Trust vs Foundation

Families who want to hold assets in a structure rather than in their own names often end up asking the same question: trust vs foundation. Both are recognised by Mauritian statute, both can serve a family rather than a charity, and both can be run for the long term. They are built on different legal ideas, though, and that shapes who controls what, who owns the assets, and how the structure behaves on death.

This page explains the difference between a trust and a foundation in practical terms. It is general information, not advice: the better fit depends on the family, the assets and the countries involved, and should be confirmed with a qualified adviser.

The core difference in one paragraph

A trust is a relationship. The settlor transfers assets to a trustee, who holds them for beneficiaries under the terms of a deed. The trust is not a legal person; the trustee is the legal owner of the assets and acts in that capacity. A foundation is an entity. Under section 5 of the Foundations Act 2012, it acquires legal personality only once it is registered with the Registrar (the Registrar of Companies, who also acts as Registrar of Foundations) and holds a certificate of registration. It then owns the assets in its own name, and a Council manages it.

For background on each, see what a trust is and what a foundation is in Mauritius.

Trust vs foundation: side-by-side comparison

The table is a summary. Details such as reserved powers, duration and governing law are covered in the pages linked below.

Control: who decides what

In a trust

The trustee takes the decisions: investing, holding and distributing the assets within the limits of the deed and the Trusts Act. Control is therefore delegated to a person or a corporate trustee, and the settlor's influence depends on what the deed allows.

Section 8 of the Trusts Act 2001 lets the settlor also act as trustee, beneficiary, protector or enforcer, but the settlor cannot be the sole beneficiary of the trust they created. Section 24 allows the deed to appoint a protector, an adult (the settlor included) or a legal person, whose role is to advise the trustee. Unless the deed says otherwise, a protector can remove and appoint trustees, set the governing law, change the place of administration and withhold consent to certain acts, without becoming a trustee. The trust protector page covers this role in detail.

In a foundation

A foundation is run by its Council. Under section 17 of the Foundations Act 2012, the Council must include at least one member who is habitually resident in Mauritius. Minors, bankrupts, people convicted of fraud or dishonesty, and officers of the foundation or their close family cannot sit on it. Section 13 also requires a secretary who is an FSC-licensed corporate service provider (Management Licence) or another Mauritius resident authorised by the FSC.

The founder's position is defined by the charter. Under sections 3 and 4, the founder can be a beneficiary. Because the foundation is a separate entity, the founder does not "hand over" assets to a third party in the way a settlor does; the assets go into the foundation, and the charter and Council rules decide how they are used. See the foundation council for members, powers and duties.

Ownership and legal personality

The ownership question is where the two structures part ways most visibly.

• Trust: legal title sits with the trustee. The beneficiaries hold rights against the trustee, but the trust itself cannot sign contracts, open accounts or sue. Everything is done through the trustee.
• Foundation: the entity owns the assets, can contract in its own name and can be a party to proceedings, once registered.

In practice this affects how a bank, a property register or a business partner deals with the structure. A foundation presents as a single counterparty; a trust presents as a trustee acting in that capacity. Neither is better in the abstract. The choice often follows the legal tradition the family is used to, and what the other countries involved will recognise.

Purpose and beneficiaries

Both structures can serve a family. The Foundations Act 2012 (sections 3 and 4) allows a foundation to pursue charitable or non-charitable objects, for the benefit of a person, a class of persons or a specific purpose. A trust normally has beneficiaries, though section 19 of the Trusts Act 2001 permits a purpose trust without beneficiaries if the purpose is specific, reasonable, achievable and lawful, the deed names an enforcer and a successor, at least one trustee is a qualified trustee, and the fate of surplus assets is provided for.

This page concentrates on family use. For how beneficiaries fit into a trust, see the Trusts Act explained; for the foundation side, see the Foundations Act explained.

Succession and forced heirship

Succession is a frequent reason families look at these structures. The rules point the same way for both, with conditions.

Under section 8 of the Trusts Act 2001, a transfer made by a settlor who is not a Mauritian citizen cannot be set aside under the succession rules of their domicile or nationality. The Foundations Act 2012 (sections 3 and 4) contains a matching rule for a non-citizen founder. These provisions are specific: they speak to a non-citizen's transfer, and they do not remove every possible challenge. A transfer that is a sham, or that is attacked on other grounds, is a separate matter.

