Mauritius Trusts
Mauritius is widely regarded as a favourable jurisdiction for the establishment of trusts, owing to its attractive tax regime, sound regulatory oversight, and geographic position as a bridge between Africa and Asia.
What is a Trust?
A trust is a legal arrangement in which a settlor transfers assets to a trustee, who holds and manages them for the benefit of designated beneficiaries or to achieve a specific lawful purpose.
Under the Mauritius Trusts Act 2001, a trust exists where a trustee holds property not as their own, but in a fiduciary capacity, with a duty to manage, use, or dispose of it according to the terms of the trust deed. This framework codifies the traditional common law concept of a trust, while allowing for wide flexibility in its application.
Trusts can therefore be established for private, commercial, or charitable purposes, and may be discretionary, fixed, or purpose-based, depending on the intentions of the settlor and the objectives of the structure.
In Mauritius, trusts benefit from:
-
A modern, well-regulated framework under the Trusts Act 2001
-
Attractive tax treatment for resident and non-resident trusts
-
Strong asset protection and confidentiality provisions
-
A strategic location bridging Africa, Asia, and global markets
Mauritius law permits a variety of trusts to be established, including:
A Discretionary Trust is the most flexible form of trust available under Mauritian law. It grants wide powers to the trustees in managing investments and determining how and when distributions are made.
Beneficiaries may be added or removed at the trustees’ discretion. However, being named as a beneficiary does not create a legal entitlement to benefit from the trust. Distributions are made entirely at the trustees’ discretion.
Trustees may be guided by a Letter of Wishes from the settlor, outlining the settlor’s preferences regarding the management and distribution of trust assets.
For added oversight, the settlor or beneficiaries may appoint a Protector under Section 24 of the Trusts Act 2001.
The Protector has authority to remove and appoint trustees, and trustees may require the Protector’s consent for certain decisions as defined in the trust deed.
Under the Trusts Act 2001, a Mauritian trust is valid for up to 99 years and must have at least two beneficiaries if the settlor is also one of them.
An Excluded Property Trust (EPT) is a specialised form of Discretionary Trust commonly used in UK inheritance tax planning. It is established when the settlor is non-UK-domiciled, allowing assets settled into the trust to be treated as “excluded property” for UK Inheritance Tax (IHT) purposes.
Once the settlor becomes UK-domiciled, they may no longer benefit from the trust assets without those assets being drawn into the UK IHT net. Provided the property within the trust continues to meet the definition of excluded property, the trust remains outside the scope of UK Inheritance Tax, avoiding anniversary charges, exit charges, and other related taxes.
An Employee Benefit Trust (EBT) is a structure established by a company to reward, motivate, and retain employees. The company transfers shares or other assets into the trust, and selected employees are designated as beneficiaries.
When specific conditions are met, typically based on performance targets, tenure, or service milestones, beneficiaries receive benefits from the trust, either in the form of cash distributions or share allocations.
Employee Benefit Trusts are a recognised mechanism for aligning employee interests with long-term company growth while maintaining flexibility in how and when benefits are delivered.
Under the Mauritius Trusts Act 2001, three types of trusts are specifically codified, including the Employee Benefit Trust, each serving distinct commercial and fiduciary purposes.
A Protective Trust, as defined under Section 18 of the Mauritius Trusts Act 2001, grants a beneficiary an absolute right to the income of the trust until that right is terminated by a pre-defined event.
This structure is commonly used in:
Maintenance Trusts, where a child’s education or living expenses are funded by the trust until they reach a specified age or marry.
Life Interest Trusts, where an individual receives a fixed annual income from the trust during their lifetime.
A hybrid arrangement may also be created, allowing a beneficiary to receive income from the trust until a condition is met, such as reaching a certain age, after which the capital of the trust fund is distributed to them.
In contrast, under a Purpose Trust, the terms governing income and distributions are fixed by the trust deed, and the trustees have no discretion to vary how the assets or income are applied.
