Seychelles Offshore Trust Formation
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Overview of Seychelles Trust Formation
Seychelles is a renowned and rapidly developing offshore financial centre. It offers the full range of offshore solutions such as international business companies, LLCs, trusts and foundations. The Seychelles trust formation is one of the primary options to consider when it comes to asset protection and effective tax planning. By allowing administration costs to be kept low, a Seychelles trust formation offers some very attractive features that make it a perfect overseas asset protection vehicle.
Seychelles trust law is largely based on the trust law of Jersey with further amendments. The asset protection provisions include the repeal of the Statute of Elizabeth, exclusion of foreign judgments, minimisation of the fraudulent transfer period, etc.
Why Set Up a Seychelles Trust?
There are many reasons to set up a trust in Seychelles. Known for its offshore companies, Seychelles also offers international trust formation as a reputable financial centre. These structures are very flexible and regulated by the most up-to-date laws. The main reasons for choosing Seychelles as a primary location for trust set-up are as follows:
- Cost-effective trust solution
- 2-year limitation period for fraudulent conveyance
- High level of confidentiality
- Specific legal provisions to ignore foreign judgments including creditors’ claims, divorce and bankruptcy cases, etc.
- No forced heirship rules are applicable
- No common law rules and the Statute of Elizabeth applicable to the trust
- Purpose trusts are allowed, as well as charitable trusts
- A settlor can be a beneficiary
- Modern and up-to-date legislation
- Possibility of opening Seychelles bank accounts
- The maximum duration of a Seychelles international trust is not limited
- No tax environment and no financial reporting is required in the Seychelles
Process of Seychelles Trust Formation
The process of trust formation in Seychelles 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 Seychelles Trust
To form an offshore trust in Seychelles 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.
Taxation Of Offshore Trusts In Seychelles
| 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 Seychelles Trust
After the transfer of the assets into the trust, the settlor is not considered to be the owner of the assets. Instead, these assets comprise the trust fund. The place of taxation of such property and any income relating to it therefore shifts to the jurisdiction of the laws regulating the trust, in our case, the Seychelles.
The trust legislation specifically stipulates that any income or capital gains derived by a Seychelles international trust from sources outside the Seychelles are not taxable in Seychelles. Therefore, such a trust enjoys full offshore status in accordance with the Seychelles Trusts Act, adopted in 1994. Instead of taxation, government fees are payable to the Seychelles Financial Services Authority on an annual basis.
There is no taxation in Seychelles on the transfer of the trust property from the settlor to the trust, as well as any further endowments from the settlor or third parties. Distributions of trust income or capital to the beneficiaries are not taxable in Seychelles. However, the distributions to the beneficiaries may be subject to tax in the home country of the beneficiaries. For clarity, we encourage our clients to seek tax advice in their home country before establishing an offshore trust.
As such, no taxes are applicable to a Seychelles trust, including income tax, capital gains tax, inheritance tax, gift tax or any stamp duties. Given the completely tax-neutral environment, the Seychelles trust formation should be considered by someone who is seeking to accumulate and preserve family wealth.
Seychelles Trust Legislation
The Seychelles law system is a hybrid of French civil law and English common law. Although the law of equity and equitable ownership was unknown in the Seychelles, it was successfully introduced following the adoption of the International Trusts Act 1994. This is the only law regulating the Seychelles trust formation and administration.
Despite having an almost entirely civil law system, the Seychelles Supreme Court takes into consideration English trust case law as well as the case law of the other Commonwealth countries.
The Seychelles International Trusts Act 1994 was drafted after careful study of the offshore legislation of various jurisdictions. Seychelles trust law had to be self-sufficient due to the prevailing civil law nature of the Seychelles legislation. The law defines, inter alia, various types of international trusts available in Seychelles, including purpose trusts, charitable trusts, etc. The original law of 1994 was significantly amended by the enactment of the Trust (Amendment) Bill, 2022.
