Seychelles

*Updated July 2018*

History and background

Seychelles is a self-governing democratic republic, which gained its independence from the UK in 1976. It is a full member of the United Nations. Seychelles remains an independent member of the UK Commonwealth, but is under no authority of the British Crown.


Seychelles is an archipelago of 116 islands located between four and seven degrees south of the equator, in the Indian Ocean, approximately 1,000 miles from the east coast of Africa. The capital is Victoria. The population is 94,600 (2016 estimate) and the official languages are English, French and Creole. English is the most widely spoken, and the language of choice for business. The currency is the Seychelles rupee (SCR), but Euros and United States Dollars are also commonly used.


The Seychelles International Business Authority (SIBA) was established in early 1995 as a body corporate under the Seychelles International Business Authority Act of 1994 with the mandate to manage and operate international business activities within Seychelles. In 2014 SIBA was restructured into the Financial Services Authority.

Seychelles is not on any blacklists published by international regulatory bodies. Seychelles has been on the OECD whitelist since it was first published. Currently, Seychelles is rated as 'largely compliant' by the OECD.

The non-banking financial services sector is regulated by The Financial Services Authority (FSA), responsible for licensing the corporate, foundation, trust, insurance, collective investment schemes, gambling and securities sectors. The Central Bank of Seychelles (CBS) is the regulator for the banks, money changers and payment service providers.The Financial Intelligence Unit (FIU) is responsible for compliance with the Anti-Money Laundering Act and Regulations (AML). Seychelles adheres to the FATF guidelines for the prevention of money laundering and terrorist financing and was reviewed by ESAAMLG in 2017. The FSA, CBS and the FIU conduct regular random inspections of baking and non-banking licence holders, ensuring compliance with the legislation.

Legal system

The Seychelles legal system is a mixture of Napoleonic civil law and English common law, as a result of its history as both a French and an English territory at various times.


Legislation affecting international business operations:


• Anti Money Laundering Regulations 2012
• Anti-Money Laundering Act, 2006 as amended 2008, 2011
• Business Tax Act, 2009
• Central Bank of Seychelles Act 2004
• Civil Aviation Act 1996
• Civil Code Of Seychelles Act, 1976
• Commercial Code Act, 1977
• Companies (Special Licences) Act, 2003
• Companies Ordinance, 1972
• Electronic Transactions Act, 2001
• Financial Institutions Act, 2004
• Financial Leasing Act, 2013
• Financial Services Authority Act, 2013
• Foreign Judgments (Reciprocal Enforcement), Act 1961
• Foundations Act, 2009
• Gambling Act, 2014
• Hire Purchase and Credit Sale Act, 2013
• Industrial Property Act, 2014
• Insolvency Act, 2013
• Insurance Act 2008
• International Business Companies Act 2016
• International Corporate Service Providers Act, 2003 as amended 2009, 2011
• International Trade Zone Act, 1995
• International Trade Zone Regulations 1995
• International Trusts Act, 1994 as amended 2011
• Interpretation and General Provisions Act, 1976
• Land Registration Act, 1967
• Limited Partnership Act 2003
• Merchant Shipping Act 1992
• Mutual Assistance in Criminal Matters Act 1995
• Mutual Funds and Hedge Funds Act 2008
• Prevention of Terrorism Act, 2004
• Proceeds of Crime (Civil Confiscation )Act 2008
• Protected Cell Companies Act 2003
• Reciprocal Enforcement of British Judgments Act, 1922
• Revenue Administration Act, 2009
• Securities Act, 2007
• Seychelles Code of Civil Procedure, 1920

• Trade Marks Decree, 1978

Sources of law

For trust creation and administration: The sources of law are mainly through legislation. The National Assembly is the Seychelles legislative branch. The National Assembly has the power to create, amend and repeal all laws except for certain chapters in the Constitution of the Republic of Seychelles. This is the supreme law of the country and certain chapters therein, such as the constitutional rights of individuals, can only be amended by a referendum. It should be noted that up to the present date, most Bills in Seychelles are sponsored by the Executive Branch of Government.

Case law developments may expound on or clarify issues not specifically targeted by legislation, but there are no branches of the law that have been developed solely through case law. The Civil Code of Seychelles sets out the laws and principles applicable in dealing with civil disputes. Also instead of the common law based tort, Seychelles has Delict, and instead of a common law based contract law, the Civil Code sets out all the principles applicable in Seychelles' contract law.