Because the position of a Mauritian citizen, or of a family with ties to several countries, can differ, see forced heirship and trusts before drawing conclusions. A family with heirs in different jurisdictions needs an analysis of each system, not a general statement.

On death, the two behave differently in practice. A trust continues in the hands of the trustee under its deed. A foundation continues as an entity, and the charter says what happens to the beneficiary or the way beneficiaries are designated (charter contents are set by section 8 of the Foundations Act 2012).

Tax: similar headline rate, different details

On the sources used for this page, the headline treatment is aligned.

• Under the Income Tax Act as consolidated up to the Finance Act 2026, a trust is taxable on its taxable income at the Part IV rate of the First Schedule, 15%.
• Under section 49A of the same Act, a foundation is taxable on its taxable income at the same Part IV rate of 15%, and any distribution to a beneficiary is treated as a dividend.
• Under section 46(4), a distribution to a trust beneficiary is deemed to be a dividend for that beneficiary.

Older descriptions of these structures sometimes mention a non-resident exemption. The Finance Act 2021 repealed both section 46(3) (the non-resident trust exemption on filing a declaration) and sections 49A(2) and (3) (the equivalent for a foundation whose founder and beneficiaries are all non-resident or Global Business Licence holders), with deemed effect from 1 July 2021. Those exemptions no longer appear in the consolidated text. Section 46(2) still describes a trust with a non-resident settlor and non-resident beneficiaries, or a purpose trust whose purpose is carried out outside Mauritius, but such a trust is still taxed at the same 15% Part IV rate.

A charitable trust or charitable foundation is a different category: the Second Schedule, Part I, of the Income Tax Act lists charitable institutions, charitable foundations and charitable trusts among exempt bodies. That route is outside the scope of this page.

The tax result for a given family also depends on residence, the source of income, any double taxation treaty and the tax rules of the beneficiaries' home countries. Read how trusts are taxed and how foundations are taxed, then take advice on your own position. The sources here do not support any claim that one structure always costs less.

Running costs and compliance

Both structures involve ongoing obligations, and a foundation has a visible public-registry layer.

A foundation must keep accounts of its receipts, expenses, distributions, purchases, sales, assets and liabilities (section 36). It must hold at its registered office copies of its charter and Articles, Council minutes and a register of Council members, founders and the persons who endowed it (section 37). The founder, officers, Registrar and FSC may inspect them.

On fees, the Registrar's fee schedule of the Foundations Act 2012 as consolidated to 14 May 2015 set Rs 9 000 on registration and Rs 9 000 for each following year, rising to Rs 13 000 after the due date, with those amounts since altered by regulation. The notice of the Corporate and Business Registration Department for 2025 gave an annual foundation fee of Rs 9 000 when paid between 3 and 20 January 2025, and Rs 13 000 after the deadline. Check the current notice before budgeting, since fees change. For a trust, the costs depend mostly on the trustee's fee arrangements, which this page does not go into.

Both structures fall within anti-money-laundering transparency rules. Under the FIAMLA 2002, a foundation is within the definition of a legal person, and for a trust-type legal arrangement the beneficial owner includes the settlor, the trustee, any protector, each beneficiary (or the class of beneficiaries) and anyone else exercising ultimate effective control. Expect identity checks either way.

Decision aid

Pros and cons at a glance

Trust

• Familiar to families from common-law countries, with a long track record.
• Flexible deed, with an optional protector to supervise the trustee.
• No separate legal person, so the trustee must act for it in every dealing.
• Control sits mostly with the trustee, which may feel distant to some settlors.

Foundation

• Its own legal personality once registered, so it can hold assets and contract directly.
• The founder may be a beneficiary and may fit into the Council structure through the charter.
• Registration, a resident Council member, a qualifying secretary and annual fees make the administration more formal.
• Less familiar to families from common-law countries, so recognition abroad needs checking.

Questions to ask before choosing

• Which countries are the settlor or founder and the beneficiaries resident in?
• Do I want the structure to hold assets in its own name?
• How much control do I want to keep, and what does the law allow?
• Is there a Mauritian citizen among the family members, or assets in Mauritius?
• How will each structure be taxed in my home country?
• Who will act as trustee, Council member or secretary?

If you would like these points reviewed against your own situation, you can send a request through the contact form; it is passed to a company licensed by the Financial Services Commission.