Trust or Holding Company for Family Wealth?

Families who want to keep wealth together across generations often hesitate between a family holding company and a trust. The question of trust vs holding company for family wealth is really a question about three things: who controls the assets, what happens when the owner dies, and how the income is taxed. The two tools answer each of them differently, and they are not mutually exclusive.

This page looks only at that family trade-off. It does not explain how to incorporate a company or the general holding-company regime; it asks which vehicle fits a family's objectives, and when the answer is to use both.

The core difference in one paragraph

A company is a legal person. It owns assets in its own name, and the family owns the company through shares. A trust is not a legal person: the trustee holds the assets, in its own name, for the beneficiaries or for a purpose, under the terms of the trust deed. If you are new to the concept, start with what a trust is. The practical consequence is that, with a company, the family members hold shares that are their personal property; with a trust, the family members hold rights or expectations against a trustee, and the settlor has parted with the assets.

That single difference drives almost everything below.

Control: who decides what

In a family holding company

Control follows the shares. Whoever holds the majority of voting rights appoints the directors and decides on dividends, sales and strategy. The founder can keep that majority for life and pass shares on later, or divide shares between children during their lifetime. The rules are those of company law and of the company's constitution, which can include different classes of shares for voting and for dividends.

The strength of this model is its familiarity: shareholders, directors and meetings are well understood by banks, buyers and advisers. Its weakness is rigidity in the long run. Shares are personal property, so each shareholder's own creditors, divorce and death can reach them.

In a trust

Control follows the trust deed and the fiduciary duties of the trustee. The settlor decides the terms at the outset, but the trustee takes the legal title and the day-to-day decisions. Under section 8 of the Trusts Act 2001, the settlor may also act as trustee, beneficiary, protector or enforcer, but cannot be the sole beneficiary of the trust he or she has created. Under section 24, a protector may be appointed to advise the trustee and, unless the deed says otherwise, may remove and appoint trustees, fix the governing law, change the place of administration and withhold consent to certain acts, without becoming a trustee.

Where the trustee is a professional, it is a qualified trustee: under section 2 of the Trusts Act 2001, either an FSC-licensed corporate service provider (Management Licence) or another person resident in Mauritius authorised by the FSC to provide trustee services. Further reading: the duties of a trustee toward the family and the role and powers of a trust protector.

A settlor who keeps too much control invites a challenge. How far reserved powers can go, and when a court may treat a trust as a sham, is covered in how much control a settlor can keep.

Succession: what happens when the owner dies

Holding company shares

On death, shares form part of the estate. They pass under the will or, without one, under the rules of intestacy, and they are subject to the heirs' statutory shares. The company continues, but ownership fragments between heirs who may not agree on its direction. A shareholder agreement can soften this, yet it binds only those who sign it.

Trust assets

Assets that were validly transferred to a trust are no longer part of the settlor's personal estate in the ordinary way; the trustee continues to hold them according to the deed, so there is no change of owner at the settlor's death. That continuity is the main reason families choose a trust for a business or a property portfolio. The deed can set out who benefits, in what proportions, and at what age or event, and it can leave the choice to the trustee's discretion within a defined class of beneficiaries.

Two cautions apply. First, the answer for heirs depends on the family's situation, the nationality and domicile of the settlor and the assets concerned. Section 8 of the Trusts Act 2001 provides that the transfer made by a non-citizen settlor cannot be set aside under the succession rules of his or her domicile or nationality, but Mauritian citizens and local property raise separate questions: see forced heirship and trusts. Second, a trust is not a way of avoiding every formality; see what happens to a trust when the settlor dies.

Tax: a comparison that depends on residence

Tax should never drive the choice alone, and nothing here is advice on a particular case. The rules below are those that make the two vehicles behave differently.

Companies

A company is tax resident in Mauritius if it is incorporated in Mauritius or if its central management and control are in Mauritius (section 73 of the Income Tax Act). A Mauritian-incorporated company that is centrally managed and controlled outside Mauritius is treated as non-resident under section 73A, but it must still file an income tax return under section 116. A family that places the directors' decisions abroad therefore does not escape reporting.