Trusts

A) Development of trust law

Because of its dual roots with both France and England, Seychelles law is a hybrid of both civil and common law, although civil law is more prominent. The concept of the trust and equitable ownership was unknown in Seychelles law before the passage of the International Trusts Act 1994. The Act was crafted after a thorough study of practice in other leading jurisdictions. Being a mostly civil-law country it was necessary for the Act to be sufficient unto itself. However, English and other Commonwealth trust case law is persuasive in Seychelles courts.

B) Legislation

The International Trusts Act 1994 (the Act) is the sole governing Act of the Seychelles trust regime. All quotations below are taken from the Act. Trust services providers are governed by this Act and the International Corporate Services Providers Act 2003 as amended and Anti-Money Laundering Act 2006 (as amended 2008, 2012) and Anti-Money Laundering Regulations 2012.

C) Types of trusts and their uses

Unless otherwise specified, Seychelles international trusts are deemed to be irrevocable.

The Act provides for various types of trusts:


• International trusts
• Charitable international trusts
• Purpose international trusts
• Other trusts – these are referred to in the Act and include commercial (trading) trusts, life insurance trusts, cash deposit trusts and trusts resulting from acts of the Court.

However, this does not mean that other forms of trust are not permitted. Indeed, as long as the provisions of the Act are met, a trust will be deemed valid and enforceable.

D) Choice of proper law

‘6.(1)The proper law of an international trust is:


(a) the law chosen by the settlor to be the proper law, the choice being expressed or implied in the terms of the trust; or


(b) if no law is so chosen, the law with which the international trust is most closely connected at the time of its creation.’

E) Creation of a trust

i) Who may settle a trust?

A Seychelles international trust may be created in writing, by will or by oral declaration by a non-Seychelles company or individual over the age of 18. The settlor must reside outside Seychelles for the duration of the trust. A trust may be settled by an individual or any legally constituted entity.

ii) Trust property

Any property other than property situated in Seychelles may be held on trust. A trustee of an international trust may accept property to be held on trust or to be added to the trust property from any person not being a resident. A beneficial interest may be held on trust.

iii) Duration and termination of trusts

Notwithstanding any provision to the contrary in the laws of Seychelles or in the law of any other country, the duration of an international trust may continue for 100 years and then terminate, unless terminated sooner pursuant to a relevant direction in the instrument creating it or for some other reason. This shall not apply to a charitable international trust or to a purpose international trust, both of which may continue without any time limitation.

iv) Beneficiaries

‘17(1) A beneficiary shall be:


(a) identifiable by name; or

(b) ascertainable by reference to:

(i) a class; or
 (ii) a relationship to another person, whether or not living at the time of the creation of the trust or at the time by reference to which, under the terms of the trust, members of a class are to be determined.


(2) The terms of an international trust may:
 (a) provide for the addition of a person as beneficiary, or for the exclusion from benefit of a beneficiary;
 (b) impose an obligation upon a beneficiary as a condition of benefit.


(3) A settlor or trustee of a trust may also be a beneficiary but shall not … at any time be the sole beneficiary of the trust.’

v) Trustees

A body corporate may act as trustee of a Seychelles international trust. Unless it is administered by a corporate trustee, an international trust must have at least two trustees. At least one trustee who is resident in Seychelles and properly licensed under the International Corporate Services Provider (Amendment) Act is required.

‘22(2)A trust shall not be invalid on the ground that:


(a) it does not have a trustee or the number of trustees is less than that required … ;

(b) it does not have a trustee who is resident in Seychelles.

(3) Subject to the terms of the international trust, where the number of trustees is less than the number required, the necessary number of additional trustees shall be appointed [by the remaining trustees, the personal representative or liquidator, or by the court on application by the interested person].

(4) Until the required number of trustees under this section or the terms of the international trust is reached, the existing trustee of a trust shall act only for the purpose of preserving the trust property.’

vi) Protector

The Act does not specifically refer to the role of protector or guardian. However, the Act expressly provides that the terms of a trust may require the trustee to consult or obtain the consent of another person before exercising a particular function. As such, there is no impediment to the appointment of a protector or guardian. However, the appointment terms and the powers of the protector should be made clear in the trust deed or other appointment instrument.

vii) Trust Deed

The Act does not prescribe any instructions or requirements regarding the trust deed allowing the settlor and trustee some flexibility in the drafting of the deed. The Act does, however require the submission of a trust declaration to the authority.

viii) Formalities

A Seychelles international trust may be created by oral declaration, by will or in writing. There must be at least one trustee resident in Seychelles that is licensed under the International Corporate Services Providers Act. The trustee must file a trust declaration with the Seychelles International Business Authority.

