Trusts versus foundations for family wealth, compared by country

Figures are for tax year 2026. For the UK that means the tax year 6 April 2026 to 5 April 2027; every other country here uses the calendar year. This Guide is for a family and its adviser choosing between a trust and a foundation, and choosing where. It covers Malta, the United Kingdom, Switzerland, Liechtenstein, Luxembourg, Cyprus, the United States and Ireland. Jersey and Guernsey are not covered: no official Jersey or Guernsey page could be used for this Guide. It is a working paper for a qualified adviser, not advice.

Read it with three sibling Guides: succession-and-forced-heirship-compared (forced heirship and clawback claims against a trust or foundation), family-holding-company-location-compared (holding companies) and mt-foundations-and-trusts (Malta in full). For US filing duties use us-foreign-trust-reporting and us-estate-gift-706-709. This Guide does not repeat them.

The method, step by step

1. Fix the facts first: where the settlor or founder lives and is tax resident, where each beneficiary lives, where the assets sit, and where the trustee or council members will be. Each country below taxes on its own connecting factor, and more than one may apply at once.
2. Decide what the family needs the vehicle to be. A trust has no legal personality: the trustee owns the assets for the beneficiaries. A foundation is a legal person that owns its own assets. The Swiss federal tax administration's circular puts it this way: "Die Stiftung erwirbt mit ihrer Errichtung die juristische Persönlichkeit. Dagegen fehlt es dem Trust an einer eigenen Rechtspersönlichkeit" (ESTV circular 20 with circular 30 of the Swiss Tax Conference).
3. For the place of the vehicle, read that country's section below: Malta (Income Tax Act, Cap. 123), the UK (Trusts and Inheritance Tax), Liechtenstein (Steuergesetz), Luxembourg (SPF page), Ireland (Discretionary Trust Tax).
4. Then test the settlor's country and each beneficiary's country separately. The same trust can be ignored in one country and taxed as a separate taxpayer in another. Switzerland, for example, never attributes trust assets to the trust: they go to the settlor or the beneficiaries, or, for an irrevocable discretionary trust whose settlor lived abroad at creation, to nobody until a distribution (ESTV circular). A US person may be the owner of a foreign trust for income tax under the grantor trust rules (IRS foreign trust page).
5. Check the settlor-interest trap in every relevant country: if the settlor or founder can revoke, or can benefit, most of these systems keep taxing the settlor (UK, Switzerland, Liechtenstein and the US sections below).
6. List the register duties: UK Trust Registration Service, Malta's trust beneficial owner register at the MFSA, Ireland's CRBOT, Cyprus's CyTBOR, and Liechtenstein's foundation registration or formation notice. Each has its own trigger and deadline, set out below.
7. Check forced heirship before funding. A transfer that cuts an heir's reserved share can be challenged after death. Use succession-and-forced-heirship-compared.
8. Write down which country taxes what, at which event (funding, each year, distribution, termination, death), and which points are open.

Trust and foundation compared

The table has no rates. Rates and amounts are in the country sections, each next to its source.

Country	Trust	Foundation	How the vehicle is taxed by default	Register on an allowed page
Malta	Yes, under the Trusts and Trustees Act, Cap. 331	Yes, a legal person once registered, under the Civil Code, Second Schedule	Trust with a Malta-resident trustee: taxed on income not allocated to beneficiaries, with options. Private foundation: taxed like a Malta company unless it elects trust treatment (Cap. 123; S.L. 123.114)	Trustee declaration to the MFSA (S.L. 331.10)
United Kingdom	Yes	Not covered by the gov.uk pages read for this Guide	Most trust assets are "relevant property" with entry, ten-year and exit charges; trustees pay income tax (gov.uk)	Trust Registration Service (gov.uk)
Switzerland	Foreign trusts recognised in civil law under the Hague Convention; the trust has no legal personality (ESTV)	Yes, a Swiss foundation is a legal person (Art. 80 ZGB, per the same circular)	Trust is not a taxpayer; assets and income go to the settlor or the beneficiaries, or to nobody (foreign-settlor discretionary trust)	Not printed on an allowed page read
Liechtenstein	Yes, the Treuhänderschaft (PGR Art. 897)	Yes, a legal person (PGR Art. 552)	Foundation pays income tax on net income with the minimum tax credited; only the minimum tax if the tax administration grants private asset structure status on application (SteG Art. 61, 62, 64)	Commercial register entry, or a formation notice to the Office of Justice (PGR)
Luxembourg	Not covered on the allowed host	Not covered; the family vehicle on the allowed host is the SPF, a company (impotsdirects)	SPF rules in the Luxembourg section	Not printed on an allowed page read
Cyprus	Not printed on an allowed page read	Not covered	Not printed on an allowed page read	CyTBOR, kept by CySEC (CySEC Q&A)
United States	Yes; grantor or non-grantor	Not covered	Grantor trust: the owner is taxed. Non-grantor trust: a separate taxpayer with its own rate table (26 U.S.C. 671; Rev. Proc. 2025-32)	Foreign trust forms: see us-foreign-trust-reporting
Ireland	Yes	Not covered	Discretionary trusts pay Discretionary Trust Tax on their assets (Revenue)	CRBOT (Revenue)

