Legal Framework and Formation Rules and Fees
The International Trusts Act 1994 established, for the first time, a regime for international trusts in the Seychelles; it does not provide for domestic trusts. The Act was drafted after a thorough study of current practice in a number of leading offshore jurisdictions. Under the Act, the Seychelles International Business Authority (SIBA) is appointed as the regulatory body for trusts, alongside the Court.
The Seychelles is mostly a civil law jurisdiction to which the concept of the trust was unknown; thus the Trusts Act has to be sufficient unto itself, and indeed it contains some basic definitions which include the admittance of charitable, trust, purpose trusts, constructive trusts, and trusts resulting from action by the Court.
The following are some of the key features of the Seychelles Trust regime:
An international trust may be created in writing, by will or by oral declaration;
The settlor must reside outside the Seychelles for the duration of the trust; at least one trustee must reside in the jurisdiction, but this trustee may be an International Business Company (IBC), which shall not thus be deemed as resident; an IBC may therefore be a settlor;
A financial institution licensed under the Financial Institutions Act 1994 may also be a settlor;
The trust property may not include any Seychelles movable or immovable property or interests or rights to them in a Seychelles company owning such property;
The local trustee may with permission own local property for the trustees' accommodation, and, again with permission, may invest in local securities;
The settlor may choose the proper law of the trust; in the absence of a choice, the Act provides guidelines for establishing the proper law; in any event, the Seychelles Court has exclusive jurisdiction, and will apply the proper law itself (this allows the Act's forced heirship provisions to be effective);
The names of settlors and beneficiaries and the trust accounts are confidential under the Act, unless a Court orders disclosure under the Anti-money Laundering Act;
The standard perpetuity period is 100 years; but it does not apply to charitable or purpose trusts; a settlor cannot revoke a trust, but the beneficiaries can; the Court may revoke a fraudulent trust;
The accumulation of income is permitted;
A settlor can also be a trustee, and a beneficiary but not the sole beneficiary;
Forced heirship judgements are specifically excluded.
The Act contains extensive wording dealing with all aspects of the setting-up of trusts, the rights and responsibilities of trustees, and the powers of the Court.
International (Offshore) Trusts pay an initial registration fee of $100 (at the time of writing). Offshore Trusts are exempt from the Business Tax, from withholding taxes and from Stamp Duty.
In response to its listing by the OECD under the 'unfair tax competition' initiative, the Seychelles signed a letter of commitment in early 2001, which essentially meant that it had until 2005 to conform to high regulatory standards for all elements of its offshore sector, including trust business.
In July 2009, the Seychelles concluded a tax treaty with Belgium which contained provisions for the exchange of information in tax matters. More agreements facilitating the exchange of tax information between the seychelles and other jurisdictions are expected in the light of the OECD's latest crackdown on secrecy, prompted by the G20 London summit in April 2009. The Seychelles was, however, placed on the OECD's 'white list' of jurisdictions which have "substantially implemented the agreed tax standard." The Seychelles signed its first Tax Information Exchange Agreement, with the Netherlands, in August 2010.
India, Seychelles To Exchange Tax Information Friday 16/9/2016The tax information exchange agreement between India and Seychelles has entered into force, the Indian tax agency has said.