Creating a Trust in Mauritius as a foreign investor

Mauritius is an attractive destination for the creation of trusts, particularly for foreign investors. The country provides a favorable legal framework for the operation of trusts, with attractive tax and non-tax advantages. Strafin is here to explain how it works.

What is a trust?

A trust is a contract that allows a person, the settlor, to transfer assets to another individual, the trustee. The trustee is expected to manage these in accordance with the settlor’s instructions for the benefit of one or more individuals, the beneficiaries.

Why create a trust in Mauritius?

Below are the main reasons for creating a trust in Mauritius:

• Tax reasons: Trusts help reduce income tax, corporate tax or inheritance tax.
• Estate planning: Trusts can be used to protect the assets of minor or disabled beneficiaries.
• Wealth management: Trusts can be used to manage complex assets, such as businesses or investment funds.
• Asset protection: Trusts are efficient in protecting assets from creditors or legal proceedings.

When should a trust be created?

The decision to create a trust is based on an individual’s situation. It is, therefore, essential to seek professional advice from a lawyer or notary.

Here are a few examples of situations in which the creation of a trust may be considered:

• To reduce your income tax obligations, you can create a trust that will invest in assets that generate low-tax income.
• To protect your assets from creditors, you can create a trust that will own your assets.
• For efficient estate planning, you can create a trust that will be managed by a trustee of your choice.

Benefits of creating a trust in Mauritius

Tax benefits

Mauritian trusts are exempt from corporate income tax, income tax and inheritance tax. Income and gains generated by a trust are subject to the beneficiaries’ personal income tax, depending on their tax residence status.

Corporate income tax exemption applies to trusts undertaking commercial or industrial activity in Mauritius. Income tax exemption applies to trusts receiving income from foreign sources.

Exemption from inheritance tax applies to trusts that are created and administered in Mauritius.

Non-tax benefits

Mauritian trusts also offer several non-tax benefits, as explained below:

• Greater confidentiality: Mauritian trusts are protected by banking secrecy.
• More flexibility: Mauritian trusts can be used for various purposes, such as wealth management, estate planning or asset protection.
• Greater security: Mauritian trusts are regulated by the Financial Services Commission (FSC), which guarantees the security of assets.

The confidentiality of Mauritian trusts is guaranteed by the Banking Secrecy Act 198, which prohibits banks and other financial institutions from disclosing confidential information about their customers, including information relating to trusts.

The flexibility of Mauritian trusts is guaranteed by the Trusts Act 2001, which allows trustees to create trusts with a wide variety of structures and clauses.

The security of Mauritian trusts is guaranteed by the regulation of the Financial Services Commission (FSC), which supervises the activities of trustees and other Mauritian financial institutions.

Requirements for setting up a trust in Mauritius

To set up a trust in Mauritius, foreign investors need to meet the following conditions:

• The trustee: The person or entity responsible for managing the trust. The trustee may be a natural or legal person, resident or non-resident of Mauritius.
• Beneficiaries: The persons or entities entitled to the trust assets. Beneficiaries may be natural or legal persons, residents or non-residents of Mauritius.
• Trust deed: A legal document that defines the objectives, powers and obligations of the trustee and the beneficiaries. The trust deed must be drawn up by a Mauritian lawyer or notary.

Creation procedure

The procedure for setting up a trust in Mauritius is quick and straightforward, comprising three steps:

• Drafting of the trust deed by a Mauritian lawyer or notary.
• Deposit of the trust deed in the FSC trust register.
• Publication of the trust deed in an official Mauritian newspaper.

Legal provisions

The creation of trusts in Mauritius is governed by the Trusts Act 2001, which defines the conditions for the creation, operation and dissolution of trusts.

The Trusts Act 2001 is supplemented by the Banking Secrecy Act 1984, which guarantees the confidentiality of Mauritian trusts.

Summing up

Setting up a trust in Mauritius is an attractive option for foreign investors seeking to benefit from the country’s tax and non-tax benefits. The creation procedure is quick and straightforward within a favorable legal framework. For professional, qualified assistance with your investment in Mauritius, contact Strafin.