Malta

Malta has both vehicles. A trust exists where a trustee holds property under an obligation to deal with it "for the benefit of persons (called the beneficiaries)" (Trusts and Trustees Act, article 3). A foundation is an organisation consisting of a "universality of things constituted in writing", and its assets and liabilities are distinct from those of its founder, administrators and beneficiaries (Civil Code, Second Schedule, article 26). Legal personality "shall only be acquired by an organisation on its registration with the Registrar for Legal Persons", unless another law grants it (Civil Code, Second Schedule). For a private foundation, unless the founder has expressly waived confidentiality, "all documents, statements or declarations submitted to the Registrar" are not open to third parties without the administrators' or supervisory council's written consent "duly authenticated by a Notary Public", or the court's permission for someone with "a legitimate interest"; the Note of Initial Registration that must be filed "shall be accessible to the public" (Second Schedule, article 31C).

Tax on a trust (Income Tax Act, articles 27B to 27D):

• Scope. Tax is payable on income attributable to a trust "Where at least one of the trustees of a trust is a person" resident in Malta (article 27B). The trustee answers for the tax; two or more trustees are jointly and severally answerable (article 27C).
• Option 1, taxed as a company. A Malta-resident trustee that is authorised under article 43(3) of the Trusts and Trustees Act, or does not need that authorisation under article 43(6), may elect irrevocably to have the trust's income computed "as if such income was derived by a company ordinarily resident and domiciled in Malta". The election is open only where the trust instrument limits the trust's income to royalties, dividends, capital gains, interest, rents or other investment income. The form must reach the Commissioner within thirty days of the trust's establishment or of the resident trustee's appointment, whichever is later. Distributions are then treated as dividends (article 27D(1)).
• Final tax option. A trust that has made the article 27D(1) election is an "entity" under the Final Income Tax Without Imputation Regulations and may elect to be taxed "at the rate of fifteen cents (0.15) on every euro of the chargeable income, in lieu of the rate determined in article 56(6)" (S.L. 123.217, regulations 2 and 3). That tax "shall in no case be lower than" the ordinary tax reduced by the refunds claimed or claimable by all the shareholders under article 48(4) or (4A) of Cap. 372, "and applying the provisions of article 43(6) of the Act, where applicable" (regulation 3(4)(a)). Where no refund is claimable, the floor equals the ordinary tax and the election saves nothing; whether a refund is claimable on a trust distribution is not settled on the page. The tax is final, and the trust cannot return to ordinary tax "before the end of the five (5)- year period" (regulation 3(3)). Refer before electing; see mt-foundations-and-trusts.
• Look-through for foreign income and non-resident beneficiaries. Without an election, where all the trust's income arises outside Malta (or is income under article 12(1)(c)), and all beneficiaries are not ordinarily resident in Malta or not domiciled in Malta, or are fully exempt, the income is treated as derived directly by the beneficiaries and not by the trust. The trustee must tell the beneficiaries (article 27D(3)(b)).
• Default. Otherwise the trust is taxed as if it were a person ordinarily resident and domiciled in Malta, but amounts allocated to beneficiaries are excluded, provided the trustee files the return and gives the beneficiaries a certificate (article 27D(3)(e) and (4)). For amounts vested in or granted to beneficiaries but not distributed by 31 March after the year, the exclusion also needs a tax payment on the beneficiaries' behalf at the article 56(6) rate. The trustee owes it by 30 June after that year, and the beneficiary gets a credit (article 27D(4)(b)(iii)).
• Rate. The trust rate is "the rate specified in article 56(6)", which the Act writes as "thirty-five cents (0.35) on every euro of the chargeable income" (articles 27D(5) and 56(6)) (article 27D(5) excepts the article 56(4) rate, which covers trusts whose income is wholly applied for the clergy).
• Beneficiaries. Allocated amounts are added to the beneficiary's other income, and "Income distributed to beneficiaries shall retain its character as to type and country of source" (article 27D(8)).
• Capital gains on settlement. Putting property into a written trust is not always a neutral act. Article 5(18) deems no transfer only "where the sole settlor is also the sole beneficiary". Two other paragraphs treat the settlement as a direct donation to family beneficiaries, or as giving rise to no gain or loss, each under narrow conditions in the trust instrument. Read mt-foundations-and-trusts before settling Maltese property.

