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8. Offshore Trust
 

A Trust is an arrangement for the holding and administration of property under which property or legal rights are vested by the owner of the property (the Settler) in a person or persons (the Trustees). The Trustees then hold the property for or on behalf of other persons (the Beneficiaries). The essence of the concept is the separation of legal and beneficial ownership, the property being legally vested in one or more Trustees but in equity for and on behalf of the Beneficiaries.

The Trustees’ duties are to take possession of and preserve the trust property, be diligent and prudent in administering it, be impartial as between Beneficiaries, keep accounts and give information to the Beneficiaries as required and to invest the trust funds in the manner permitted by the Trust Deed.

8.1 Features:

·         No tax on non-resident Offshore Trusts

·         The absence of statutory fees

·         There is no requirement to register a Trust in Mauritius

·         99 years perpetuity period

·         Protection from the forced heir ship rule

·         The Statute of Elizabeth is overridden

·         There is provision for the appointment of Protectors

·         Letters of Wishes are permitted

·         Variation of Trust instrument is permitted

·         A great variety of Trusts are permitted

These include Discretionary Trusts, Asset Protection Trusts, Purpose Trusts, Charitable Trust, Spendthrift Trusts.

8.2 Purposes:

Trusts can be used for a variety of purposes. The two most common uses are listed here below:

8.2.1 Tax planning

·         A Trust may accumulate income and hold assets for the duration of the Trust

·         The Trust will not be taxable in Mauritius if it qualifies as being “non-resident”

·         A Trust will be non-resident where neither the Settler nor the beneficiaries are resident in Mauritius.

·         The Trust may apply for a GBC1 license and accordingly have full access to the Double Taxation Treaties

·         An Offshore Trust may hold the Shares of a Mauritian Global Business Company

·         Ideal structure to avoid inheritance and estate tax payable in onshore jurisdictions

8.2.2 Asset protection

Forced heirship rules do not apply to Mauritian Offshore Trusts. This means where the Trust is administered according to the laws of Mauritius, the courts of Mauritius will not uphold or recognise any heir’s claims against trust property where the claim is based on forced heirship rules of another jurisdiction. i.e. The provisions of a Trust Deed will prevail over heirship rules of the foreign jurisdiction.

The Statute of Elizabeth is overridden: This means that where a settlor transfers assets or property to a Trust but later becomes insolvent, no action may lie against the Trustees of that Trust by creditors of the settler if the said creditors were not existing creditors at the time that the transfer was made or if more than two years has elapsed since the transfer was made.

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