The amendment introduced by the bill has made the Seychelles international trust more attractive and competitive with other offshore jurisdictions.
Common Law Rules
Since Seychelles has mixed legislation, there are no common law rules. The concept of a trust was introduced by the International Trusts Act, which was specifically adopted for this purpose. As such, common law rules do not apply to Seychelles trusts, including the Statute of Elizabeth.
Perpetuity Period and Accumulation Period
The rule against perpetuities does not apply to the Seychelles international trust. Before the 2022 amendments, the maximum duration period following a trust set up in Seychelles was 100 years. The Trust (Amendment) Bill, 2022, makes Seychelles trusts valid for an indefinite period of time.
Of course, the trust validity period can be stipulated by the settlor in the trust deed if the settlor would like the trust to be automatically terminated at a certain point in time.
Fraudulent conveyance
The fraudulent conveyance period in Seychelles is two years. This means that the Seychelles court would not challenge any disposition of property to the trust after two years from the date that such disposition took place. Therefore, for complete asset protection, it is vital to set up a Seychelles trust in advance.
Burden of Proof
The Seychelles Trusts Act specifically provides that the burden of proof of intent to defraud is on the creditor seeking to set aside the disposition, rather than on the settlor of the Seychelles trust.
Foreign Judgments
Seychelles legislation specifically excludes foreign judgments regarding all matters relating to a Seychelles trust. According to the law, a Seychelles trust is valid, notwithstanding any foreign law which prohibits or does not recognise the concept of a trust. The same applies in cases where the trust or disposition avoids or defeats rights, claims or interests conferred by any foreign law upon any person by reason of a personal relationship to the settlor or by way of heirship rights.
Seychelles is not a party to and has not ratified The Hague Trust Convention.
Forced Heirship
The Seychelles asset protection trust allows avoidance of the forced heirship rules applicable in the home jurisdiction of the settlor and beneficiaries. There are no forced heirship rules applicable to trusts in Seychelles.
Bankruptcy
According to the Seychelles Trusts Act, a disposition of trust assets to a trust shall not be void, voidable or otherwise liable to be set aside, or subject to any implied condition by reason of bankruptcy, liquidation of the settlor or any action, proceeding or other claim by a creditor of the settlor.
Spendthrift Beneficiaries
Seychelles trust legislation permits the set up trust in Seychelles to protect assets from spendthrift beneficiaries. The terms of a Seychelles trust may make a beneficiary’s interest liable to termination, restriction on alienation or disposal, diminution or termination in the event of the beneficiary becoming bankrupt.
The following laws are applicable to the Belize Trust formation
Structure of a Seychelles trust
Settlor – for the establishment of a Seychelles trust, the settlor is any person who has a full legal capacity to contract and create the trust by providing trust property or by making a testamentary disposition on trust or to a trust.
A settlor of a Seychelles offshore trust may also be a trustee, beneficiary, protector or enforcer, but may not be the sole beneficiary or trustee of a trust.
Nominee settlors can be used for privacy matters.
The settlor may provide a non-binding letter of wishes to the trustee after he has set up a Seychelles trust. With such a letter, a settlor can provide guidance to the trustee on the further line of administration of the trust.
Trustee – Every Seychelles trust must have an approved trustee. Only licensed trust companies in Seychelles may provide trustee services. According to the new Trusts Act, there is also a possibility for a private trust company to act as the trustee. Such a private trust is not required to obtain a trust licence in Seychelles, however, there are additional requirements applicable to such a company.
Along with the licensed trustee, a trust may have an unlimited number of co-trustees. The co-trustee may be an individual or a corporation of any nationality and residency. It is not required that the co-trustees hold a licence in Seychelles to be appointed.
Seychelles trust legislation determines the liability of the trustee for breach of trust in the event of any misconduct on the part of the trustee.