A Purpose Trust, established under Section 19 of the Mauritius Trusts Act 2001, is created to achieve a specific objective rather than to benefit individual beneficiaries. The trust exists solely to fulfil that defined purpose and is terminated once the purpose has been accomplished.
The stated purpose must be reasonable, specific, and capable of fulfilment, and cannot be immoral, unlawful, or contrary to public policy.
Because a Purpose Trust has no beneficiaries, the law requires the appointment of an Enforcer, an independent individual responsible for ensuring that the trustees act in accordance with the stated purpose of the trust.
Under Section 20 of the Mauritius Trusts Act 2001, a Charitable Trust is established when the trust fund is dedicated to one or more charitable purposes. The founding document must clearly state the charitable objective or objectives for which the trust is created.
Charitable trusts registered in Mauritius may be established for any of the following recognised purposes:
The relief of poverty
The advancement of education
The advancement of religion
The protection of the environment
The advancement of human rights and fundamental freedoms
Or any other purpose beneficial to the public in general
Beneficiaries of a charitable trust may include individuals or groups, whether within or outside Mauritius.
Charitable trusts enjoy tax-exempt status under Mauritian law, provided their activities remain consistent with their declared charitable purposes.
Mauritius Trust – Frequently Asked Questions
When assisting clients in establishing trust and corporate structures in Mauritius, we often encounter similar questions about how these vehicles operate and the advantages they offer.
To help clarify some of the most common points of interest, we’ve prepared the following frequently asked questions covering the key features, benefits, and practical considerations of Mauritian trusts.
Trustees are bound by strict fiduciary duties under the Mauritius Trusts Act 2001 and the terms of the trust deed. These duties require them to act honestly, in good faith, and solely in the best interests of the beneficiaries.
While trustees may have the power to add or remove beneficiaries, this power must be exercised within the limits set by the trust deed and for a proper purpose. Any action taken for personal gain or contrary to the settlor’s intentions would constitute a breach of trust.
In practice:
Trustees are often regulated professionals (such as licensed Management Companies) subject to FSC oversight and compliance obligations.
The trust deed may also require Protector approval before any change to the class of beneficiaries.
Beneficiaries or other interested parties can apply to the Mauritian courts if trustees act improperly or outside their authority.
These layers of legal, regulatory, and fiduciary protection ensure trustees cannot lawfully remove beneficiaries or benefit themselves without consequence.
The power to amend the trust deed ensures that a trust remains adaptable and effective over time. Circumstances can change legally, financially, or personally, and this flexibility allows the structure to evolve without undermining its integrity or purpose.
This power is most commonly exercised in two situations.
First, to change the proper law of the trust. If the tax or regulatory environment in Mauritius changes to the point that it affects the viability of the trust, the trustee may need to transfer the proper law to another jurisdiction to preserve its intended benefits.
Second, when the settlor or beneficiaries request that a protector be added under Section 24 of the Mauritius Trusts Act 2001, which typically requires a formal amendment to the trust deed.
Importantly, this power is governed by Section 34 of the Act, which means the trustee cannot amend the deed unless it is in the best interests of the beneficiaries. Any amendment must therefore be reasonable, justifiable, and consistent with the settlor’s original intent.
No. A Letter of Wishes is not legally binding on the trustees. It serves as a guide, expressing the settlor’s preferences on how the trust should be managed or how distributions should be made, but the trustees are not obligated to follow it.
The trustees may consider the views and requests of the settlor or beneficiaries, but they must exercise independent judgment and act in accordance with the terms of the trust deed and the best interests of the beneficiaries.
The key principle behind a trust is that control of the trust assets passes from the settlor to the trustees. If trustees were legally required to follow the settlor’s or beneficiaries’ directions, control would never have been transferred, and the trust could be considered a sham.
Under the Mauritius Trusts Act 2001, it is legally possible for a non-licensed individual to act as a co-trustee alongside a licensed trustee. This means that, in theory, you may serve as a trustee of your own trust.
In practice, however, this arrangement raises significant control and tax-residency issues.
If the settlor also acts as a trustee, it becomes difficult to demonstrate that control of the trust assets has genuinely passed to an independent party. This may undermine the validity of the trust and expose it to legal or tax challenges.