Tax on a foundation (Foundations (Income Tax) Regulations, S.L. 123.114):

• A foundation is treated, for the purposes of the Income Tax Acts, "in the same manner as a company that is ordinarily" resident and domiciled in Malta, at the article 56(6) rate (regulation 3(1)). This does not apply to a foundation enrolled under the Voluntary Organisations Act, or a non-profit social-purpose foundation, unless it opts irrevocably in writing; otherwise it is taxed at the article 56(1)(d) rate (regulation 3(5)).
• Distributions to beneficiaries "shall be treated as if they were dividends distributed to shareholders of a company" (regulation 3(4)).
• The administrators may, by notice in writing to the Commissioner, irrevocably elect that a foundation "shall be taxed under the provisions of the Act applicable to trusts" (regulation 4(1)).

Register: a trustee authorised or registered under articles 43 or 43B of the Trusts and Trustees Act, or a private trustee under article 43A, must send the MFSA a declaration of beneficial ownership within fourteen (14) days of "being appointed as a trustee of an express trust" (S.L. 331.10, regulation 3). A change is notified within fourteen days after the trustee records it (regulation 5). A trustee established or residing outside the EU who enters into a business relationship or acquires real estate in Malta as trustee files the same declaration within fourteen days (regulation 3A). Every trustee confirms each year, by 31 January, that nothing changed in the previous calendar year other than notified changes (regulation 5(2)).

United Kingdom

The UK taxes trusts mainly through inheritance tax and income tax. The rates and limits are in the tables. The year is 2026 to 2027.

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/guidance/trusts-and-inheritance-tax
Inheritance tax threshold used for transfers into most trusts	GBP 325,000	"transfers that total more than the Inheritance Tax threshold of £325,000"
Lifetime entry charge rate if the trustees pay	20%	"If the trustees pay, the rate of tax is 20%."
Rate if the settlor dies within 7 years of the transfer	40%	"your estate will have to pay Inheritance Tax at the full amount of 40%"
Exit charge, maximum	6%	"Inheritance Tax is charged up to a maximum of 6% on assets"

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm42081
Ten-year anniversary charge, maximum	6%	"The rate may be anything up to 6%."

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/trusts-taxes/trusts-and-income-tax
Tax-free amount for most trusts	GBP 500	"Most trusts do not pay Income Tax on income up to a tax-free amount (normally £500)."
Limit per trust where the settlor made 5 or more accumulation or discretionary trusts	GBP 100	"the limit for each trust is £100"
Accumulation or discretionary trust, dividend-type income	39.35%	"Dividend-type income 39.35%"
Accumulation or discretionary trust, all other income	45%	"All other income 45%"
Interest in possession trust, dividend-type income	10.75%	"Dividend-type income 10.75% (or 8.75% on or before 5 April 2026)"
Same, for dividends on or before 5 April 2026	8.75%	as above
Interest in possession trust, all other income	20%	"All other income 20%"

