS” / Offshore Fund / Global Fund) is defined in the Securities Act 2005 as a scheme set up in the form of a company, trust or other prescribed legal entity or approved by the Financial Services Commission (FSC) of Mauritius whose sole purpose is the collective investment of funds in a portfolio of securities or other financial, real estate or non-financial assets. Their operation is based on the principle of risk diversification;
  • Global CIS: a fully regulated CIS, whose funds are primarily intended for the public;
  • Professional CIS: those are schemes that only offer their shares to well-informed investors or in the context of private placements. Sophisticated investors include governments or public bodies, banks, among others;
  • Specialized CIS: a specialized CIS is made up of funds that are invested in specific activities: real estate, derivatives, commodities for example;
  • Expert Funds: its funds are only accessible to Expert Investors. An Expert Investor is an investor who makes an initial investment for his own account of at least 100,000 US dollars. Most of the requirements and restrictions governing global funds do not apply to Expert Funds.

After having said all that, wouldn’t you consider Mauritius as the African Luxembourg so far and see the complementarity of those two financial centres? Answer is obvious

Ivaylo Markov, Managing Partner of Thales Capital


What is E-money?

In the modern world, it is almost impossible to imagine daily life without electronic money, not to mention any business operations. E-money is a convenient way to transfer funds worldwide both for businesses and individuals.

In this article, we will review electronic money as a concept and as a system.

What is electronic money, and how it works?

The term “electronic money” describes funds that can be utilized to support electronic transactions and are stored in computer systems of banking institutions. Electronic money is mostly utilized for electronic transactions because of how convenient it is, even if its value is supported by fiat currency and can therefore be converted into a “real”, or physical form.

Electronic money is utilized for global transactions. The cycle of e-money takes place mostly inside and between banking systems and payment processors. However, it can be easily changed for fiat currencies since e-money is backed up with physical money stored in banks.

Managing the fiat currency in physical form and regulating the money supply through monetary policies and open market operations is the responsibility of national banks. At first, there were some concerns that the rising usage of e-money could result in inflation ‒ but truthfully, the reality is the opposite. Electronic money is a transparent payment type, meaning it can actually reduce the risk of inflation.

Things to consider

Circulation of electronic currencies

Individuals and businesses can store their e-money in different ways. It can be as simple as a digital record of the cash put on deposit or something more sophisticated ‒ a standalone account tied with a digital wallet (like Payoneer or Skrill) where one can deposit fiat currencies in exchange for e-money.

The profit in both cases is made by operational fees for processing every transaction, be it cash depositing, or fiat-to-digital conversion.

Payment processing

There are several ways for organizations and people to do digital transactions. This includes receiving payments via direct deposit, transferring funds online between accounts, or making purchases using credit and debit cards.

Physical money still offers advantages in some circumstances, although its significance has increasingly declined over time. Due to the fact that electronic money cannot be lost and is widely recognized by retailers worldwide, many consumers and companies feel it to be more secure and convenient. As a result, the global financial system has developed a strong infrastructure for the exchange of electronic money, which is principally made possible through payment processing systems like Visa, American Express, and Mastercard.

To provide their clients with branded network cards that enable electronic transfers from bank accounts to merchant accounts, banks and other financial institutions collaborate with electronic money processors. For example, E-commerce makes it simple to transact electronic currencies, giving customers the convenience of online shopping for products and services using e-money.

What do critics say?

While electronic money is swiftly gaining acceptance and is sometimes praised as the safer and more open substitute for physical money, it does not mean it goes without hazards and weaknesses. When money can be moved from one entity to another without the need to physically confirm the original owner’s genuine identity, fraud becomes a problem.

Electronic money might unwittingly assist in tax avoidance since electronic transactions lend themselves to becoming more covert. Last but not least, because the computer systems in charge of processing digital transactions are not flawless, occasionally an accident in the system will cause an electronic money transaction to fail.

Still, it is undeniable that electronic money is one of the most convenient and quick options for both individuals and businesses.


Difference between Electronic Money Institution and Authorized Payment Institution

The two main types of financial organizations are Authorized Payment Institutions and E-money Institutions. Knowing the difference between these two is a must if you plan to apply to obtain a financial license.

The difference between e-money and authorized payment institutions

Both Authorized Payment Institutions and Electronic Money Institutions offer payment processing services for companies. The biggest difference here is that EMIs can also issue electronic money.

Moreover, these are governed by two different directives: APIs are governed by PDS2 Directive while EMIs are governed by EMI Directive.

What is an e-money Institution?

So, if a business is authorized to issue electronic money in compliance with EMI Directive, it is considered an e-money institution.

EMIs also provide various payment services:

  • currency exchange;
  • transaction execution and processing;
  • financial data storage.