If key decisions about the trust’s property are made outside Mauritius, the trust could be viewed as being managed and controlled abroad, making it taxable in that foreign jurisdiction.
A fully independent trustee structure provides stronger protection, clearer governance, and greater legal certainty.
Yes. Beneficiaries may enjoy or make use of trust property, provided such use aligns with the terms of the trust and the trustees’ duties.
This is most common where a trust owns residential property and beneficiaries reside in that property. However, it can also extend to art collections, classic cars, yachts, or other valuable assets held within the trust.
The trustees have a legal duty to safeguard and maintain the trust property, so they will usually require that:
The property is properly insured
Regular reports or valuations are provided on its condition
In some cases, a representative inspection may be arranged to ensure proper upkeep
This arrangement allows beneficiaries to enjoy the trust assets while ensuring the trustees fulfill their fiduciary duty to protect and preserve them for the benefit of all beneficiaries.
In principle, a trust may invest in any legal asset or instrument, provided such investments align with the terms of the trust deed and the trustee’s fiduciary duties.
However, trustees are obligated to act in the best interests of the beneficiaries, which means they will generally avoid high-risk or speculative investments such as cryptocurrencies, collectibles, or highly volatile funds.
Trustees must also act with prudence and professional care. As they may not be experts in all asset classes, trustees will often require that any proposed investments be made through a licensed investment adviser or professional portfolio manager.
This approach ensures that investment decisions are responsible, transparent, and in keeping with the long-term objectives of the trust.
This power exists to ensure that the trust is managed effectively and professionally in situations where the trustee may not have the specialised expertise required to make certain decisions.
For example, trustees may appoint:
Investment managers to handle portfolio management or asset allocation
Legal advisers to act in the event of litigation or complex transactions
Specialist consultants for valuations, tax matters, or other technical areas
While powers can be delegated, the trustee remains ultimately responsible and must always act in the best interests of the beneficiaries.
Any delegation must be made with care, due diligence, and in accordance with the Mauritius Trusts Act 2001 and the trust deed.
The power to make loans allows the trustee to manage the trust’s assets flexibly and efficiently, while still acting in the best interests of the beneficiaries.
This power is typically used in two situations:
To provide funds to beneficiaries where receiving a direct distribution would create unfavourable tax consequences in their country of residence.
To provide financing to companies owned by the trust, which cannot receive distributions because they are not beneficiaries.
Any loan made by the trustee must serve the best interests of the beneficiaries and comply with the terms of the trust deed.
For this reason, it is highly unlikely that a loan would ever be made to an unrelated third party.
The power to receive loans provides flexibility in how the trust can be funded or managed, particularly in situations where a direct transfer of assets may not be tax-efficient or practical.
This power is typically exercised in the following circumstances:
When the settlor wishes to fund the trust, but doing so through a direct donation or settlement would create adverse tax consequences. In such cases, the trust may instead receive the funds as a loan.
When the trust requires liquidity for distributions, expenses, or new investments, but an underlying company owned by the trust cannot pay a dividend, for example, due to solvency constraints, split shareholding, or other commercial reasons.
In both cases, the loan mechanism allows the trustee to maintain proper financial management of the trust while remaining compliant and tax-efficient.
If you are dissatisfied with the service provided by the trustee, there are formal remedies available under Mauritian law.
You may request the replacement of the trustee in accordance with the terms of the trust deed. This process is typically straightforward and allows for the appointment of a new licensed trustee to assume responsibility for the administration of the trust.
If you believe the trustee has breached its duties under the Mauritius Trusts Act 2001 or the trust deed, you may apply to the Mauritian courts for relief. The court has the power to:
Award damages to compensate for any loss suffered
Remove or replace the trustee
Impose fines or sanctions, including potential revocation of the trustee’s licence, depending on the seriousness of the breach
These safeguards ensure that trustees remain accountable and that the trust continues to be administered fairly, transparently, and in the best interests of the beneficiaries.
Start Your Journey
with Us