Set up Seychelles Foundation
Tetra Consultants assists our international clients to set up Seychelles Foundation. Our service package includes:
- Registration of the Foundation with Seychelles’ Registrar of Companies, the Seychelles International Business Authority
- Local secretary and registered office address
- Local management company and registered agent
- Nominee founder services
- Annual accounting services
What is a Foundation?
- A Foundation is a legal entity governed by the Seychelles’ Foundations Act 2009 with its own organization and without members. It is established when the Founder endows assets to the Foundation. Foundations are a hybrid company structure that combines the succession planning elements of a trust with the administrative flexibility of a company. This contemporary form of company structure was traditionally used by organizations to fulfil philanthropic goals, such as charities using foundations to fund grants. With rising tax rates and unfavourable capital restrictions, private foundations have evolved to replace other traditional succession planning and wealth management structures such as privately owned companies and trusts. It is commonly set up by our international clients to protect their assets against personal liability, high taxes, foreign exchange controls and risk of confiscation.
- Other than foundations, the Seychelles International Business Authority (SIBA) also administers two other structures that may be used for wealth management purposes, the International Business Corporation (IBC) and Trusts, governed under the International Business Companies Act 1994 and International Trusts Act 1994 respectively. However, we will see that the foundation has several key advantages over both structures, making it the preferred choice of our international clients.
- Contact us now for a free consultation on Seychelles foundation formation. Our team of experts will revert within the next 24 hours.
Foundations vs Corporations
- In other countries, a foundation would typically incur less compliancy costs as compared to a corporation. For example, in Mauritius, a corporation must be prepared for regular auditing and financial reporting, as well as maintain a substantial fiscal presence in the region through employment of a Mauritius resident and domestic expenditures.
- In contrast, a Seychelles IBC only needs to keep copies of Resolutions and accounting records, as well as a Register of directors, shares and beneficial owners without needing to be audited. Thus, added compliance cost in Seychelles for a corporation as compared to a foundation is expected to be minimal, if any. Registration fees between the two entities are also similar, with the foundation costing US$200 for initial registration and annually for subsequent years, and US$150 in the case of the IBC.
Greater legal certainty
- Since costs are similar between both structures, the key advantage a foundation holds over company formation is in formalizing and legalizing the beneficiaries claim to assets in the foundation’s regulations. This would minimize any legal issues or disputes when it comes to distribution of assets to the beneficiary.
Foundations vs Trusts
Superior liability protection and legal certainty
- As compared to a trust, a foundation represents a separate legal personality from the owner, and thus separates and limits liability from the directors or owners. In being a separate legal personality, foundations also offer more certainty due to its tangibility. This minimizes legal issues that trusts would typically face over its validity or legitimacy. However, this does come at the expense of the foundation needing to be publicly registered whilst a trust does not. This is mitigated by the permissibility of nominee directors. Clients that wish to have more privacy in their affairs and not have their name in public records or documents may opt to do so.
Superior continuity for long term succession planning
- Foundations also offer continuity and easy succession since they have an infinite duration once incorporated and do not come with the same perpetuity period a trust usually would have. Non-purpose trusts in Seychelles have a standard perpetuity period of 100 years.
- Despite foundations having a higher registration and annual fee of US$200 as compared to a one time registration payment of US$100 for trusts, they are cheaper in the long run. This is because foundations in Seychelles also do not require their beneficiaries to be residents of Seychelles, whilst it must be the case for at least one trustee. Hence, trusts need to separately maintain an IBC to serve as a trustee, incurring additional compliancy costs as well as registration and annual fees.
Why set up Seychelles Foundation?
High levels of economic freedom
- The Heritage Foundation’s 2021 Index for Economic Freedom ranked Seychelles as the 60th freest economy in the world. While this is far from a top score, it is 4th in the Sub-Saharan African region, and still above both the regional and global average. It is also representative of the government’s efforts in improving economic freedom, prosperity and opportunity, evident through the country’s rank of 27 on Transparency’s 2020 Corruption Perception Index. This makes it the least corrupt country in the Sub-Saharan African region.