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/capital-gains-tax/allowances
Capital gains tax-free allowance for trusts	GBP 1,500	"£3,000 £1,500 for trusts"

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/guidance/register-a-trust-as-a-trustee
Penalty for failing to register a trust	GBP 5,000	"you may need to pay a £5,000 penalty"

Item	Value	Note (verbatim)
Source	all figures below	https://www.gov.uk/government/publications/capping-inheritance-tax-trust-charges-for-former-non-uk-domicile-residents/cap-inheritance-tax-trust-charges-to-5m-for-former-non-uk-domiciles-from-6-april-2025
Proposed cap on relevant property charges, per trust, each 10-year cycle	GBP 5 million	"The relevant property charges are capped at £5 million over each 10 year cycle."

Entry charge. For most trusts, inheritance tax is due when the settlor's transfers into trust, plus chargeable gifts in the previous 7 years, exceed the threshold in the first table. Tax is due on the excess at the entry rate if the trustees pay. If the settlor pays instead, the loss to the estate is larger and so is the tax. If the settlor dies within 7 years, the tax is recalculated at the death rate with a credit for the lifetime tax. Depending on when the gift was made, "‘taper relief’ might mean the Inheritance Tax charged on the gift is less than 40%" (Inheritance Tax). The page says in one place that the personal representative pays the further amount out of the estate, and in another that "The trustees will be liable to pay the extra tax" (Trusts and Inheritance Tax). The main gov.uk page prints the same threshold as the current one (Inheritance Tax).

Ten-year and exit charges. Trustees pay a charge on every 10-year anniversary "if your trust contains relevant property with a value above the Inheritance Tax threshold", on the net value the day before the anniversary. Exit charges arise when relevant property leaves the trust, with exceptions, including transfers "within 3 months of setting up a trust, or within 3 months following a 10 year anniversary". The rate on each is a computed rate up to the maximum in the tables, not a flat rate. For a chargeable event on or after 6 April 2014, trustees pay and report on IHT100 by the end of the sixth month after the event (Trusts and Inheritance Tax).

Not every trust is relevant property. The exceptions on the gov.uk page are interest in possession trusts made before 22 March 2006, transitional serial interests, interest in possession trusts made by will or intestacy, and trusts for a disabled person, a bereaved minor or an "18 to 25" trust (Trusts and Inheritance Tax).

Residence-based rules from 6 April 2025. Foreign property in a trust is excluded property (outside UK inheritance tax) only at times when the settlor is not long-term UK resident. "When a settlor is long-term UK resident, any assets they have settled (even if settled when not long-term UK resident or domiciled outside the UK ( IHTM13000 ) will not be excluded property" (IHTM47050). For a settlor who dies on or after 6 April 2025, the status is fixed by their long-term residence status at death. For a settlor who died before 6 April 2025, the old domicile test still applies (same page). A proportionate (exit) charge arises "when a settlor ceases to be long -term UK resident" (IHTM47052). The policy paper describes long-term residence as "broadly, they have been resident 10 years out of the last 20". It proposes the cap in the last UK table for trusts that held excluded property at 30 October 2024 (only property that was excluded property on that date and "is situated outside the UK at the time of the relevant charge"; the paper says such trusts "can elect" the cap), through a new section 75B of the Inheritance Tax Act 1984, "with retrospective effect from 6 April 2025" (HMRC policy paper). The page calls this a proposed revision; check that it is in force before relying on it.

Income tax. Trustees of accumulation or discretionary trusts pay at the rates in the third table. The tax-free amount is a cliff: "Tax is due on the full amount if the income is more than the tax-free amount", and trustees do not get the dividend allowance. With several such trusts, the settlor's tax-free amount is divided by the number of trusts, down to the per-trust floor in the table (Trusts and Income Tax).

Settlor-interested trusts. A trust is settlor-interested where "the settlor or their spouse or civil partner benefits from the trust" (Types of trust). "The settlor is responsible for Income Tax on these trusts, even if some of the income is not paid out to them." The trustees still pay as income arrives and give the settlor a statement (Trusts and Income Tax). For inheritance tax, a settlor who gives assets into trust but keeps a benefit pays the entry charge and the gift still counts in the estate; HMRC applies only the higher of the two charges (Trusts and Inheritance Tax).