An important note: being an Electronic Money Institution does not automatically imply that this business can provide all of the services above. The type of financial services is set in the application for the license.

It’s essential to know which payment providers are connected to the creation of e-money and which are not. This is due to the fact that the regulatory standards for connected and unconnected payment services provided by electronic money institutions are different.

What is a payment services provider?

A payment services provider is an institution that assists other businesses in accepting bank transfers from their customers. A payment services provider is a wider term in comparison with an authorized payment institution. The main objective of the PSP is to create merchant accounts and a means to let businesses accept payments from their clients.

APIs, more specifically, can provide the following services:

  • execute payment transactions;
  • issue payment tools;
  • credit granting.

As you can see, the list of feasible services is almost the same as the one for EMIs ‒ with the small exception of being unable to generate and operate electronic money.

E-money: a summary

Knowing what electronic money is crucial to understand the distinction between EMIs and PIs.

Electronic money can be stored both on a physical card and on an online account. Basically, it is an acclamation of a certain amount of digital cash.

You can also think of e-money as a monetary value that can be used as a means of payment. It can be stored on a magnetic device that is commonly accepted as a payment method.

According to the aforementioned, any business or organization that wants to offer a product that satisfies the above definitions of electronic money must apply for an EMI license.

FAQ about APIs and EMIs

Now, these most commonly asked questions about both institutions can give you even more insight.

Who has the right to open electronic wallets?

First of all, there are no electronic wallets ‒ the term is rather made up in order to simplify the understanding of the system. In reality, we are talking about payment accounts that can store digital monetary values ‒ both APIs and EMIs are eligible to open one.

Which one is more complicated to obtain ‒ an EMI or an API license?

The processes are very similar and require almost the same preparation. However, you might find it more time-consuming to obtain an EMI license since the regulators review electronic money institutions more intensively.

Can an API license be switched or updated to an EMI license?

This depends on the regulator. Technically, this is possible, but some preparations have to be made. For example, you will have to provide the initial capital requirement to the regulator and add some more paperwork.


Both authorized payment institutions and electronic money institutions play a big role in modern economics. Depending on your objectives, you can apply both for EMI and API licenses if you want to operate as a business that provides payment services to third parties (including operations with digital currencies).


Types of payment licenses in the European Union

A payment business nowadays expects months of anticipation for a PI or EMI authorization. However, it should not be tiresome, especially if you ask our experts for help.

In this article, we will again review the most common payment licenses in Europe and their authorization process.

The most popular payment license types in Europe

The two license categories related to financial institutions and given under the PSD2 legislation, PI (Payment Institution) and EMI (Electronic Money Institution), are still sought after by European payment businesses.

Any European jurisdiction can issue permits. However, each country has its own set of regulations. You can compare the conditions prior to submitting an application for authorization in a specific jurisdiction. Nevertheless, general requirements are basically untouched.

Authorization of the Payment Institution API enables businesses to offer financial and intermediary services for both online and offline businesses, including the ability to open and close accounts, restore accounts in other payment systems, transfer cash from the accounts of individuals and businesses, send money, develop their own payment instruments, and more.

The business that wants to receive this license has to be registered in the same country as the PI license.

A corporation that intends to collect and handle payments must have a registered capital of €125000. This sum has to be transferred to a local bank account. If the original registered capital does not appear to be sufficient for the proposed activity, the supervisory authority can raise the final capitalization value after reviewing the business plan for the company.

Authorization for an electronic money institution, often known as an e-Wallet, grants the ability to issue and use virtual currency. Non-cash payment on time and marketable financial products sold on the market are all examples of quasi-money. The generated money can be exchanged for any other currency and utilized outside of the payment system.

A business with an electronic money institution license is nearly a bank, except without the capability to provide loans. The business can create an electronic wallet by allowing its clients to open sub-accounts inside of its own bank account.

Such authorization is sought by businesses that want to build electronic wallets on websites so that users can withdraw money or use the wallet currency for transactions on third-party sites.

One thing to keep in mind is that EMI has every PI licensing function.

The EMI company’s authorized capital is set at €350000 in the European Union. This money must stay in the company’s bank account set up in the same country that grants EMI for the term of the authorization.


What is Banking as a service?

It’s simpler than ever for companies from many sectors to incorporate financial services in their products or customer journeys thanks to the development of banking as a service (BaaS) implementations. This way, different platforms become a one-stop shop with these customized financial services, allowing users to handle every element of their business in one location.

What is banking as a service?

By providing their own banking services, non-bank institutions can increase client satisfaction and income in a variety of ways. Nevertheless, almost every country in the world demands you to have a banking license if you intend to provide financial services. A license of this kind is also challenging because of the systemic importance of banks to the economy’s operation.

