The Mauritius Trust: a powerful tool for wealth structuring and succession planning
Mauritius has evolved into a trustworthy jurisdiction for establishing and operating Trusts, especially used for the management, preservation and transmission of assets. This brief provides information on the establishment and administration of Mauritius Trusts, as well as the features of this vehicle.
What is a Trust?
A Trust is a vehicle whereby an individual (also referred to as the Settlor) transfers property or assets to another individual or individuals (also called Trustees) to hold for the benefit of other individuals or specific class of people (called Beneficiaries). The Trust Act 2001 is the governing legislation in relation to the Mauritius Trusts.
Both citizens and non-citizens can establish a Trust in Mauritius, and, similarly, Trusts can be resident or non-resident.
There are different types of Trusts in Mauritius. These include:
- Discretionary Trust: 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.
- Charitable Trust: A Charitable Trust is formed for purposes beneficial to the public in general (in Mauritius or another country). These include the relief of poverty, the advancement of education, the protection of environment, or the advancement of human rights and fundamental freedoms.
- Protective Trust: A Protective Trust provides for the protection of vulnerable members of a family or certain beneficiaries.
- Purpose Trust: A Purpose Trust is formed for advancing non-charitable purpose, such as holding an asset such as an aircraft.
- Sharia compliant Trust: A trust that is compliant with Islamic law (Sharia) must observe Sharia principles, in particular restrictions on investment and rules of inheritance.
Along with Foundations, Trusts are a powerful tool for wealth structuring, asset preservation and transmission.
Who makes up a Trust?
A Trust is composed of:
- The Settlor
- The Trustee
- The Beneficiary
- The Protector and Enforcer
A more detailed description of the roles that constitute of a Trust are specified below:
The Settlor is the owner of the property, which is ultimately transferred to the Trustee to be held for Beneficiaries.
The Trustee is an individual or a Corporate who manages and administers the property transferred to it. As a result, the Trustee will hold the property on Trust for the Beneficiary. Selecting a trustworthy Trustee is important as the Trustee may have the responsibility of protecting the assets and carrying out the activities of the Trust. Thus, a Mauritius Trust needs to have a Qualified Trustee resident in Mauritius and regulated by the Financial Services Commission (FSC), such as Sunibel Corporate Services Ltd. The number of Trustees cannot surpass four.
The Beneficiary is an individual, group of individuals or a specific class of people who benefit from the property, which is preserved on Trust.
The Protector and Enforcer take the necessary steps to make sure the Trustees carry out their functions.
Mauritius: the jurisdiction with many advantages for establishing a Trust
Selecting to establish a Mauritius Trust allows investors around the globe to channel their investments within the African continent and benefitting from the tax advantages the island offers. The benefits include:
- No Capital Gains, Estate Duty nor Withholding Tax;
- In the case of a Settlor’s bankruptcy or liquidation, a Mauritian Trust will not be void or voidable;
- The Trust’s income is taxed at a fixed rate of 15%, thus this income is not subject to additional tax in the hands of Beneficiaries when distributed;
- Trusts are exempt from forced heirship limitations, letting an owner to leave his/her money to people of his choice. Ultimately, the forced heirship rules of other countries will not be furthered by the courts in Mauritius;
- No inheritance tax;
- No registration needed;
- Avoidance of probate;
- Asset protection;
- Succession planning; and
- Assets can be held and managed on behalf of minors.
Trusts are usually accountable to income tax on its chargeable income. Chargeable income is the difference between the net income resulting by the Trust and the aggregate income distributed to the Beneficiaries under the terms of the Trust.
However, it is possible for a Mauritius Trust to elect to be a non-resident by the Trustee filing a declaration in that regard to the Commissioner of Income Tax and thus be debarred from paying income tax.
It is also possible if the Settlor holds a Global Business Licence under the FSC Act 2007.
Establishing a Trust in Mauritius
Trusts are created by the enactment of a written document, which includes the name of the Trustee, the Settlor’s intention, the object of the Trust as well as the responsibilities and powers of the Trustees. Steps for the establishment of a Mauritius Trust include:
- Execution of Trust Deed (Can be done by a Settlement or Declaration of Trust);
- Provide Know Your Clients documents on all the parties (Settlor, Protector and Beneficiaries);
- A Settlement is where both the Trustee’s and Settlor’s names are stated in the Trust Deed;
- A Declaration of Trust is where solely the Trustee’s name is cited; and
- Transfer of the Initial Trust Fund to the Trustee.
How we can accompany you in establishing a Trust in Mauritius
With expertise in the industry, Sunibel Corporate Services Ltd is legally eligible to act as qualified Trustee and Company Secretary under the Trusts Act 2001. We will assist you in establishing your Trust and offer tailor-made advice to help you meet your goals.
For more detailed information about the different types of Trusts, and how to establish your Mauritius Trust, feel free to contact us using the form below.
Disclaimer and important notices
This document has been prepared using sources believed to be reliable. However, their accuracy and completeness cannot be fully guaranteed. The statements and opinions it incorporates were formed after careful consideration and maybe subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to sell any services. The use of any information contained in this document shall be at the sole discretion and risk of the user. Sunibel Corporate Services Ltd does not provide legal or tax advice and this document should not be construed as such. Sunibel Corporate Services Ltd expressly disclaims any and all liability for inaccuracies contained in the document and shall not be held liable for any damage that may result from any use of the information presented herein. For more information, please see our terms and conditions.