Since the Finance Act 2026, the corporate Fair Share Contribution under Part XC of the VAT Act applies to companies whose taxable income exceeds MUR 24 M in the financial year; the turnover criterion has been removed. The change takes effect from 13 August 2026.

Specific company types exist for non-resident owners, such as the Global Business Licence company and the Authorised Company, which are both "global business entities" under the Income Tax Act. They carry their own licensing conditions and are outside the scope of a family comparison.

Trusts

Under the Income Tax Act 1995 as consolidated up to the Finance Act 2026, every trust is chargeable on its taxable income at the Part IV rate of the First Schedule, that is, 15%. Several points deserve attention:

• The Finance Act 2021 repealed section 46(3), which had exempted a non-resident trust on filing a declaration of non-residence. That relief no longer exists in the consolidated text; it was repealed with deemed effect from 1 July 2021.
• Section 46(2) still describes a trust whose settlor is non-resident (or holds a Global Business Licence) and whose beneficiaries are all non-resident (or hold a GBL), or a purpose trust whose purpose is carried out abroad. Such a trust is still taxed at the same rate of 15%.
• Under section 46(4), any distribution to a beneficiary is deemed to be a dividend in the beneficiary's hands.

Foundations follow a similar pattern under section 49A. For the detailed picture, see how trusts are taxed in Mauritius.

What this means in practice

Neither vehicle is a way of removing tax; each has rules, conditions and limits that depend on residence, source of income and the profile of the beneficiaries. The sensible exercise is to model the family's actual position, not to compare rates in the abstract.

Transparency and records

Both structures are visible to the authorities, though in different ways.

For a company, the Companies Act 2001 (section 91(3A), as updated on 15 May 2026) requires every Mauritian company to identify its beneficial owner and any nominee at all times, and to record them in a separate register: full name and residential address, national identity or passport number, nationality, and the holding structure identifying the ultimate beneficial owner. The Registrar of Companies keeps a Beneficial Ownership Register, accessible to competent authorities and other prescribed public authorities; the Companies Act does not describe it as public.

For a trust, the FIAMLA 2002 (FIU version of 2026) treats as beneficial owners the settlor, the trustee, the protector if any, each beneficiary (or the class of beneficiaries and objects of a power), and any other natural person exercising ultimate effective control, including through a chain of control. The FSC publishes Practice Notes for qualified trustees and corporate service providers about keeping this information up to date.

The result is that neither structure is secret towards regulators. For a discussion of privacy among private parties, see whether Mauritius trusts are confidential.

Can a trust own the shares of a company?

Yes, and this is often the best answer to the either-or question. A trustee can hold the shares of a family company. The family business continues to operate as a company, with directors, accounts and contracts, while ownership sits above it in the trust. The company supplies the commercial vehicle; the trust supplies the succession and governance layer.

This arrangement has three consequences worth weighing:

1. Dividends flow upward to the trustee, and the trust's own tax treatment then applies, together with the beneficiary-side rule in section 46(4).
2. Directors of the company still owe their company-law duties. The trustee, as shareholder, should supervise rather than manage, and the deed should say how.
3. A second layer means more cost and more compliance. The trustee must be able to identify and report the beneficial owners across the whole chain.

The case for a trust over the shares is strongest when the family expects several generations to share the business, when the owner wants a neutral decision-maker between siblings, or when some heirs cannot be trusted with outright shares. See passing a family business to the next generation.

Side-by-side comparison

The questions to ask before choosing

Practical points before deciding

• List the assets and where they are located
• Note the nationality, residence and domicile of each family member
• Decide how much control you want to keep personally
• Identify who would be the trustee, and whether a protector is needed
• Check how the heirs' statutory rights apply to the assets
• Ask an adviser to model the tax position of each vehicle for your residence

If you want your own situation looked at by a company licensed by the Financial Services Commission, you can use the form on the contact page.