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.
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 not, 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
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.
A Discretionary Trust gives the trustee(s) full discretion over how and when trust assets are distributed to beneficiaries. No beneficiary has a fixed entitlement — the trustee decides the timing, amount and recipient of each distribution.
A Protective Trust is designed to protect assets from creditors or from a beneficiary's own financial mismanagement. The trust interest is forfeited upon certain events (e.g. bankruptcy), after which income is held at the trustee's discretion.
A Purpose Trust is established for a specific purpose rather than for named beneficiaries. It is commonly used in structured finance, asset holding, and special purpose vehicles where no individual beneficiary exists.
A Charitable Trust is established for charitable purposes and may benefit from tax exemptions. It is governed by the Trusts Act 2001 and must meet specific charitable criteria recognised under Mauritian law.
A Spendthrift Trust restricts beneficiaries from assigning their interest in the trust and protects their share from creditors until distribution. It is ideal for protecting financially vulnerable beneficiaries.
An Employee Benefit Trust (EBT) is established by an employer to hold shares or assets for the benefit of employees. It is commonly used for share incentive schemes, retirement benefits, and employee ownership arrangements.
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 • 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 nonresident 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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