‘4(1) An international trust is a trust or a constructive trust in respect of which:


(a) the settlor is not at any time during the duration of the trust a resident of Seychelles;


(b) at all times at least one trustee is:

(i) a resident of Seychelles;

(ii) an International Business Company authorised by the Authority to act as trustee; or

(iii) a financial institution;


(c) the trust property does not include:

(i) any property situated in Seychelles;

(ii) any shares, debentures, or any interests in any body corporate other than a corporate body incorporated under the law of a country other than Seychelles or an International Business Company or another international trust.


(2) For the purpose of subsection (1)(a), an International Business Company shall not be deemed to be a resident of Seychelles.


(3) Notwithstanding subsection (1)(c), a trustee of an international trust may, with the approval of the Authority and subject to any other written law:

(a) own such immovable property as may be required for the office accommodation of the trustee;

(b) invest in securities and hold other investments in Seychelles.


(4) A trustee may open and maintain with a financial institution an account out of which all payments required for the administration and operation of the international trust may be effected.’


‘75(1) On appointment, a resident trustee of an international trust shall submit to the Authority:


(a) a declaration stating that:

(i) the settlor of the trust is not a resident of Seychelles;

(ii) the trust property does not include any immovable property situated in Seychelles;

(iii) the trust the trustee holds qualifies as an international trust.


(b) the prescribed fees.


(2) The Authority shall:


(a) file the declaration in a Register of International Trusts;


(b) give the declaration a registration number;


(c) notify the resident trustee of the registration of the declaration and of the registration number, and


(3) The registration number of a trust shall be the reference by which the international trust shall be identified by the FSA and may be used officially to refer to the international trust.
 Where at any time after the declaration of trust has been submitted for registration under s75, a trust ceases to be an international trust, the resident trustee shall forthwith notify the Authority of this fact.’

F) Administration of trusts

i) Fiduciary duties

‘26(1) A person shall in the exercise of the functions of a trustee observe the utmost good faith and act:

(a) with due diligence;

(b) with care and prudence; and

(c) to the best of the ability and skill of the person.


(2) Subject to this Act, a trustee shall execute and administer the international trust, and exercise the functions of the office of trustee:

(a) in accordance with the terms of the trust;

(b) only in the interest of the beneficiaries or in the fulfilment of the purpose of the trust.’

ii) Duty to preserve trust property

‘27 Subject to this Act and to the terms of the international trust, a trustee shall:

(a) ensure that the trust property is held by or vested in the trustee, or held by a nominee on the trustee’s behalf, or is otherwise under the control of the trustee; and

(b) preserve and enhance so far as is reasonable, the value of the trust property.’

iii) Duty not to profit

‘28 A trustee shall not:


(a) derive, directly or indirectly, any profit from the trusteeship;


(b) cause or permit any other person to derive such profit; or


(c) on the trustee’s own account enter into any transaction with a co-trustee, or relating to the trust property, which may result in any such profit except:


(i) with the approval of the court;

(ii) as permitted by this Act; or

(iii) as expressly provided by the terms of the trust.’

iv) Duty to keep accounts

‘29 A trustee shall keep accurate accounts and records of the trusteeship.’

v) Duty to trust property separate

‘30 A trustee shall keep trust property separate from the trustee’s own property and separately identifiable from any other property of the trust.’

vi) Duty to give information

‘31 Subject to the terms of the international trust, a trustee shall, at all reasonable times, at the written request of any beneficiary (including any charity named in the trust) or of the settlor, provide full and accurate information as to the state and amount of the trust property.’

vii) Duty of co-trustees

‘32(1) All the trustees of an international trust shall, subject to the terms of the trust, join in the execution of the trust.


(2) Subject to subsection (3), no function conferred on trustees shall be exercised unless all the trustees agree on its exercise.


(3) The terms of an international trust may empower the trustees to act by a majority.


(4) A trustee who dissents from a decision of the majority may require the trustee’s dissent to be recorded in writing.’

viii) Impartiality of trustees

‘33(1) Where an international trust has more than one beneficiary, purpose or charity, the trustees, subject to the terms of the international trust and to subsection (2), shall be impartial and, in the execution of the trust, maintain equality among beneficiaries, purposes or charities, as the case may be.


(2) Subsection (1) does not prejudice the exercise of a discretion conferred upon a trustee by the terms of the international trust.

