Mauritius has evolved into a trustworthy jurisdiction for establishing and operating Trusts. Offshore Trusts are especially used for the management, preservation and transmission of assets. Mauritius provides an ideal choice for setting up a trust thanks to its robust legal framework, as outlined in the Mauritius Trusts Act.
Mauritius is a highly favourable location for setting up a trust on the basis of its tax regime, regulatory framework and its proximity to Africa and Asia.
This is the most flexible type of trust available; it gives wide powers to the trustees with respect to investment and distribution. Beneficiaries may be added or removed by the trustees however being a beneficiary does not create a right or entitlement to benefit from the trust. Trustees take direction and guidance from a Letter of Wishes provided by the settlor, if available. Settlor’s/Beneficiaries looking for an extra level of comfort may appoint a protector to the trust in terms of section 24 of the Act. The protector is able to remove the trustee and appoint new ones in addition to this the trustees will require the protector’s approval to perform certain actions, as detailed in the deed/declaration.
In terms of the Act a trust in Mauritius is valid for 99 years and requires a minimum of two beneficiaries in the event that one of the beneficiaries is the settlor.
Derived from a discretionary trust is an Excluded Property Trust. An excluded property trust is a recognised structure in UK inheritance tax planning it is a standard discretionary trust where assets are settled while the settlor is a non-UK-domicile.
Once the settlor becomes a UK-domicile they are unable to benefit from the trust property without it falling into the UK Inheritance Tax net and thereby avoiding exit charges, Inheritance tax, anniversary charges and similar provided the property in the trust continues to meet the definition of excluded property.
An Employee Benefit Trust is a trust created by a company to provide incentive for their employees. The company will place shares or other assets into the trust. Select employees will be the beneficiaries. When certain criteria are met, usually performance or long service, the employees will receive a benefit for the trust; either in the form of cash or shares.
There are three types of trust specifically codified into the Act
A protective trust, in terms of section 18, is a trust whereby the beneficiary is granted an absolute right to the income of the trust until the right is terminated by pre-defined event.
This is often used in Maintenance Trusts where a child is entitled to have certain expenses met by the trust until they reach a specified age or marriage. Or Life Interest Trusts where an individual is entitled to receive a fix annual benefit until their death.
It is also possible to have a hybrid arrangement whereby an individual will be entitle to income for the trust until they reach or certain age or satisfy a pre-defined criteria after which point they will receive the capital amount of the trust fund.
In a purpose trust the terms of the income the beneficiary will receive are defined and the Trustees do not have discretion to distribute assets or income outside of that.
A Purpose Trust is a trust created, in terms of section 19 of the Act, with a specific goal or objective. Upon the fulfilment of that purpose the trust is terminated. The purpose of trust must be reasonable, specific and capable of fulfilment and not immoral, unlawful or contrary to public policy.
An enforcer is required in a purpose trust to ensure that the trustees are working to achieve the purpose of the trust.
Charitable Trusts – Section 20 of the Act provides for the creation of charitable trusts, where the trust fund is to be used for a purpose that is charitable. The document establishing the trust must state the purpose or purposes for which the trust has been created, charitable trusts created in Mauritius must have one of the following purposes;
The beneficiaries of which can be a person or a class of persons inside or outside of Mauritius
A Trust that is compliant with Islamic law (Sharia) must observe Sharia principles, in particular restrictions on investment and rules of inheritance.
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 holding a Global Business Company Licence 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.
A Trust would have its Central Management and Control in Mauritius if:
The non-resident Trust will be subject to source-based taxation only. Indeed, Trusts that have their Central Management and Control outside of Mauritius will not be subject to tax on their foreign source income in Mauritius, but only on income derived from Mauritius. The non-resident Trust will need to file an income tax return in order to declare and pay income tax (15%) on its Mauritius sourced income.
Charitable Trusts are not liable to tax.
<p>Setting up a Mauritius Trust requires that you select a local Trusteeship services provider, who must be regulated by the Mauritius FSC. With a strong experience in the industry, Renesis is legally allowed to act as Qualified Trustee and Company Secretary under the Mauritius Trusts Act 2001. We assist you in your Trust registration in Mauritius and offer tailor-made advice to help you meet your goals, ensure asset protection, and achieve tax efficiency while protecting your assets.</p>
<p>Renesis can also assist international clients to redomicile their already-established Trusts to Mauritius. In the recent years, there is an upward trend of Trusts moving from overseas into Mauritius to avail the numerous benefits the jurisdiction offers.</p>
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Renesis Financial Services is a boutique management company licensed and regulated by the Financial Services Commission of Mauritius, offers a wide range of professional international business support services, with a tailor-made approach.
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