In addition to substantial capital requirements, obtaining a license necessitates adherence to rigorous rules regarding, among other things, deposit protection and banking privacy. Banking as a Service can help in this situation.

The term “Banking as a Service” (abbreviated as “BaaS”) refers to a business model in which authorized banks include their online banking solutions right into the offerings of other non-bank companies. In this manner, a non-bank company can provide its consumers with digital banking services like mobile bank accounts and payment services without having to obtain their own banking license.

Your client can access banking services through the website or app of your company since the bank’s and your internal systems are connected via APIs. This way, your company only serves as an intermediary and doesn’t really handle the customer’s money. Therefore it is exempt from all of the regulatory requirements that banks must meet ‒ including licensing.

So, with BaaS, any company can start offering financial services with just a few strings of code. Due to the fact that banking services are provided through a non-branded bank’s product, the term “BaaS” is also frequently used to refer to white-label banking.

The difference between BaaS and open banking

Since open banking entails banks linking to the non-bank institutions through API, too, these two concepts are sometimes equated. These models, however, have completely distinct uses. Non-bank companies that use BaaS models include full banking services in their business offerings. On the contrary, non-bank companies only use the bank’s data for their offerings in open banking models.

Open banking, for instance, can be advantageous for financial management apps. They let you better manage your money by combining data from your many bank accounts into a single application. This could enable you to improve your spending patterns or reach your savings objectives. The program needs to extract transactional data from each of your bank accounts in order to integrate the data. It accomplishes this by incorporating an API with the banking systems.

This API integration is frequently offered by other companies. They may be thought of as the intermediaries bridging the banks with outside parties, such as the financial planning app in our example, and are typically characterized as API banking platforms. In order to allow data to flow between the bank and the third party, they offer the real API layer that exists on top of the bank’s system.

Open banking has several further applications. In order to expand these use cases, the 2nd EU payment services regulation, sometimes known as PSD2, requires banks to make their data accessible to outside service providers.

The important point to keep in mind is that, unlike BaaS providers, third parties cannot provide banking services since they do not have complete banking licenses. They are only using the bank details from your current bank accounts to generate transactions or offer insights.

About platform banking

The situation with platform banking is unique. This term is used to describe banks that incorporate services from other financial institutions to strengthen their current offering.

Platform banking might be compared to Banking as a Service’s opposite. The bank owns the consumer and also incorporates fintech services. The consumer is managed by the non-bank in the BaaS model, which also incorporates bank services.

Platform banking is a common defensive tactic used by banks to keep their clients from leaving for more savvy fintech companies. Even if it means giving the fintech the lion’s share of the income, they may at least maintain their clients in their ecosystem by incorporating the services of the fintech company into their platform.


Set up a company or a fund in Mauritius

Many investors thinking about establishing a fund consider Mauritius as a starting point because of its flourishing financial sector full of opportunities. With flexible management choices and simple and well-known fund designs, it has become increasingly popular recently.

The country is also acknowledged as a significant driver of development for blockchain ventures and other alternative types of assets.

Why choose Mauritius to set up a company or fund?

Mauritius has enacted many rules governing the establishment of funds in the state throughout the years. Additionally, the country has entered into a number of Investment Promotion and Protection Agreements with other African nations.

The country of Mauritius has been positioned as an investment link between Africa and Asia due to its stable and business-friendly financial climate. Additionally, an 80% tax relief is available for income from closed-end funds and collective investment schemes (CIS), which makes this country an even more appealing place to set up a fund.

Advantages of setting up and investing in Mauritius funds

In Mauritius, low taxes are applied to domestic and international business enterprises under the Partial Exemption Regime since 80% of foreign-sourced income from closed-end funds, collective investment schemes, managers, or administrators will be excluded from income tax. In the end, there are no capital gains taxes or interest taxes. Thus, the tax rate is as low as 3%.

Additionally, Mauritius has a robust and adaptable legal framework that recently enhanced the nation’s anti-money laundering regulations.

Different schemes are feasible, and you might find a variety of structure solutions beneficial with differing benefits.


You can dive deeper into investing legislations of Mauritius funds by looking through official funds governing documents:

  • The Securities Act 2005;
  • The Securities Rules 2007;
  • The Securities Rules on Licensing 2007;
  • The Securities Rules on Public Offers 2007;
  • The Securities Regulations on CIS and close-ended funds 2008.

You might also want to study other key legislation bodies on AML, licensing and fees, and advertising guidelines.

The Financial Service Commission, the Registrar of Companies, and the Registrar of Limited Partnerships are the regulatory organizations in charge of overseeing CIS and closed-end funds.

The Financial Service Commission governs alternative investment funds in Mauritius. The commission has a broad range of authority.

