Two complementary structures
Mauritius offers international investors and families a choice between two leading wealth management structures: the trust, governed by the Trusts Act 2001, and the foundation, governed by the Foundations Act 2012. These two structures pursue similar objectives — asset protection, estate planning, wealth structuring — but rest on fundamentally distinct legal foundations.
The choice between a foundation and a trust is a strategic decision that depends on your personal situation, your legal environment of origin, the nature and location of your assets, the residence of your beneficiaries and your specific wealth objectives. This page presents a comprehensive comparison to help you make an informed choice.
Fundamental differences
Legal nature
The most fundamental difference between the foundation and the trust lies in their legal nature. This distinction has profound implications for international recognition, governance and operational functioning.
The foundation: a legal person
The foundation is a distinct legal entity endowed with legal personality (Foundations Act 2012, section 4). It exists as a legal person separate from its founder, its council and its beneficiaries. It holds its assets in its own name, can enter into obligations, open bank accounts, sue and be sued, and sign contracts.
The trust: a fiduciary arrangement
The trust is a contractual arrangement (fiduciary) whereby the settlor transfers assets to a trustee who holds and manages them for the benefit of the beneficiaries (Trusts Act 2001). The trust exists in two main forms: the discretionary trust and the fixed-interest trust. The trust has no legal personality of its own; assets are held in the name of the trustee, who acts in a fiduciary capacity.
Legal origin
| Aspect | Foundation | Trust |
|---|---|---|
| Legal tradition | Civil law (continental) | Common law (Anglo-Saxon) |
| Familiar jurisdictions | France, Belgium, Switzerland, Luxembourg, Germany, Latin America, francophone Africa | United Kingdom, United States, Australia, Singapore, Hong Kong, India, South Africa |
| Legal concept | Legal person with governance bodies (corporate model) | Fiduciary relationship (obligation of trust/confidence) |
| Understanding by banks | Immediate in civil law jurisdictions | Immediate in common law jurisdictions |
| Legislative reference in Mauritius | Foundations Act 2012 | Trusts Act 2001 |
Detailed comparison
| Criterion | Foundation (Foundations Act 2012) | Trust (Trusts Act 2001) |
|---|---|---|
| Legal personality | Yes — distinct entity from registration | No — contractual arrangement |
| Asset ownership | In its own name (the foundation is the owner) | In the trustee's name (fiduciary ownership) |
| Governance | Council — collegial body with minutes | Trustee (individual or co-trustees) |
| Creator | Founder | Settlor |
| Main constitutive document | Foundation Charter | Trust Deed |
| Supplementary document | Internal Rules — confidential | Letter of Wishes |
| Public registration | Yes (charter registered with the Registrar) | Not publicly required |
| Regulatory supervisor | Qualified secretary (FSC-licensed) | Qualified trustee (FSC-licensed) |
| Legal capacity | Can enter into contracts, sue and be sued, open accounts | The trustee acts in the name and on behalf of the trust |
| Creator's rights post-constitution | May retain certain powers (per the charter) | The settlor divests themselves (strict separation) |
| Civil law recognition | High (immediately familiar concept) | Variable (foreign concept, sometimes met with mistrust) |
| Common law recognition | Good (recognised concept but less traditional) | Excellent (native concept) |
| Firewall provisions | Not specific | Yes — section 24A (enhanced protection) |
| Spendthrift clause | Not applicable | Yes — section 26 (beneficiary protection) |
Governance compared
Foundation governance
The foundation is governed by a Council, a collegial body that operates on principles similar to those of a company's board of directors. This governance structure is familiar and reassuring to individuals accustomed to the workings of companies and legal persons.
| Governance aspect | Foundation (Council) | Trust (Trustee) |
|---|---|---|
| Decision-making mode | Collegial (vote, quorum, minutes) | Individual or joint (co-trustees) |
| Documentation | Meeting minutes mandatory | Minutes optional but recommended |
| Oversight | FSC secretary + internal rules | Protector (optional) + letter of wishes |
| Formality | High (defined formal procedures) | Moderate (flexibility of the trust deed) |
| Specialised committees | Possible (investment, distribution) | Not traditional (a protector suffices) |
| Liability | Collective liability of the council | Personal liability of the trustee |
| Replacement | Per the internal rules | By the protector or the settlor |
Asset protection compared
Both structures offer effective asset protection through the legal separation of assets from the creator's personal estate. However, the protection mechanisms differ significantly.
Protection via the foundation
The assets are owned by the foundation as a legal person. The founder's creditors cannot access the foundation's assets. The foundation can sue in court to defend its assets. Distinct legal personality reinforces the separation of wealth.
