Mauritius Offshore Trust Formation
Overview of Mauritius Trust Formation
Mauritius is an island nation in the Indian Ocean, located east of Madagascar. A former Dutch, French and British colony, Mauritius played a significant role in the trade routes from India to Europe. Nowadays an independent nation, Mauritius is the most developed country in Africa. Its financial system is based on the British model of the modern financial centre. As in the past, Mauritius remains a primary gateway to Africa and the wider Indian Ocean region.
Despite its well-known past as a British Overseas Territory, the laws of Mauritius were originally based on French civil law. The concept of trusts, therefore, had to be introduced into the legal system by statute. The first such statute was adopted in 1989 as the Trusts Act. Subsequently, the Offshore Trust Act was enacted in 1992 to allow non-resident settlors to set up a trust in Mauritius. The more recent Trusts Act 2001 replaced both statutes by establishing common regulations for all types of trusts in Mauritius and facilitating effective Mauritius trust formation.
Mauritius has a lot to offer when it comes to the establishment of a trust structure. The up-to-date legislation provides for the establishment of structures of varying complexity. The robust financial industry gives access to advanced banking and trustee services in Mauritius. The island has a stable and business-friendly environment. Thus, settlors and their family members can benefit from the strong asset protection legislation applicable in Mauritius. This includes standard foreign judgment protection as well as an extensive network of investment promotion and protection agreements.
Why Set Up a Mauritius Trust?
A Mauritius trust is the preferred option for those who are seeking wealth management and estate planning in a solid financial centre. Mauritius offers many benefits such as competitive financial services, modern legislation, reputable and well-established banks, etc. The main reasons for choosing Mauritius for your trust establishment are as follows:
- Qualified and experienced trust and fiduciary service providers
- Reputable business-oriented banks
- The Highest Court of Appeal is the Judicial Committee of the Privy Council in England
- High level of confidentiality of offshore trusts
- 2-year limitation period for fraudulent conveyance
- Specific legal provisions to ignore foreign judgments, including creditors’ claims, divorce and bankruptcy cases, etc.
- Suitable for wealth protection, complex estate and succession planning arrangements
- No forced heirship rules are applicable
- No common law rules are applicable
- Purpose trusts are allowed, as well as charitable trusts
- A settlor can be a beneficiary
- Modern and up-to-date legislation
- Low cost of setting up a trust in Mauritius
Process of Mauritius trust formation
The process of the trust formation in Mauritius is quite straightforward:
Stage 1
Choosing a trust name and deciding on the structure of the trust
Stage 2
Providing KYC documents, completing forms and drafting and executing the trust deed
Stage 3
Registration of the trust and transfer of assets into the trust
Required Documents To Set Up Mauritius Trust
To form an offshore trust in Mauritius the following KYC documents are required:
- Certified copy of proof of ID for the settlor, all beneficiaries, protectors and co-trustees
- Certified proof of address for the settlor, all beneficiaries, protectors and co-trustees
- Reference letter from a banking institution, notary, attorney or auditor
- KYC form provided by your personal manager in Astra Trust
For more information click below to receive certification instructions and requirements.
The Following Rates Apply to Non-resident Trusts in Mauritius:
| Corporate Income Tax | 0% |
| Withholding tax | 0% |
| Gift tax | 0% |
| Capital gains tax | 0% |
| Inheritance tax | 0% |
| Wealth tax | 0% |
| Exchange Controls | No |
Taxation of Mauritius Trust
Under Mauritian legislation, all entities that are residents of Mauritius for tax purposes are subject to income tax in Mauritius. The local resident entities and resident trusts pay income tax at the rate of 15% on their worldwide income. At the same time, non-residents are exempt from income tax and are taxed only on income derived from Mauritius directly.
When setting up a trust in Mauritius, it is possible for the trust to be either tax resident or non-resident in Mauritius. In order for a trust to be a resident of Mauritius for tax purposes, significant presence and links to Mauritius must be demonstrated. According to the Mauritius Income Tax Act, the trust will be recognised as a tax resident in Mauritius if the following criteria apply:
- A majority of the trustees are residents of Mauritius in Mauritius and the trust is administered in Mauritius
- The settlor of the trust was resident in Mauritius at the time of settling the trust in Mauritius
- A majority of the beneficiaries of the trust reside in Mauritius
How to set up a trust in Mauritius that is non-resident? Obviously, the trustee of the trust would always be a local resident as required by the Trusts Act. Nevertheless, if the settlor and the beneficiaries of the trust are non-residents in Mauritius, the trust will be deemed to be non-resident of Mauritius. Overall, the vast majority of trusts established in Mauritius are non-resident trusts and are not subject to taxation in Mauritius. This caters to the tax planning purposes of the settlors of Mauritius trusts.