First of all, it sets rules and standards and provides guidelines. The FCS also ensures compliance with current laws and conditions ‒ and if they are violated, it has the right to issue a warning, censure, or even imply penalties (up to revoking a license).

What are the main types of Mauritius funds?

In Mauritius, there are two different kinds of funds: closed-end funds and collective investment funds. Financial Services Commission approval of the funds is required. The following conditions must be met for FSC to accept an application:

  • track record and qualifications of the promoters;
  • fund structure and objectives;
  • market and investors that are the focus;
  • asset types that the fund will deal with;
  • experience records of an investment manager and fund administrator;
  • adherence to international and third-party laws and regulations, where necessary.

Let’s focus on collective investment funds as the most approachable type.

Collective investment funds

The objective of a collective investment scheme is to invest money in a portfolio of securities, other financial assets, real estate, or non-financial assets allowed by FSC regulations.

The diversification of risks is the foundation of CIS operations. On request from the security holder, funds in this scheme are required to redeem the securities at their net value, less commission and costs.

The most common ways to create a collective investment scheme are as a business, a protected cell company, or a unit trust. The registration fee and yearly fee for the CIS fund are each $1000 and $3000 respectively.

But there is more to it. Collective investment schemes exist in several forms.

Professional CIS fund is free from the majority of continuing responsibilities as long as the shares purchased aren’t offered for sale to the general public or listed for trading on a market. At least two weeks prior to the offering, you must inform FSC about it. You must also provide a copy of the presentation at the same time. Also, you have to inform FSC of the actual number and the value of the shares sold when the offering is over. Any bankruptcy applications must be reported to the FSC by CIS professionals.

Legal requirements for a professional CIS fund include being a category one global business company, having at least two corporate stakeholders with local residency, as well as an external auditor with local residency.

Founding a professional CIS fund in Mauritius requires a single payment of $1000 for a license application to FSC and a yearly fee of $2500.

Expert Fund is an opportunity only for experienced investors. Expert investors are those who make their first investment from their own funds of at least $100000.

International customers have the option to assign the management of the funds to an authorized CIS in Mauritius or another regulated country. The CIS manager need not reside in Mauritius in order to perform their duties.

To open this type of CIS fund, you have to represent a category one global business company, have at least two corporate employees with local residency and have a local external auditor as well as a local custodian. You also have to employ a fund administrator. Just as with a professional CIS fund, you have to pay an application fee of $1000 and a yearly $2500 fee. But also, there is a requirement of a minimum subscription of $100000.

The specialized fund is specifically used to target high-risk or illiquid assets such as commodities, derivatives, and real estate. Before applying for a specialized fund, you are required to obtain FSC’s approval on whether such a scheme would be authorized.

The requirements are similar to those of professional CIS funds, except for the limitation on the size of the fund or total assets under management of $100000.

Also, there is a retail scheme. It targets retail investors and is subject to Investment Restrictions and Practices under CIS. It is mandatory for an open-ended retail fund to appoint a custodian licensed by FSC to safeguard assets in the retail fund. Custodians are required to maintain a minimum stated “unimpaired” capital of MUR10 million.

And finally, there is a global scheme. The global scheme is allowed to carry out the activities of a CIS but does not fall into specific categories such as Professional CIS, Expert Fund or

Specialized Fund. Upon approval of the FSC, a global scheme can appoint a CIS Manager from other regulated jurisdictions. Unlike the more specific categories, the global scheme is required to adhere to most of the regulations set by the FSC.

Do CIS funds operate similarly to hedge funds?

Hedge funds can be characterized as CIS Professional funds or CIS Expert funds, despite the fact that neither a defined regime nor an official nomenclature applies to them. Since they are excluded from a significant portion of the restrictions, these funds operate similarly to hedge funds ‒ this is why we have mentioned hedge funds in this article.

How to set up a fund in Mauritius?

So, you want to start a fund registered in Mauritius. In order to do that, you have to incorporate either a trust, a company, or a limited partnership and then get a global business corporation license we have mentioned before.



Your next step is to send an application to FSC to authorize your company and let it operate as a fund of your choice. After one to three months depending on the type of fund, you will obtain the license if you meet FSC regulations for collective investment scheme funds.

Want to learn more about the intricacies of obtaining necessary licenses and setting up a fund? Thales Capital Luxembourg can offer you a consultation as well as services you might need in the process of setting up the fund.

    Thales Capital Luxembourg is a licensed, independent advisor specialized in private capital management, fund structuring, governance, investments and capital raising.


    2 Place de Strasbourg L-2562 Luxembourg Luxembourg


    +352 20 33 40 30
    +352 621 624 969
    +352 621 827 628



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