Protection via the trust
The assets are held by the trustee, separated from the settlor's estate. The discretionary trust offers enhanced protection (no vested rights). The firewall provisions (section 24A) block foreign judgments. The spendthrift clause (section 26) protects against beneficiaries' creditors.
Advantage of the discretionary trust: In terms of pure protection, the discretionary trust offers a significant advantage. Since beneficiaries have no vested rights — only a mere expectancy — there is nothing that creditors can identify, quantify or seize. In addition, the firewall provisions of section 24A prevent foreign jurisdictions from requalifying beneficiaries' rights under their own domestic law.
Estate planning compared
Both structures are effective estate planning tools, but with important nuances:
| Estate planning criterion | Foundation | Trust |
|---|---|---|
| Continuity on death | Yes — the council remains in office | Yes — the trustee continues management |
| Probate | Not required | Not required |
| Distribution flexibility | Per the charter and internal rules | Maximum (discretionary trust) |
| Protection of vulnerable persons | Good (per internal rules) | Excellent (spendthrift clause + discretion) |
| Forced heirship | No specific protection | Firewall provisions (section 24A) |
| Understanding by heirs | Immediate (civil law) | Variable (depends on the jurisdiction) |
| Dynastic trust | Possible (perpetual foundation) | Possible (multi-generational trust) |
| Updating wishes | Amendment of internal rules | Letter of wishes (informal, flexible) |
International recognition
International recognition is a crucial criterion in choosing between the two structures, as it determines the effectiveness of the structure in the jurisdictions where the assets are located and where the beneficiaries reside.
The trust internationally
The trust is fully recognised in all common law jurisdictions. Conversely, civil law jurisdictions may struggle to fully recognise it. The 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition improved the situation, but it has only been ratified by a limited number of countries (Italy, Luxembourg, Switzerland, the Netherlands, among others).
In non-signatory civil law countries, the legal qualification of the trust can be problematic: is it a contract, a legal person, a segregated pool of assets? This uncertainty can complicate operations involving assets located in these jurisdictions (real estate registration, opening bank accounts, etc.).
The foundation internationally
The foundation enjoys more natural recognition in civil law jurisdictions, as it relies on the well-known concept of a legal person. Banks, land registries, tax authorities and business partners in these countries are more comfortable with an entity endowed with legal personality than with a fiduciary arrangement whose legal nature is uncertain under their system.
| Jurisdiction | Foundation recognition | Trust recognition | Recommendation |
|---|---|---|---|
| France | Good (legal person concept) | Difficult (no legal framework) | Foundation preferred |
| Belgium | Good | Moderate (progressive recognition) | Foundation preferred |
| Luxembourg | Good | Good (Hague Convention ratified) | Both suitable |
| Switzerland | Excellent (Stiftungen tradition) | Good (Hague Convention ratified) | Foundation slightly preferred |
| United Kingdom | Good (recognised as a foreign entity) | Excellent (native concept) | Trust preferred |
| Singapore / Hong Kong | Good | Excellent | Trust preferred |
| Francophone Africa | Good (OHADA civil law) | Weak (unfamiliar concept) | Foundation strongly recommended |
| Dubai / UAE | Good (DIFC Foundation) | Good (DIFC Trust) | Both suitable |
| Latin America | Good (fundaciones tradition) | Variable (limited fideicomiso) | Foundation preferred |
Tax aspects compared
On the tax side, both structures benefit from the competitive Mauritian tax regime. The tax differences between a foundation and a trust are minimal at the Mauritian level — they lie mainly in how they are perceived by foreign jurisdictions.
| Tax aspect | Foundation | Trust |
|---|---|---|
| Foreign-source income (non-resident) | Exemption | 0% for non-resident trusts |
| Local income (resident) | 15% | 15% |
| Via GBC (Partial Exemption) | ~3% effective (80% exemption) | ~3% effective (80% exemption) |
| Inheritance tax | 0% in Mauritius | 0% in Mauritius |
| Gift tax | 0% in Mauritius | 0% in Mauritius |
| Capital gains | 0% in Mauritius | 0% in Mauritius |
| Tax treaties | Access to the network (45 DTAs in force, MRA 2026) | Access to the network (45 DTAs in force, MRA 2026) |
| FATCA/CRS | Reporting obligations | Reporting obligations |
| Perception in civil law jurisdictions | Familiar (classic taxable entity) | Sometimes complex (uncertain tax qualification) |
Important tax point: The tax qualification of the trust in civil law jurisdictions can pose difficulties. In France, for example, the trust is subject to a specific and constraining tax regime (articles 792-0 bis and following of the CGI). The foundation, as a foreign legal person, benefits from a better established and more predictable tax framework in these jurisdictions. This factor can be decisive in choosing the structure.
Selection criteria
Choose the foundation if...