High economic growth potential
- Despite the fact that it is already the richest country in Africa in terms of GDP per capita, the International Monetary Fund (IMF) still expects continued growth from Seychelles. With their recent inclusion in the World Trade Organization in 2017, and the implementation of several key acts in 2007 governing mutual funds, securities and insurance, many industry watchers echo the IMF’s sentiments and expect the financial services sector to be the main anchor of the Seychellois economy. This shift away from Seychelles’ traditional dependency on tourism is expected to reduce the country’s vulnerability to external shocks, especially crucial in this pandemic period where global tourism has yet to return to peak pre-pandemic levels.
Asset protection and privacy
- As mentioned earlier, the foundation is its own individual legal personality. This allows it to legally own any assets endowed to it, rebuking any claim from the founder, beneficiaries or creditors. The Seychellois Foundation Act also include strong asset security laws that overrule the judgment of foreign courts, and excludes laws of forced heirship, allowing you to explicitly control and specify the beneficiary of your foundation.
- Whilst these same laws also ensure the confidentiality of your information, mandating that councillors must keep information accessible to them confidential, and that all information submitted to the Seychelles International Business Authority will not be publicly accessible. Investors can also opt for an added layer of privacy by employing nominee directors. This name can be used on any public documents that need to contain the director’s name.
- A Seychellois foundation also enjoys complete tax exemption, making it highly tax efficient. No business or withholding tax needs to be paid, and the foundation is also exempt from social security contributions and stamp duty.
- Our international clients choose to set up Foundation in Seychelles as it gives them the protection and ease for long-term wealth management. Family assets are well planned and preserved over generations while enjoying tax efficiency. Once the Seychelles Foundation is successfully set up, you can own and manage any companies, family businesses or wealth.
How do I start a Foundation business?
Tetra Consultants will assist our international clients to set up Seychelles Foundation with the Seychelles International Business Authority. The requirements for various aspects of the set up process are as follows:
- If the name is to be in another language, it should be accompanied by a translation to English or French.
- All Seychelles Foundations shall also end with the word “Foundation” or equivalent in French.
- It is mandatory to have a registered office address in Seychelles. Prior to registration, Tetra Consultants will provide a local registered office address in which all correspondences from government and banks will be addressed to.
- According to the Seychelles Foundations Act, all Seychelles Foundations are required to have a Foundation Council, the most essential component of any Foundations.
- This Council will administer the assets of the Foundation and carry out all the duties of the Foundation, including managing its businesses and affair. Both natural persons and corporate entities are permitted, and only one councillor is required. There are no additional requirements on place of residence or nationality. The Founder may be appointed as a councillor but cannot be appointed as the sole councillor.
- Simply put, Foundation Council is equivalent to the Board of Directors in a corporation. However, the difference is that the members of the Foundation Council are not shareholders and do not have any personal title to a Foundation’s asset.
Charter and Regulations
- These are two separate documents. A charter behaves similarly to a traditional corporation’s articles of association and is a publicly filed constitutional document with information regarding the Founder’s name and purpose. Similarly to the name of the Foundation, this document will either be in English or French, otherwise it should be translated into either one of these languages. Tetra Consultants can also arrange for a nominee founder to sign off on the charter to ensure your privacy.
- Regulations are an optional, private document that contains information on the councillors and beneficiaries, distribution of assets and other operational details.
- In addition, you will also need to appoint a registered and licensed International Foundation Services provider in Seychelles as per the International Corporate Services Providers Act 2003.
- Foundations may also appoint a protector to account for and oversee the operations of the Foundation and veto decisions as necessary. However, a sole councillor or sole beneficiary is ineligible to be appointed as protector.
- Once approved, you will be issued a certificate of registration. This process is expected to take 1 to 3 business days. Assets can then be endowed to the Foundation, with a minimum initial capital of US$1. Foundation assets usually consist of shares, investments, real estate, insurance policies and other assets. These assets, however, cannot be located in Seychelles except with certain exceptions under the Foundations Act.
Accounting and Tax obligations
- Income and Distributions to beneficiaries are legally tax exempt in Seychelles even if the Foundation is managed and controlled from Seychelles. Apart from these forms of tax and the ones mentioned earlier, this tax exemption also extends to include any capital gains tax, stamp duties, inheritance tax and estate tax.
- The registered office should contain updated copies of accounting records and books. A signed copy of a Board of Directors resolution should be filed with the Registered Agent’s office if these documents are not being kept at the registered office. As no filing of any annual returns or accounting records with governmental authorities is needed, these records can be kept in a manner which reflects endowments and records on transactions relating to the assets and liabilities of the foundation. No audits or annual meetings are required.