Trust Registration Service. Every UK resident express trust must register unless it is excluded under Schedule 3A. A non-UK resident trust must register if it becomes liable to income tax, capital gains tax, inheritance tax or the UK land transaction taxes on UK assets or income, or if it is an express trust with listed UK links, such as acquiring UK land after 6 October 2020. A non-taxable trust created after 6 October 2020 registers within 90 days of being created or of becoming liable for tax. A taxable trust created on or after 6 April 2021 registers within 90 days of becoming liable for tax. For a taxable trust created before 6 April 2021 the deadline is 5 October or 31 January after the tax year, depending on the tax and on whether the trust was liable for income tax or capital gains tax before. A non-UK trust that acquired an interest in UK land before 6 October 2020 and still held it on 30 June 2026 must register by 1 September 2027, but the Trust Registration Service "currently will not let you register these trusts" (Register a trust).

Switzerland

The federal tax administration has adopted circular 30 of the Swiss Tax Conference of 22 August 2007 for the direct federal tax and withholding tax (ESTV circular 20, 27 March 2008). Its rules, all on that page:

• The Hague Trusts Convention "ist in der Schweiz am 1. Juli 2007 in Kraft getreten", but trust taxation still follows Swiss tax law only.
• A trust is not a taxpayer: "Es gibt demnach im aktuellen schweizerischen Steuerrecht keine gesetzliche Grundlage, welche es erlauben würde, einen ausländischen Trust für Steuerzwecke mit einer juristischen Person gleichzusetzen." The trustee and protector are not taxed on the trust assets, only on their fees.
• Trust assets and income are attributed either to the beneficiaries or to the settlor ("Grundsatz der Transparenz").
• Revocable trust: taxed with the settlor at the settlor's residence. Distributions to a beneficiary are a gift; the cantons set the rate.
• Irrevocable fixed interest trust: assets and income go to the beneficiary. Funding is a gift from settlor to beneficiary. Distributions are in principle taxable income, but the circular excepts paying out capital gains (to the extent they are private assets) and the contributed trust capital: "(soweit als Privatvermögen vorliegt) und des eingebrachten Trustkapitals steuerfrei ist" (KS 30, 5.2.2); without proof, the whole receipt is income.
• Irrevocable discretionary trust, settlor resident in Switzerland at creation: "werden das Vermögen und der Vermögensertrag weiterhin dem Settlor zugerechnet", the same result as a revocable trust.
• Irrevocable discretionary trust, settlor resident abroad at creation: the assets are attributed to nobody. Funding is a gift by the settlor. A Swiss beneficiary is taxed only on receipt or on acquiring a firm legal claim to the payment, and distributions are in principle income, unless the beneficiary proves that a payment returns capital that was already treated as a gift. The circular says contributed capital can be paid out only after all trust income has been paid out.
• Settlors, trustees and beneficiaries taxable in Switzerland must give the authorities all information, and a trustee may not rely on professional secrecy in an external tax audit.

Whether Switzerland has since adopted a trust in its own private law, and how a Swiss foundation itself is taxed, are not printed on the allowed pages read for this Guide.

Liechtenstein

Liechtenstein has both. A foundation is a legally and economically independent purpose fund: the PGR calls it a "verselbständigtes Zweckvermögen, welches als Verbandsperson (juristische Person) durch die einseitige Willenserklärung des Stifters errichtet wird" (PGR Art. 552 § 1). The trustee of a Treuhänderschaft receives assets or a right from the settlor (Treugeber) "mit der Verpflichtung zuwendet, dieses als Treugut im eigenen Namen als selbständiger Rechtsträger zu Gunsten eines oder mehrerer Dritter (Begünstigter) oder für einen bestimmten Zweck" to manage or use them (PGR Art. 897). The trustee, not the trust, is the legal holder. A foundation that need not be entered in the commercial register must deposit a formation notice with the Office of Justice "innerhalb von 30 Tagen ab Errichtung", and a change notice within 30 days of a change (PGR Art. 552 § 20).