There are no exchange controls applicable in Mauritius.
Mauritius Trust Legislation
Modern legislation, namely the Mauritius Trusts Act 2001, provides a complete and up-to-date regulatory framework for trusts. As the Mauritian legal system was originally based on French civil law rather than English common law, the trust concept had to be introduced separately. The Trusts Act therefore remains the sole basis for the existence of trusts in Mauritius. Basic common law concepts such as the Statute of Elizabeth and constructive trusts in Mauritius are not applicable outside the scope of the Trusts Act.
Overall, Mauritian legislation provides a sound base for the Mauritius trust formation and maintenance for international clients. Today, it is a jurisdiction of choice for many HNWIs and families from different countries and backgrounds. Mauritius stands firmly alongside other popular trust financial centres.
Common Law Rules
Since Mauritius has predominantly civil law legislation, the common law rules are not applicable to trusts in Mauritius.
Perpetuity Period and Accumulation Period
As common law rules are not applicable in Mauritius, the concept of perpetuity period, in turn, does not apply to Mauritius trusts. The maximum duration period of the discretionary trust in Mauritius established by the Trusts Act is 99 years from the date of its creation.
Any purpose trust in Mauritius, whether charitable purpose or not, has an unlimited duration under the Mauritius Trusts Act.
The accumulation period of the trust is the same as the maximum perpetuity period of the trust.
Foreign Judgments
Mauritian trust law has specifically excluded foreign judgments in relation to trusts in Mauritius.
Notwithstanding any rule or law relating to the enforcement of judgments given by the court of another jurisdiction, the court shall not vary it, set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction.
This rule is in force in respect of any of the following:
- the personal and proprietary consequences of marriage or the dissolution of marriage;
- succession rights (whether testate or intestate), including the fixed shares of spouses, ascendants and descendants or relatives; or
- the claim of creditors in an insolvency.
Burden of Proof
Trust legislation does not specifically state that the burden of proof is on the creditor. However, the trust enjoys robust asset protection under the legislation.
Forced Heirship
The Mauritius asset protection trust allows the avoidance of forced heirship rules applicable in the home jurisdiction of the settlor and beneficiaries.
Bankruptcy
According to Mauritius trust law, a trust or the property transferred into the trust is not subject to the claims of creditors in insolvency proceedings.
Spendthrift Beneficiaries
When setting up a trust in Mauritius, it is possible to include provisions for spendthrift beneficiaries in the trust deed. Such provisions create the so-called spendthrift or protective trust, which is intended to protect the property of the beneficiaries from the claims of third parties.
According to the legislation, the terms of a trust may make the interest of a beneficiary subject to:
- termination;
- restriction on alienation of or dealing in that interest or any part of that interest;
- diminution, suspension or termination.
Such measures may apply in the event of the beneficiary becoming insolvent or any of his property becoming liable to seizure or sequestration for the benefit of his creditors.
Fraudulent conveyance
The legislation provides asset protection to trust funds in Mauritius from frivolous litigation. The fraudulent transfer period in Mauritius is limited to two years. This means that the Mauritian court would disregard any third-party claims against the trust after two years from the date of transfer of the property into the trust.
It is therefore recommended that a Mauritius trust be established as early as possible for better asset protection.
The Following Laws Are Applicable to The Mauritius Trust Formation
Structure of Mauritius Trust
Settlor – According to the Trusts Act, any person who has the legal capacity to contract may create a trust. The settlor creates the trust by executing the trust deed. Under the legislation, a settlor may also be a trustee, beneficiary, protector or enforcer, but cannot be the sole beneficiary of a trust of which he is a settlor.
Trustee – A trustee in Mauritius can be a person of full age who has the legal capacity to contract, or a body corporate permitted under its statutes to act as a trustee. A Mauritius trustee cannot hold a beneficial interest under the trust of which he is a trustee except where he is not the sole trustee of the trust or the sole beneficiary under the trust.
