Why Mauritius is the ideal jurisdiction for the creation of trusts

Mauritius has become a sought-after destination for the creation of trusts, thanks to its favorable legal framework and multiple opportunities for foreign entrepreneurs and business owners. The Mauritian trust has many benefits if you’re seeking effective estate planning, asset protection, or attractive tax incentives. In this article, we will explore why you should consider setting up a trust in Mauritius, highlighting what makes it an attractive option for managing your wealth.

What is a trust?

The process of establishing a trust involves a natural or legal person (the “settlor”) transferring legal ownership of assets (the “trust property”) to one or more other persons (the “trustees”) for the purpose of holding them for the benefit of other persons called “beneficiaries” or for a specific purpose. Although a trust can be created by a simple verbal agreement as a private arrangement, drawing up a written document (the trust deed) is standard practice. The settlor provides the trustees with instructions on how to manage the trust Through a “letter of wishes”.

Assets held in a Mauritian trust

A Mauritian trust can hold various types of assets, including the following: Banking assets such as cash, bonds, securities, etc.; Real estate property, whether commercial or residential; Shares in companies, whether listed or private; Insurance policies.

• Banking assets such as cash, bonds, securities, etc.;
• Real estate property, whether commercial or residential;
• Shares in companies, whether listed or private;
• Insurance policies.

What are the features and benefits of a Mauritian trust?

In Mauritius, trusts are governed by the Trusts Act 2001, which allows for the creation of different types of trusts:

• Discretionary trust: this form of trust gives trustees the power to decide how much the beneficiaries will receive from the trust and when.
• Employee benefit trust: this form of trust can be established to hold assets providing benefits to the employees of a company or group of companies.
• Charitable trusts: these are irrevocable trusts created for charitable purposes, benefiting from certain tax advantages in many countries.
• Special-purpose trust: this type of trust doesn’t have specified beneficiaries but is created to promote a specific non-charitable purpose. It must have an executor in Mauritius. Under Mauritian law, a special-purpose trust may have an unlimited lifetime.

A Mauritian trust can only be established by a written document called a trust deed. The deed defines the trust’s objective, purpose, intention, and the duties and powers of the trustees. A Mauritian trust may be established by a resident or non-resident of Mauritius. While it is not compulsory to register a trust in Mauritius, the Trusts Act provides for the possibility of appointing a “protector” who has a fiduciary duty towards the beneficiaries. The protector has the power to revoke an existing trustee and appoint new additional trustees if necessary.

1. When creating a trust in Mauritius, up to four trustees may be appointed, provided that one of them is a qualified trustee approved by the Financial Services Commission (FSC).
2. The terms of the trust may also provide for the appointment of a custodian trustee and a managing trustee. The role of the custodian trustee is limited to holding the trust assets, while the managing trustee manages them.
3. Moreover, the settlor himself may be one of the trust’s beneficiaries.
4. Trusts can move to and from Mauritius.
5. A trust may choose not to be considered a tax resident in Mauritius if none of the settlors, trustees (except the qualified trustee), or beneficiaries is a tax resident in Mauritius.
6. Trusts can obtain a worldwide business license and benefit from double taxation agreements (DTAs) ratified by Mauritius. This option can help make investments in countries that have signed such agreements or for making distributions to residents of such countries.

If you are considering establishing a trust in Mauritius, contact StraFin now. Our team of professionals will provide you with close, high-quality assistance.