Item	Value	Note (verbatim)
Source	all figures below	https://www.gesetze.li/konso/pdf/2010340000?version=38
Minimum tax for a legal person, and the only tax of a private asset structure	CHF 1,800	"Die Mindestertragssteuer beträgt 1 800 Franken."
Ordinary income tax rate for legal persons	12.5%	"Die Ertragssteuer beträgt 12,5 % des steuerpflichtigen Reinertrags."
Transfer tax on the transferor when assets go to a foundation and the benefits cannot be valued (no Art. 9(3) application)	3.5%	"hat der Übertragende eine Steuer in Höhe von 3,5 % des vermögenssteuerlichen Wertes der Zuwendung zu entrichten"

Rules from the Tax Act (SteG, version in force 1 July 2026):

• A legal person that meets all the conditions of Art. 64 can apply for private asset structure status: no economic activity (in particular, only acquiring, holding, managing and selling financial instruments, holdings, cash and bank balances), no public placement and only private investors, no fees for that activity, and statutes that adopt the restrictions. It may hold companies only if neither it nor its investors or beneficiaries actually control their management. It must confirm the conditions every year. A private asset structure is subject only to the minimum tax under Art. 62(1) and (2) and is not assessed (Art. 64(8)). Otherwise a foundation pays the ordinary rate in the table on its net income (Art. 61), with the minimum tax credited (Art. 62).
• A Liechtenstein wealth-tax payer who transfers assets to a foundation or asset dedication pays the transfer tax in the table where the benefits cannot be valued and no application under Art. 9(3) was made (Art. 13).
• "Besondere Vermögenswidmungen ohne Persönlichkeit" (asset dedications without legal personality) set up under Liechtenstein law, or managed there, also pay only the minimum tax (Art. 65). The text read does not say which trusts fall under that term.
• For a beneficiary liable to Liechtenstein income tax (Erwerbssteuer), taxable income includes "Zuwendungen, die der Steuerpflichtige als Begünstigter erhält", except to the extent the beneficial interest is itself subject to wealth tax under Art. 9(3) or Art. 12(1)(d) or (e) (Art. 14(2)(k)).
• The assets of a revocable foundation are attributed to the founder and taxed in the founder's hands (Art. 9(4)).

Luxembourg

The allowed Luxembourg tax host covers the family wealth management company (SPF), which is a company, not a trust or foundation (impotsdirects, SPF, page last updated 1 July 2026).

Item	Value	Note (verbatim)
Source	all figures below	https://impotsdirects.public.lu/fr/az/s/spf.html
Partial exemption of gross dividends that does NOT apply to SPF dividends	50%	"L’exonération du dividende brut à raison de 50% prévu par l'article 115, numéro 15a L.I.R. n’est pas applicable."

• An SPF may be a SARL, SA, SCA or a cooperative organised as an SA. Its exclusive purpose is acquiring, holding, managing and realising financial assets, with no commercial activity. It is "destinée uniquement aux personnes physiques agissant dans le cadre de la gestion de leur patrimoine privé".
• It may not interfere in the management of companies it holds, may not make interest-bearing loans, and may not hold real estate directly. Since 1 July 2021 it may not hold real estate through partnerships or FCP funds either; it may through capital companies.
• SPF dividends bear no Luxembourg withholding tax, but resident recipients are still taxed. The SPF cannot use the EU parent-subsidiary directive. A non-resident individual's gain on SPF shares is not Luxembourg-source income.
• Tax control lies with the Administration de l'enregistrement, des domaines et de la TVA (AED), except the check of tantièmes. The SPF's subscription tax is not printed on an allowed page for this Guide, so no rate or minimum is given here.

Cyprus

Cyprus has a trust beneficial ownership register, CyTBOR, kept by CySEC under section 61C of the anti-money-laundering law. A trust must be entered if its trustee is established or residing in Cyprus, or if a trustee established or residing outside the EU enters into a business relationship or acquires immovable property in Cyprus in the trust's name (CySEC CyTBOR Q&A, answers 1 and 10).