G) Distribution

Income from a trust that is not accumulated must be distributed in accordance with the terms of the trust by the trustee.


‘58(1) On the termination of an international trust, the trust property shall, subject to subsection (2), be distributed by the trustees within a reasonable time in accordance with the terms of the trust to the persons entitled to it.


(2) The trustees may retain sufficient assets to make reasonable provision for liabilities (existing, future, contingent or otherwise).


(3) Without prejudice to the powers of the court under subsection (4), and subject to the terms of the international trust, where all the beneficiaries are in existence and have been ascertained, and none is a person under legal disability or a minor, they may unanimously require the trustee to terminate the trust and distribute the trust property among them, and the trustee shall comply with the request.


(4) The court, on the application of any person having an interest in the trust, may:


(a) direct the trustees to distribute, or not to distribute, the trust property; or

(b) make such other order in respect of the termination of the trust and the distribution of the property as it thinks fit.


Property, estates and probate

Intestacy laws and domestic matters involving wills and succession planning are dealt with under the Civil Code, which includes forced heirship provisions. It is important to note, however, that trusts formed according to the International Trust Act are expressly exempted from foreign rulings involving forced heirship after a 2 year limited period.

Taxation

Business tax is levied on the taxable income of a business; i.e., its assessable income less any allowable deductions. Generally, the owners of businesses are liable to pay business tax if their taxable income exceeds SCR150,000 for a particular tax year in respect of sole trader and partnership. Whereas a company is liable to pay business tax on any net profit that it derives. A Seychelles taxation year runs from 1 January to 31 December. However, taxpayers may request to have an alternative tax period apply to their business. The Business Tax rate is 0 per cent on the first SCR150,000 of taxable income in respect of a sole trader and a partnership business, 15 per cent on the next SCR850,000 of taxable income and 33 per cent on the remainder. Companies do not have a tax-free threshold. The Business Tax rate is 25 per cent on the first SCR1 million of taxable income and 33 per cent on the remainder. Following amendments prompted by OECD’s BEPS only income sourced domestically will be taxable. International Business Companies, Trusts and all other entities will not require any special exemptions but will still not be taxed on income sourced internationally.

Other relevant information

Anti-money laundering

Trust and other financial services practitioners are regulated in Seychelles, with trust and corporate services firms treated as ‘financial institutions’ under the Anti-Money Laundering Act 2006 (as amended 2008, 2011) and Anti-Money Laundering Regulations 2012.

The Financial Intelligence Unit last published guidelines on anti-money laundering laws in June 2015: www.fsaseychelles.sc/index.php/download/send/5-­‐guidelines/11-­‐guidelines-­‐aml-­‐cft

The Anti-Corruption Act, 2016 came into force on 4 April 2016.

Tax treaties

Double-taxation agreements (DTAs) in force: Bahrain (3 February 2012), Barbados (28 February 2008), Belgium (10 September 2015), Bermuda (19 July 2013), Botswana (22 June 2005), China (17 January 2000), Cyprus (2 November 2006), Ethiopia (1 January 2014), Guernsey (6 October 2016), Indonesia (16 May 2000), Isle of Man (16 December 2013), Jersey (5 January 2017), Kenya (9 April 2015), Luxembourg (19 August 2013), Malaysia (10 July 2006), Mauritius (22 June 2005), Monaco (1 January 2013), Oman (20 January 2004), Qatar (10 April 2007), San Marino (30 May 2013), Singapore (18 December 2015), South Africa (3 July 2002), Sri Lanka (26 March 2014), Swaziland (11 February 2015), Thailand (14 April 2006), United Arab Emirates (23 April 2007), Vietnam (7 July 2006) and Zambia (4 June 2012).


DTAs signed (not ratified): Ghana, Kuwait, Lesotho, Malawi, Monaco and Zimbabwe.

Tax information exchange agreements (TIEAs) in force: Denmark (14 May 2012), Faroe Islands (14 May 2012), Finland (14 May 2012), Greenland (11 January 2014), Guernsey (22 July 2012), Iceland (19 October 2013), India (28 June 2016), Netherlands (1 September 2012), Norway (11 August 2012), Sweden (6 October 2013), Swiss Confederation (10 August 2015).

Resources

• Financial Services Authority: www.fsaseychelles.sc
• Seychelles Revenue Commission: www.src.gov.sc
• Central Bank of Seychelles: www.cbs.sc

STEP branches in the Seychelles

There is one STEP branch in the Seychelles.

• STEP Seychelles

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Members in the Seychelles

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