- Tetra Consultants advises our international clients on the setting up of a Seychelles Foundation and provide customized solutions to achieve tax efficiency while protecting your assets. Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.
Alternatives to Seychelles Foundation formation
Seychelles only received a “partially compliant” rating from the Organisation for Economic Cooperation and Development (OECD) Global Forum in 2020 and is unfortunately still on the EU’s list of non-cooperative jurisdictions. While reforms have been put in place and Seychelles is hopeful for removal from this list, associations with tax havens will inevitably remain, and this might lead to increased scrutiny from tax authorities and banks.
The new measures also make taxation policy for foreign companies stricter. Large foreign companies with insufficient domestic fiscal presence or earning income on Seychellois patented intellectual property should also expect to be taxed in the Seychelles under these new regulations.
- Mauritius is another offshore jurisdiction that has also made fierce tax reforms to stay compliant with the OECD and EU standards of tax transparency.
- They offer a similarly low registration fee of US$300 and a minimum capital of US$1, making it another option depending on how the tax reforms of Mauritius and Seychelles are accepted by the various regulatory bodies.
United Arab Emirates
- The United Arab Emirates (UAE) is another stable and wealthy economy without the same associations of being a tax haven despite having zero corporate tax for firms earning below USD 270,000. However this does come at a higher set up cost and minimum capital of US$1,150 and US$100,000 respectively. The UAE also offers multi-currency bank accounts, allowing you more flexibility in receiving or making payment in a variety of currencies.
Contact us now for a free consultation to set up your foundation. Our team of experts will revert within the next 24 hours.
What is a Beneficiary?
- A beneficiary is the ultimate recipient of the Foundation’s assets.
What is a Protector?
- A protector is one who has been specifically appointed to oversee and account for the operations of a foundation, and veto decisions if necessary.
What is a Charter?
- A charter is the publicly filed constitutional document stating the founder’s name and foundation’s purpose, similar to a corporation’s articles of association.
What is a Foundation Council?
- A foundation council is the governing body of a foundation (equivalent to a corporation’s board of directors) and is responsible for the operations and activities of a foundation.
What is a Registered Office?
- A registered office is required by every foundation as it will hold updated copies of the accounting records and books (unless otherwise specified through a resolution) and will also be where any letters from governments or banks will be sent to.
What is the property of a foundation?
- A foundation can own different forms of property, including assets such as shares, investments, real estate, insurance policies and other assets. These assets, however, cannot be located in Seychelles except with certain exceptions under the Foundations Act.
How much does it cost to set up a Seychelles foundation?
- The engagement fee depends on the services you require from Tetra Consultants. Prior to each engagement, our team will fully understand your business needs and inform you of the exact services you require.
- Tetra Consultants’ fees include government fees such as the foundation registration costs of US$200.
Are there any hidden fees throughout the engagement?
- Tetra Consultants believes in transparency between our firm and our international clients. All terms and conditions will be stated clearly within the appointment letter to ensure that there are no hidden fees.
- Our engagement fees consist of the government fees for foundation formation. However, it does not include third-party fees such as notarization, translation or legalization.
Can we hand over or transfer a foundation between different agents?
- Yes, it is possible. Outstanding fees and invoices should first be settled either with us or the other agent, likewise with documents or any other relevant requests for information. After that, we will assist to draft the resolution from the councillors that authorizes the change in agent.
- Seychelles also allows for migration of foundations in or out of the country.
What constitutes a valid proof of identity or address?
- A valid proof of identity would be a certified copy of your passport or national identity card. Copies should be in colour, and can be certified at a public notary or a qualified professional (lawyer, solicitor, accountant or auditor).
- A valid proof of address would be a certified or original copy of your national identity card or driver’s license with name and residential address visible, or a recent utility, bank or credit card bill.
Can a foundation partake in commercial activities?
- Foundations are explicitly prohibited from commercial activities, though they may own a offshore company conducting such activities.
Who will be able to access what information I have shared?
- Publicly filled information will only be accessible through the company search if they already know the foundation’s name. This will include the name and address of the incorporating founder, initial assets endowed, details of the registered agents, registered office address and status of the foundation.
- Any information filed to Tetra Consultants directly or through registers will be kept in full confidentiality, though we need to comply with any requests from Financial Intelligence Units and Seychellois court orders.