The tax treatment of trusts in Cyprus, their trustees and their beneficiaries is not printed on an allowed gov.cy page found for this Guide. Do not quote a Cyprus trust tax rule from this Guide.

United States

The US distinguishes grantor and non-grantor trusts for income tax. Where the grantor trust rules treat the grantor or another person as owner of any portion of a trust, that person's taxable income includes the items of income, deductions and credits of that portion (26 U.S.C. 671, LII mirror). A non-grantor trust is a separate taxpayer with its own rate table; the rates are in us-form-1041-trust-and-estate-income.

For foreign trusts, "a U.S. person who is treated as the owner of a foreign trust under the grantor trust rules (IRC sections 671-679) is taxed on the income of that trust", and a US beneficiary of a foreign non-grantor trust reports their share of distributable net income (IRS foreign trust page). Who owns a foreign trust, the throwback tax and Forms 3520 and 3520-A are in us-foreign-trust-reporting. Gift, estate and generation-skipping transfer tax on funding a trust is in us-estate-gift-706-709.

Ireland

Item	Value	Note (verbatim)
Source	all figures below	https://www.revenue.ie/en/gains-gifts-and-inheritance/discretionary-trust-tax/initial-once-off-6-charge.aspx
Initial once-off Discretionary Trust Tax charge	6%	"The initial 6% charge is imposed on the market value of the trust assets at the latest of the following dates"

Item	Value	Note (verbatim)
Source	all figures below	https://www.revenue.ie/en/gains-gifts-and-inheritance/discretionary-trust-tax/annual-1-charge.aspx
Annual Discretionary Trust Tax charge	1%	"The first annual 1% charge arises in the year following the year in which the 6% charge arises."

• A resident or ordinarily resident person who sets up a discretionary trust must file Form DT1 within four months of setting it up. The trustees, or an agent for them, pay the tax (Revenue, DTT overview).
• When the initial charge bites. It is charged on market value at the latest of: 25 January 1984; the date the property becomes subject to the trust; the disponer's death; or, where there are principal objects, the date the youngest principal object reaches 21 (property settled on or after 31 January 1993) or 25 (property settled between 25 January 1984 and 31 January 1993). Principal objects are the disponer's spouse or civil partner, children, and some grandchildren where their parent died before the disponer. It is payable within four months of the valuation date on Form IT4 (initial charge page).
• Annual charge. The valuation date is "generally 31 December". It is payable within four months of the valuation date on Form IT32 (annual charge page).
• Exempt trusts (on application): public or charitable trusts, superannuation and unit trusts, heritage house or garden trusts, and trusts for persons who cannot manage their affairs because of age, improvidence, or physical, mental or legal incapacity (exemptions page).
• CRBOT. A relevant trust, meaning an express trust established by deed or other declaration in writing, must report to the Central Register of Beneficial Ownership of Trusts when "the trustees are resident in the state or the trust is administered in the state" (Revenue, CRBOT).
• Distributions. Revenue lists among the items regarded as a gift or inheritance for Capital Acquisitions Tax "a benefit appointed out of a discretionary trust" (Revenue, What do you pay CAT on?). So a beneficiary can owe CAT on a distribution as well as the trust paying DTT.

Worked hypothetical (invented amounts). A discretionary trust holds assets worth EUR 1,000,000 on its initial valuation date. No principal object is under 21, the disponer has died, and no exemption applies. The initial charge at the rate in the first Irish table is EUR 60,000, due within four months on Form IT4 (initial charge page). If the assets are still worth EUR 1,000,000 on 31 December of the following year, the annual charge at the rate in the second Irish table is EUR 10,000, due on Form IT32 (annual charge page). The figures are illustrations, not a valuation; the Revenue pages print the rates and dates, not this arithmetic.

