Trusts

Mauritius: an ideal jurisdiction for establishing trusts

Trusts in Mauritius are primarily governed by the Trusts Act 2001, which provides a solid legal foundation for creating and managing trusts while allowing flexibility for various purposes, including discretionary, fixed interest, protective, charitable, and purpose trusts. The legal system combines English common law and French civil law, ensuring that complex trust arrangements and disputes can be effectively managed. Trustees must be licensed by the Financial Services Commission (FSC) to ensure competence and integrity.

Benefits for Setting up a Trust in Mauritius

TAXATION

1. Tax Benefits: • No capital gains tax or withholding tax. • Trust income is taxed at a flat rate of 15% at the level of the trust, with distributions not subject to additional tax in the hands of beneficiaries in Mauritius. • No inheritance, succession or estate tax applies in Mauritius. • In the event of a settlor's bankruptcy, liquidation, litigation or divorce proceedings, a Mauritius trust will generally not be rendered void or voidable solely on that basis. • Trusts are exempt from foreign forced heirship rules, allowing a settlor to freely determine their succession wishes without foreign heirship regimes being enforced by Mauritian courts. • A Trust holding a Global Business Company may benefit from an 80% Partial Exemption Regime whereby specified sources of income (Interest, dividend, etc.) are exempt from tax, provided it meets the substance requirements

Planning and Structuring

2. Mauritian trusts also offer a wide range of planning and structuring features, including: • Strong privacy provisions whereby trustees' deliberations and the identity of settlors and beneficiaries are not disclosed, except in limited circumstances (for example where local disclosure obligations apply). • Estate and succession planning, including avoidance of probate. • No mandatory requirement to register the trust, contributing to a high degree of confidentiality. • Flexibility in terms of trust duration, investment powers and distribution provisions. • The ability to hold and manage assets on behalf of minors and other vulnerable beneficiaries.

Types of Trust in Mauritius

Used in wealth protection and tax planning, the Discretionary Trust gives the Trustee the power to determine who are the Beneficiaries and the allocation of income and capital amongst them

Formed for purposes beneficial to the public in general (in Mauritius or another country), which include the relief of poverty, the advancement of education, the protection of the environment or the advancement of human rights and fundamental freedoms.

A Protective Trust provides for the protection of vulnerable members of a family or certain Beneficiaries

A Purpose Trust is formed for advancing non-charitable purpose, such as holding an asset such as an aircraft.

A Trust that is compliant with Islamic law (Sharia) must observe Sharia principles, in particular restrictions on investment and rules of inheritance.

A Spendthrift Trust limits the access of the Beneficiaries to the assets and properties of the Trust, and protects against bad spending habits and creditors. The Beneficiaries receive their inheritance in a controlled and incremental manner.

Commonly used by businesses as a means to provide benefits to their employees (either in the form of cash or shares) in a tax efficient manner. The trust structure allows for the shares and other trust assets to be held at the discretion of the trustees.

Resident vs Non-Resident Trusts

RESIDENT TRUST

Resident Trust A Trust registered or having its Central Management and Control in Mauritius is considered to be locally resident and is liable to a 15% Income tax on its chargeable (worldwide) income. A Trust would have its Central Management and Control in Mauritius if: • The Trust is administered in Mauritius and a majority of the Trustees are resident in Mauritius; • The Settlor of the Trust was resident in Mauritius at the time the instrument creating the Trust was executed or at such time as the Settlor adds new property to the Trust; and • A majority of the Beneficiaries or the class of Beneficiaries appointed under the terms of the Trust are resident in Mauritius.

NON-RESIDENT TRUST

Non-Resident Trust • A non resident trust in Mauritius is taxed on a source basis only. • Where the trust's central management and control are exercised outside Mauritius, it is not liable to Mauritian tax on its foreign sourced income. • It is chargeable solely on income arising in Mauritius. • The non-resident trust must file an annual income tax return in Mauritius to report and pay income tax at the rate of 15% on its Mauritius sourced income. • Charitable Trusts are not liable to tax.

FAQs relating to Trust registration in Mauritius

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