- You come from a civil law jurisdiction (France, Belgium, Luxembourg, Switzerland)
- Your assets are mainly located in civil law countries
- Your beneficiaries reside in civil law countries
- You want structured collegial governance
- Legal personality is important for your operations
- The founder wishes to retain certain rights post-constitution
- Your banking and business partners are from civil law systems
Choose the trust if...
- You come from a common law jurisdiction (UK, USA, Singapore)
- Maximum asset protection is your priority (discretionary trust + firewall)
- You are seeking maximum flexibility in distributions
- Total confidentiality is essential (no public registration)
- You want a less formal structure
- Protection against forced heirship is crucial (section 24A)
- You wish to use a flexible letter of wishes
Hybrid approach: the best of both worlds
In many cases, a hybrid approach combining a foundation and a trust is the optimal solution, particularly for complex international estates involving several jurisdictions and different types of assets.
Foundation as trustee
A Mauritian foundation is set up to serve as trustee of a trust. This approach combines the foundation's legal personality (facilitating banking and business operations) with the flexibility and firewall provisions of the trust. A structure particularly suited to multi-jurisdictional estates.
Trust holding a foundation
A discretionary trust holds interests in a foundation. The trust provides the maximum layer of protection (no vested rights, firewall, spendthrift). The foundation holds the operational assets and interacts with civil law partners who better understand this structure.
Parallel geographic structures
A foundation for assets located in civil law jurisdictions (real estate in France, interests in francophone Africa) and a trust for assets in common law jurisdictions (a portfolio in London, investments in Singapore). Each structure operates in its natural legal environment.
Philanthropic foundation + wealth trust
A foundation for philanthropic and charitable activities (a concept better understood and accepted in most jurisdictions) combined with a discretionary trust for the management and protection of private family wealth. Allows philanthropic and wealth objectives to be clearly separated.
Detailed cost comparison
| Cost item | Foundation | Trust | Difference |
|---|---|---|---|
| Document drafting | Charter + internal rules (2 documents) | Trust deed (1 document) | Foundation slightly more costly |
| Registration | Registration fees with the Registrar | No public registration | Foundation more costly |
| Annual administration | FSC secretary + council fees | Trustee fees | Comparable |
| KYC/AML compliance | Reporting obligations + KYC/AML | Reporting obligations + KYC/AML | Identical |
| Amendment | Formal charter amendment procedure | Deed of variation (more flexible) | Foundation slightly more costly |
| Dissolution | Formal striking-off procedure | Revocation or final distribution | Foundation slightly more costly |
| Estimated total cost (year 1) | USD 5,000 – 15,000 | USD 4,000 – 12,000 | Moderate gap |
| Recurring annual cost | USD 3,000 – 8,000 | USD 2,500 – 7,000 | Moderate gap |
Recommendation: The cost differences between the two structures are moderate and should not be the determining criterion. The suitability of the structure to your objectives, your legal environment and the jurisdictions of your assets and beneficiaries is far more important than the cost gap.
Summary table: decision aid
Quick selection guide
| Your situation | Recommended structure |
|---|---|
| Francophone, assets in Africa/continental Europe | Foundation |
| Common law, assets in UK/USA/Asia | Trust |
| Maximum asset protection a priority | Discretionary trust |
| Total confidentiality essential | Trust |
| Founder wishes to retain powers | Foundation |
| Structured collegial governance | Foundation |
| Complex multi-jurisdictional estate | Hybrid approach |
| Wealth + philanthropic objectives | Hybrid approach |
| Vulnerable heirs to protect | Discretionary trust |
| Forced heirship to work around | Trust (section 24A firewall) |
Our recommendation
There is no universal answer to the question "foundation or trust". The optimal choice depends on a combination of factors specific to your situation. Our team of experts analyses your overall situation and recommends the structure — or combination of structures — best suited to you:
- Your legal environment of origin: civil law or common law
- The location of your assets: civil law jurisdictions, common law jurisdictions, or both
- The residence of your beneficiaries: tax and recognition implications
- Your wealth objectives: protection, transmission, philanthropy, investment
- Your governance preferences: collegial (foundation) or individual (trust)
- Tax considerations: tax qualification in the jurisdictions concerned
- The level of confidentiality desired: total (trust) or dual (foundation)
We support you in this strategic reflection, from the initial analysis through to the setting up and ongoing administration of the chosen structure.
Disclaimer: The information presented on this page is provided for guidance only and does not constitute legal or tax advice. The choice between a foundation and a trust involves complex legal and tax considerations that vary according to your personal situation, your country of residence and the location of your assets. The costs indicated are estimates and may vary depending on the complexity of the structure. We strongly recommend that you consult a qualified legal and tax advisor before making any decision. The laws and regulations mentioned (Trusts Act 2001, Foundations Act 2012) are subject to change.