Protector – The terms of a trust may provide for the appointment of a person as a protector of a Seychelles trust. The protector’s main function is to supervise the trustees in the exercise of their powers and duties. The protector can be granted quite broad powers, including powers to give directions to the trustees and to dismiss and appoint trustees of a Seychelles international trust.
A protector of a trust may be a settlor or an enforcer of the trust, but not a trustee of the trust. A protector of a trust may be a beneficiary of a Seychelles trust, but not a sole beneficiary.
Beneficiaries – A beneficiary of a Seychelles trust is a person who benefits from the trust setup. The beneficiary must be identifiable by name or ascertainable by reference to a class of persons or relationship to some person whether or not living at the time of the creation of the trust or at the time which under the terms of the trust is the time by reference to which members of a class are to be determined.
The terms of a Seychelles trust may provide for the addition or removal of a person as a beneficiary or for the exclusion of a beneficiary from benefit. The terms of a trust may also impose an obligation on a beneficiary as a condition for benefit.
The Seychelles asset protection trust may be set up as a purpose trust. It is possible to establish both charitable trusts and non-charitable purpose trusts in Seychelles. Such a purpose trust must appoint an enforcer whose name has to be indicated in the trust deed or declaration of trust. The enforcer ensures that the trustees execute their powers and use the trust assets in connection with the purpose of the trust as established by the settlor.
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Privacy of Seychelles Trust
A Seychelles trust is a highly private entity. Information regarding the trust is accessible only to the trustees and is stored exclusively at the registered office of the trust.
The agent submits a limited amount of information to the Registrar of Trusts upon Seychelles trust formation. Only the following details are recorded in the Register of Trusts:
- the name of the trust;
- the reference number of the trust;
- the name and address of each approved trustee of the trust;
- the date of registration of the trustee appointment declaration relating to the trust;
- the date of any notice of termination of the trust;
- the date of any order of a court that the trust is set aside or otherwise ended.
The Register of Trusts in Seychelles is closed to the public. Third parties may request a certificate of search regarding the Seychelles trust from the Registrar, just like the ordinary legal entity. Such a certificate would contain only the information mentioned in the list above.
Apart from the above-mentioned, there is absolutely no other information accessible to third parties in relation to a Seychelles trust.
If you are interested in trust formation or would like to know the cost of trust services in Seychelles, please do not hesitate to contact us. The team at Astra Trust has the necessary experience and is able to assist you in all matters relating to trust establishment or company formation in Seychelles.
FAQs in Relation to Seychelles Trust Formation
How can I benefit from a Seychelles trust formation?
By opting for a Seychelles trust formation, you can enjoy various advantages such as asset protection, tax optimization, confidentiality, and flexibility in managing your assets. It provides a legal structure to safeguard your wealth and preserve it for future generations.
What are the requirements for setting up a Seychelles trust?
To establish a Seychelles trust, you need to appoint a trustee, provide the necessary documentation, such as the trust deed, and comply with the legal and regulatory requirements of Seychelles. Seeking professional advice from a trust service provider is recommended to ensure a smooth and compliant formation process.
What is the tax regime for Seychelles trusts?
Seychelles offers a favourable tax regime for trusts, as they are exempt from income tax, capital gains tax, and estate duty. This makes Seychelles an attractive jurisdiction for individuals and businesses seeking tax optimization and asset protection.
What is the duration of a Seychelles trust?
Seychelles trusts can be established for an indefinite period, allowing for long-term asset protection and succession planning. The duration can be specified in the trust deed, providing flexibility to meet your specific requirements.
Can I act as the trustee of my Seychelles trust?
Yes, you can act as the co-trustee of your Seychelles trust. However, it is mandatory to appoint a professional trustee or to ensure compliance with legal obligations and to benefit from their expertise in trust administration.
Can a Seychelles trust own real estate properties?
Yes, a Seychelles trust can own real estate properties internationally. This enables you to hold and manage real estate assets under the protective structure of a trust, ensuring their preservation and efficient management.