Traps

• The settlor is still taxed. A UK settlor-interested trust leaves income tax with the settlor. A Swiss settlor who creates even an irrevocable discretionary trust while resident in Switzerland keeps the assets and income for Swiss tax. A Liechtenstein revocable foundation is the founder's. A US grantor trust's income is the grantor's. Ask who can revoke and who can benefit before choosing the vehicle (sections above).
• A beneficiary in a high-tax country. A low-tax vehicle does not lower the beneficiary's own tax. A Swiss beneficiary of a foreign-settlor discretionary trust is taxed on distributions as income unless they prove a return of contributed capital. A Malta beneficiary's allocation keeps its character and source. A US beneficiary of a foreign non-grantor trust faces DNI and throwback rules (us-foreign-trust-reporting).
• Moving changes the answer. A UK settlor who becomes long-term UK resident brings foreign trust property into inheritance tax, and one who stops being long-term resident triggers an exit charge (UK section). Leaving the UK does not end long-term residence at once: in HMRC's example the charge falls when the settlor "has ten consecutive years of non-residence" (IHTM47052).
• Malta election deadline. The Malta trust-as-company election must be filed within thirty days and cannot be undone (Malta section).
• Irish DTT is a charge on capital. Both DTT charges are on the market value of the trust assets, not on income. A beneficiary's CAT on a benefit appointed out of the trust is separate (Ireland section); income tax on trust income is not covered here.
• Forced heirship. In a country with reserved shares for heirs, a trust or foundation funded during life can face a clawback claim after death, whatever its tax status. Use succession-and-forced-heirship-compared.
• Registers are separate from tax. A trust with no tax to pay may still have to register (UK, Malta, Ireland, Cyprus). The UK penalty for failing to register is in the UK table.

Ask the client first

• Where are the settlor or founder and each beneficiary resident? For the UK, has the settlor been resident in about 10 of the last 20 tax years (the policy paper's own "broadly" summary of long-term residence)?
• Must the settlor or founder be able to revoke the vehicle, change beneficiaries, or benefit from it?
• What assets go in (listed shares, a trading company, real estate, and where the real estate is) and do any beneficiaries need fixed rights or only discretionary hope?
• Where will the trustee, council members or administrators be resident, and where will the vehicle be managed?
• Does any heir have a reserved share under the law of the settlor's nationality, residence or the asset's location?
• Has anyone already made chargeable gifts, or set up other trusts on the same day or earlier?

When to refuse or refer

• Refer every choice of vehicle and place to a qualified adviser in the settlor's country and in each beneficiary's country before funding. This Guide compares rules; it does not design a structure.
• Refer the UK computed rates for ten-year and exit charges, the 2025 residence-based transition, and any reliance on the proposed charge cap until its enactment is confirmed.
• Refer any Malta final tax election, and any promise that beneficiaries of a Malta trust or foundation can take an article 48(4A) refund: the page does not settle the refund, and without one the final tax saves nothing (mt-foundations-and-trusts).
• Refuse to state Cyprus trust tax rules, Luxembourg subscription tax figures, Swiss foundation tax or Jersey and Guernsey rules from this Guide: no allowed page printed them.
• Refer any forced heirship exposure to a succession lawyer (succession-and-forced-heirship-compared).
• Refer US persons to us-foreign-trust-reporting and us-estate-gift-706-709; refer anyone giving up US citizenship or long-term residence.
• Refuse a structure whose stated purpose is to hide assets from a register, a tax authority or an heir.

Sources

• Malta: Income Tax Act, Cap. 123; Trusts and Trustees Act, Cap. 331; Civil Code, Cap. 16; Foundations (Income Tax) Regulations, S.L. 123.114; Register of Beneficial Owners Regulations, S.L. 331.10; Final Income Tax Without Imputation Regulations, S.L. 123.217
• UK: Trusts and Inheritance Tax; Inheritance Tax; IHTM42081; IHTM47050; IHTM47052; charge cap policy paper; Trusts and Income Tax; Types of trust; Capital Gains Tax allowances; Register a trust
• Switzerland: ESTV circular 20 with Swiss Tax Conference circular 30
• Liechtenstein: Steuergesetz, version 1 July 2026; PGR, version 1 September 2026
• Luxembourg: impotsdirects, SPF
• Cyprus: CySEC CyTBOR Q&A
• United States: 26 U.S.C. 671, LII mirror; Rev. Proc. 2025-32; IRS foreign trust page
• Ireland: DTT overview; initial charge; annual charge; exemptions; CRBOT; What do you pay CAT on?