Open a Trust in South Africa

A trust is a legal arrangement through which a settlor assigns or transfers property to a trustee for the advantage of a beneficiary.  To open a trust in South Africa, all three agents have to be assigned.

Understanding the manner in which SA trusts are defined by law, how they are taxed, and other important provisions is simplified by the assistance of our lawyers in South Africa.

Find out how you can set up a trust in South Africa from our article. Personalized questions can be answered upon request by one of our local specialists.

Types of trusts in South Africa

Several types of trusts are available in South Africa and their classification can depend on the law that governs them, when the trust is created, or if it has a certain use. Our South African lawyers present a broad classification below:

• According to how the trust is controlled: ownership trust and bewind trust;
• Depending on when the trust is created: inter vivos trust or testamentary trust;
• According to how the assets are vested: the option is to open a trust in South Africa that is discretionary or hybrid, or a vesting trust;
• According to its specific application: trading, charitable, collective investment scheme trust, etc.

Those who want to open a trust in South Africa can receive more in-depth information about the types of trusts from our team.

In addition to matters concerning trust registration, our accountants in South Africa can offer important information on the taxation of trusts. Some of the taxes for which a trust can be liable for include, but are not limited to:

• Value-added tax, only in those cases in which the trust makes taxable supplies;
• Provisional tax and transfer duty can also apply in the case of trusts in South Africa;
• A 20% or 25% donations tax, depending on the value of the donated property;
• A securities transfer tax of 0,25% of the taxable amount of the security.

If you are an investor who is not yet interested in asset management via trusts but in company formation in South Africa, our team will answer your questions.

The main steps needed to open a trust in South Africa

A trust is a fiduciary relationship between parties. As such, the assignment of the fiduciary duty is mandatory, as is defining the trust’s purpose. Our team highlights some of the key steps below:

1. Choose the trust type: as stated, several trust types are available in South Africa and they can be used for different purposes;
2. Draw up the trust deed – this is the founding document, the one that will describe the trust’s purpose, assets, and will assign the trustee;
3. Obtain the Letter of Authority – this is issued by the Master of the High Court;
4. Register as a trust: this is done with the South African Revenue Service if it is liable for taxes, irrespective of whether the trust has any transactions.  

The South African Trust Law

The Trust Property Control Act 57 of 1988 is the main legislative document on the setup of trusts in South Africa and their treatment.

The South African Revenue Service is responsible for the trust’s registration for income tax. Once the trust is registered for this purpose, the trustee will be the one required to submit the annual income tax return.

The experts at our law firm in South Africa can give you more information about the trust registration requirements, the Trust Property Control Act 57 of 1988, non-resident (Foreign) Trusts and other requirements set forth by the South African Revenue Service in the case of trusts.

Local and foreign individuals who want to know how they can open a trust in South Africa can ask us their questions. Additionally, we offer a host of other services, such as those related to obtaining residency in South Africa, or permanent residence in South Africa. Our team of experts in company incorporation in South Africa can also help you open a company.

Contact us for more information on how to open a trust in South Africa.