Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

Investment structuring with Luxembourg and Mauritius SPVs: an ideal route for European investments towards Africa and Asia

As European investors increasingly seek exposure to growth opportunities across Africa and Asia, structuring considerations have become central to the success of cross-border investments. Selecting jurisdictions that combine tax efficiency, legal reliability, and practical operability is essential. In this context, the use of Luxembourg and Mauritius as part of a coordinated special purpose vehicle (SPV) structure has proven to be a highly effective and widely adopted approach. By combining the strengths of these two jurisdictions, investors can benefit from strong treaty access, optimized tax outcomes, regulatory certainty, and flexible investment platforms tailored to international capital flows.

From a treaty perspective, Luxembourg and Mauritius each maintain extensive double taxation agreement (DTA) networks that significantly reduce fiscal barriers to international investment. Luxembourg’s treaty network is among the most developed globally, encompassing the majority of European Union member states as well as numerous key international markets. These agreements typically allow for reduced withholding taxes on cross-border payments such as dividends, interest, and royalties, while ensuring clarity on the allocation of taxing rights. By contrast, Mauritius has developed its treaty network with a particular focus on Africa and Asia. This strategic orientation has positioned the country as a preferred intermediary jurisdiction for investments into emerging markets across these regions. When structured together, Luxembourg and Mauritius SPVs enable investors to access treaty benefits at multiple levels of the investment structure, enhancing overall efficiency.

Similarly, Mauritius’ DTAs with African and Asian countries are widely recognized for their favourable treatment of foreign investors. Common advantages include lower or zero withholding tax rates on income streams, capital gains provisions that often favour taxation in the investor’s jurisdiction of residence, and protections against double taxation and adverse fiscal treatment. As a result, these treaty features have made Mauritius a well-established gateway for private equity, infrastructure, and long-term investments across Africa, as well as for selected Asian markets, subject to evolving international tax standards.

In fact, a key benefit of the Luxembourg–Mauritius investment route lies in the interaction between the Luxembourg–Mauritius DTA and Luxembourg’s participation exemption regime. Under this arrangement, dividend and capital gain flows between Luxembourg and Mauritius can generally be achieved without significant tax leakage. Qualifying shareholdings benefit from exemption at the Luxembourg holding level, while withholding tax exposure within the structure is largely mitigated. Consequently, investors can preserve value throughout the investment lifecycle, including at exit, provided that substance and compliance requirements are properly met.

Beyond tax considerations, both Luxembourg and Mauritius are internationally recognized financial hubs serving their respective regions. Luxembourg is a leading European centre for investment funds and holding structures, offering deep expertise in alternative assets, private equity, real estate, debt, and capital markets transactions. Mauritius performs a similar role for Africa and parts of Asia, supported by a stable legal system, internationally aligned regulation, and a well-developed network of financial institutions and professional service providers. Importantly, cross-border financial activity between Luxembourg and Mauritius is well established, allowing for efficient capital movement and administrative coordination.

From a structuring standpoint, both jurisdictions are known for their investor-oriented frameworks and wide range of structuring vehicles. Luxembourg offers holding companies, regulated and unregulated fund structures, and flexible financing instruments suitable for institutional and private investors. Mauritius provides a variety of corporate and partnership vehicles, including global business companies and investment funds designed to accommodate private equity and alternative investment strategies. In both cases, entry and exit mechanisms are efficient, enabling investors to dispose of their interests through share transfers, asset sales, or fund exits with limited tax impact when appropriately structured.

In conclusion, the Luxembourg–Mauritius SPV structure continues to represent a compelling solution for European investors seeking exposure to Africa and Asia. By combining expansive treaty networks, favourable DTA provisions, tax neutrality through participation exemption alignment, and the advantages of two established financial centres, this approach delivers a balanced and resilient investment framework.