In most cases, trust companies in Mauritius act as a licensed professional trustee or Private Trust Company (PTC). In addition to the licensed trustee, a trust may have an unlimited number of co-trustees. The Mauritius Trusts Act defines the roles of the different types of trustees, such as a custodian trustee or a managing trustee.
The use of a private trust company in Mauritius is also possible. Such a company can be the sole trustee of the trust and manage the trust assets in its own name. A Mauritius private trust company can be established as a Global Business Company (GBC) or an Authorised Company (AC).
Protector – The terms of the Mauritius trust may provide for the appointment of a protector and give him powers over the trustee. The trust instrument may appoint as protector any person of full age and sound mind, including the settlor, or any body corporate, firm, partnership or group of persons, whether incorporated or unincorporated.
The protector of a trust may also be a settlor, a trustee or a beneficiary of the trust.
Beneficiaries – to set up a trust in Mauritius, the settlor appoints the beneficiaries of the trust. A beneficiary must be identifiable by name or ascertainable by reference to a class of beneficiaries or a relationship to another person or at the time by reference to which the members of a class are to be determined.
The terms of a trust in Mauritius may provide for the addition of a person as a beneficiary or the exclusion of a beneficiary from the benefit or impose an obligation on a beneficiary as a condition of benefit.
Under the Trusts Act, the interest of a beneficiary is movable property and subject to the terms of the trust, is freely transmissable. In accordance with the terms of the trust, a beneficiary’s interest may be sold, pledged, charged, transferred, or otherwise dealt with.
Mauritian trusts can be in the form of purpose trusts or charitable trusts. To establish a purpose trust in Mauritius, the following conditions shall be met:
- the purpose, whether charitable or not, for which the trust is created is specific, reasonable and capable of fulfilment and not immoral, unlawful or contrary to public policy;
- the terms of the trust provide for the appointment of an enforcer who is capable of enforcing the trust and for the appointment of a successor to an enforcer;
- at least one trustee is a qualified trustee;
- the instrument creating the trust provides for the disposition of surplus assets of the trust upon its termination, whether by expiry, on a specified date or on the occurrence of a specified event, or for any other cause.
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Privacy of Mauritius Trusts
Mauritius trusts enjoy the highest degree of confidentiality. There is no central Registrar of Trusts in Mauritius, therefore, there is no need to submit any information regarding a trust. How to register a trust in Mauritius with the authorities if it is required? The settlor may decide to register the trust with the Mauritius Registrar General if he wishes to do so, but this is not necessary.
There is also no need to submit information about beneficial interests to the Mauritius authorities.
All documents relating to the trust and related affairs are stored only at the office of the licensed registered agent that provides business services. The licensed registered agent, who is authorised for the incorporation of companies and trusts in Mauritius, will disclose trust information only upon request from authorised authorities. Such requests must relate to criminal proceedings in order for the authorities to be able to make such a request.
To find out more about Mauritius trusts or if you have any questions on how to create a trust in Mauritius, please do not hesitate to contact us. The team at Astra Trust has the necessary experience and international qualifications to assist you in all matters relating to trust establishment or company formation in Mauritius.
FAQs in Relation to Mauritius Trust Formation
How can a Mauritius trust protect my assets?
A Mauritius trust can protect your assets by legally separating them from your personal ownership. This separation helps shield the assets from potential creditors, lawsuits, or other financial risks, providing a secure environment for wealth preservation.
Why should I consider Mauritius for trust formation?
Mauritius is an attractive jurisdiction for trust formation due to its political stability, strong legal framework, and favorable tax regime. It offers confidentiality, asset protection, and flexibility in trust structuring, making it a preferred choice for international investors and high-net-worth individuals.
Do I need to reside in Mauritius to form a trust there?
No, you do not need to reside in Mauritius to form a trust. Mauritius allows non-residents to establish trusts in the jurisdiction, making it accessible to individuals and businesses from around the world. Professional service providers can assist you in managing the trust from abroad while ensuring compliance with local regulations.
Can I transfer existing assets into a Mauritius trust?
Yes, it is possible to transfer existing assets into a Mauritius trust. This can include various types of assets such as cash, real estate, investments, or intellectual property. The trustee will guide you through the process of transferring these assets to the trust structure.
Can I be both the settlor and beneficiary of a Mauritius trust?
Yes, you can be both the settlor (the person who establishes the trust) and a beneficiary of a Mauritius trust. This allows you to retain control over your assets while enjoying the benefits of the trust structure.
