Singapore trusts for U.S. citizens

The legislative framework

The Trust Companies Act 2005 provides the statutory framework for trust business in Singapore. MAS states that a company conducting activities regulated under that Act requires a trust business licence.^[2]

MAS presents trust business licensing separately from its capital markets services licensing category. Capital markets services activities fall under the Securities and Futures Act 2001.^[2]

Singapore Statutes Online provides public access to Singapore legislation without an access charge. The Legislation Division of the Attorney-General's Chambers of Singapore supplies that service.^[6]

Trust arrangements and participant roles

Unit trusts are used for collective investment schemes in Singapore. A company acting as trustee of such a scheme requires MAS approval where the scheme falls within specified categories.^[2]

Those categories include schemes authorised under the Securities and Futures Act 2001. They also include restricted schemes constituted in Singapore and entered on the restricted schemes list maintained by MAS.^[2]

IRAS also describes a trustee-documented trust within its CRS registration framework. This classification depends on a Reporting Singaporean Financial Institution acting as trustee and undertaking the trust's reporting obligations.^[5]

IRAS treats beneficiary entitlement as a separate factor in trust income taxation. Its resident-beneficiary rules refer to income entitlement arising through a trust deed or a deceased person's will. The Law of Intestacy is another stated basis for entitlement.^[4]

Regulation and the public directory

MAS publishes licensing information for trust business and provides a Financial Institutions Directory. The directory allows searches by financial institution and by licence type or activity in Singapore.^[2][3]

A financial institution can hold more than one licence listed in the directory. Consequently, MAS explains that totals for licences can exceed the number of institutions returned by a search.^[3]

Trust business licensing and approval to act as a CIS trustee have separate entries in MAS licensing information. The CIS trustee entry links approval to the particular scheme categories specified there.^[2]

Singapore trust income taxation

IRAS describes trust income taxation through rules for trustees and beneficiaries. The trustee's statutory income is taxed at a flat rate.^[4]

Singapore tax-resident beneficiaries with the specified entitlement pay tax on their shares at their personal income tax rates. IRAS also gives them the exemptions and concessions accorded to individual resident taxpayers.^[4]

The trustee pays tax on the entitlement shares belonging to non-resident beneficiaries. IRAS applies the prevailing trustee rate for the relevant assessment period to those shares.^[4]

A resident beneficiary's assessment can reflect entitlement even when the amount received is smaller. In that situation, personal income tax rates apply to the beneficiary's entitlement share.^[4]

CRS and FATCA reporting frameworks

Reporting Singaporean Financial Institutions have CRS registration and annual reporting obligations administered through IRAS. Their account review applies CRS due diligence procedures to identify reportable financial accounts.^[5]

IRAS identifies four financial institution categories for CRS purposes, including custodial institutions and depository institutions. Investment entities and specified insurance companies are the other categories.^[5]

For a trustee-documented trust, the reporting trustee undertakes the trust's due diligence and reporting work. The trust does not need its own CRS registration with IRAS under that arrangement.^[5]

Before reporting for that trust, the trustee supplies identifying details to IRAS. These include the trust's name and its Tax Reference Number where applicable.^[5]

Singapore's FATCA intergovernmental agreement is a Model 1 agreement and is in force.^[8]

Treasury describes FATCA reporting as covering financial accounts held by U.S. taxpayers. Its explanation also includes accounts held by foreign entities in which U.S. taxpayers have a substantial ownership interest.^[8]

U.S. foreign trust reporting

The IRS includes U.S. citizens within its definition of a U.S. person for purposes of its foreign trust rules.^[10]

A U.S. person treated as a foreign trust's owner generally pays tax on that trust's income. The IRS identifies sections 671 through 679 as the relevant grantor trust rules.^[10]

Form 3520 generally reports a U.S. person's creation of a foreign trust or transfers to it. Distributions from a foreign trust can also require this form, including certain loans or uncompensated property use.^[10]

The instructions require a separate Form 3520 for each foreign trust involved in reportable transactions. Part II applies to U.S. owners even during a tax period without trust transactions.^[11]

Part III covers distributions received by a U.S. person from a foreign trust. Reportable distributions include cash and the fair market value of other property, whether the distribution is taxable or not.^[11]

U.S. owners have responsibility for ensuring that the foreign trust files a complete and accurate Form 3520-A. The trust also furnishes annual statements to its U.S. owners and U.S. beneficiaries.^[10]

If the trust does not file Form 3520-A, the U.S. owner completes a substitute return. That substitute accompanies the owner's timely Form 3520, with the required annual statements also furnished.^[10]

Form 8938 can apply when specified foreign financial assets exceed the relevant reporting thresholds. The thresholds depend on the total value of specified foreign financial assets in which the person has an interest.^[10]

FBAR reporting can apply to a financial interest in a foreign financial account or signature authority over one. Covered accounts include bank accounts and brokerage accounts.^[10]

Some foreign trusts qualify for exceptions from Forms 3520 and 3520-A under the conditions described by the IRS. Those exceptions leave applicable Form 8938 and FBAR obligations in place.^[10]

The court structure

Singapore's Judiciary identifies the Supreme Court and State Courts within its court structure. Its structural overview also includes the Family Justice Courts.^[7]

Singapore's trust legal framework

Legal framework for trusts

Singapore is a common law jurisdiction for establishing trusts. The Trustees Act 1967 and the Trust Companies Act 2005 govern aspects of Singapore trusts and trust company business.^[12]

Trust company regulation

The Trust Companies Act 2005 governs the licensing and regulation of trust companies in Singapore.^[13]

MAS guidance states that licence application review considers an applicant's Singapore presence and management expertise, financial soundness, financial and insurance capacity, compliance systems, and competence and integrity.^[14]

More on Singapore

Questions and answers

Related resources

Related glossary terms

• Trust: The Hague Convention describes a trust as a relationship in which a settlor places assets under a trustee's control for beneficiaries or a specified purpose.
• Charitable trust: A charitable trust holds property for charitable purposes, and trust laws relate it to purpose trusts and to the other categories of trust used in planning.
• Settlor: A settlor is associated with creating a trust or placing property into it. Definitions describe the role through trust creation and property disposition.

Related articles and guides

• Switzerland reporting and foreign trust rules: Switzerland exchanges account information under AEOI and FATCA arrangements, with Swiss trustee rules and IRS reporting for foreign trusts set out alongside.
• BVI Information Exchange and U.S. Trust Reporting: BVI information exchange and trust record rules, with the IRS reporting framework for U.S. citizens who are connected with foreign trusts in the territory.
• Mauritius Trust Tax and Reporting Rules: Mauritius legislation on trusts and trustee residence, with the IRS guidance on foreign trust reporting by U.S. persons who own or benefit from such trusts.

Tools and official documents

• FinCEN Report 114 (FBAR): foreign account reporting: FinCEN Report 114 (FBAR) for U.S. citizens: account definitions, financial interests, signature authority, trust provisions and the filing requirements it sets.