Nevis Trust: How It Works and What Brazilian Law Says

A Nevis trust is governed by the Nevis International Exempt Trust Ordinance: the settlor transfers assets to a trustee for the benefit of others. Nevis law makes creditor actions harder but does not settle validity or taxation in Brazil. In Brazil, the assets stay with the settlor until distribution or death (Law No. 14,754/2023 (Lei 14.754/2023), art. 10).

What is a Nevis trust?

It is the international trust provided for in the Ordinance, Cap. 7.03(N). Under the official text, a trust is only "international" if it is registered and meets three conditions (s. 2):

1. •at least one trustee is a Nevis company, a Nevis LLC, a trust company licensed in Nevis, a law firm licensed as a registered agent, or a multiform foundation;
2. •the settlor and the beneficiaries are always non-residents of St. Christopher and Nevis;
3. •the trust assets do not include real estate located in St. Christopher and Nevis.

There are four roles:

This article covers the trust. A company in Nevis (LLC or corporation) is a different instrument, explained in offshore in Nevis. For the jurisdiction itself, see the Nevis page.

Which Nevis rules protect trust assets?

The Ordinance contains rules that favor the assets within the Nevis system. The main points of the official text (revision of December 31, 2017):

There are also rules on unlimited duration under certain conditions (s. 5), on restricting the beneficiary's interest in case of insolvency or assignment (spendthrift, s. 6), and on exemption from income, inheritance and stamp taxes for the registered trust (s. 49). Registration is renewed annually, with a certificate valid for one year (s. 43 and 44).

These rules are Nevis rules and the revision consulted dates from 2017. Confirm the rule currently in force with a local lawyer before deciding, especially for amounts such as the bond.

Is a Nevis trust valid against creditors in Brazil?

Not by itself. The Ordinance governs what happens in Nevis. In Brazil, Brazilian law governs the transfer of assets by a debtor. Here are the differences:

Here "CC" is the Brazilian Civil Code and "CPC" is the Code of Civil Procedure. If the transaction is annulled, the benefit reverts to the pool of assets available to the creditors (CC, art. 165), and the action can be brought against the debtor, the party who contracted with the debtor and third-party acquirers in bad faith (CC, art. 161). The decision of a Brazilian judge about people and assets under Brazilian jurisdiction follows Brazilian law. Section 30 concerns what is processed in Nevis. It is not Brazilian law, and the effects of a decision on assets in Brazil must be analyzed by a lawyer.

In practice, the earlier the trust is created and the more legitimate its purpose, the lower the risk of a challenge by creditors. See also the guide to international asset holding.

How does Law 14,754 treat the Nevis trust?

For purposes of Brazilian law, the trust is not the owner of the assets. Art. 10 of Law No. 14,754/2023 establishes:

• •the assets and rights remain under the settlor's ownership after the trust is created;
• •they pass to the beneficiary when the trust distributes them or when the settlor dies, whichever occurs first;
• •the transfer may be considered earlier if the settlor irrevocably gives up the right over part of the assets (§ 1º);
• •the change of ownership is a gratuitous transfer: a gift, if during life, or a transfer causa mortis, if on death (§ 2º);
• •income and capital gains are considered the owner's on the respective date and subject to individual income tax (IRPF) under the rules applicable to the owner (§ 3º);
• •if the trust has a controlled entity abroad, it is considered to be held directly by the owner of the assets (§ 4º).

Art. 13 extends these rules to contracts governed by foreign law with characteristics similar to those of a trust, provided they are not controlled entities.

How does ITCMD apply to a trust?

Law 14,754 qualifies the distribution as a gift and the settlor's death as a transfer causa mortis (art. 10, § 2º). ITCMD, Brazil's state inheritance and gift tax, is a state tax, and the Federal Constitution defines the jurisdiction (art. 155, § 1º):

• •real estate: the State where the property is located;
• •personal property, securities and receivables: the State where the deceased was domiciled or where the donor is domiciled;
• •if the donor lives abroad, or the deceased had assets, residence or probate abroad, jurisdiction is regulated by complementary law;
• •the tax is progressive according to the value of the share, the bequest or the gift.

The rate and the treatment of assets abroad depend on the law of the relevant State. Confirm the rule currently in force. For succession as a whole, see the guide to international succession planning.

What obligations does a Brazilian have with a trust?

• •Annual Adjustment Return (DAA): the trust's assets and rights must be reported directly by the owner, at acquisition cost, as of the base date of December 31, 2023 (Law 14,754, art. 11). If the trust had already been reported before, it must be replaced by the underlying assets and rights (art. 11, § 1º).
• •Trustee information: the settlor or the beneficiary must request from the trustee the financial resources and information needed to pay the tax and comply with obligations in Brazil (art. 10, § 5º). The trustee's failure to comply does not relieve the settlor or the beneficiary of the duty (art. 10, § 8º).
• •CBE: the annual declaration to the Central Bank (Brazilian Capital Abroad report) is required when Brazilian capital abroad totals US$ 1,000,000.00 or more on December 31 (Res. BCB 279/2022, art. 10). Confirm with the Central Bank how the trust counts toward this total.

When does a Nevis trust not make sense?

1. •When there is already a debt or lawsuit: CC, art. 158, and CPC, art. 792, address exactly these cases.
2. •When the only goal is to hide assets: the trust must be reported on the DAA and may be included in the CBE.
3. •When the settlor wants to keep full control: the Ordinance allows certain retained powers (s. 53), but Brazilian law keeps treating the assets as the settlor's until distribution.
4. •When the assets cannot bear the costs of the trustee, the annual registration and the lawyers: ask for a written quote before deciding.

To assess the design of your case, see the international tax planning service.