01
The PRC trust and its limits
The PRC Trust Law recognises a written relationship in which a settlor entrusts property rights to a trustee for administration in the interest of a beneficiary or a permitted purpose. The purpose and property must be definite and lawful, and registration is required where legislation or administrative rules prescribe it. A trust prejudicing creditors may be challenged. The law covers civil, business and charitable trust activities within the PRC, while trust institutions are governed by separate organisational and regulatory measures. A private arrangement should therefore not be presented as the automatic equivalent of an Anglo-Saxon offshore trust without confirming the eligible trustee, property, registration, regulatory perimeter and genuine purpose.
02
Succession, family property and corporate control
The PRC Civil Code governs property, contracts, marriage and family, succession and related obligations. Planning begins with a map of personal and marital property, company interests, real estate, heirs, wills, debts and transfer restrictions. For a family company, the articles, shareholders' arrangements, governing-body powers, voting, transfers, buy-outs, incapacity and death of a key owner must operate together. A foreign trust or foundation does not displace mandatory rules applicable to Chinese assets, and it does not guarantee that a registry, bank, court or tax authority will accept the ownership and control analysis asserted in foreign documents.
03
Offshore SPVs and SAFE foreign-exchange control
Where a PRC resident establishes or controls an offshore SPV for investment, financing or round-trip investment, SAFE registration and foreign-exchange procedures require a separate analysis. Circular 37 addresses direct and indirect control, including operating, economic and decision rights obtained through trusts, entrusted holdings, voting rights, buy-backs and convertible bonds. For transactions within its scope, registration precedes the contribution of money or rights to the SPV, and later restructuring may require updates. An offshore company, foundation or trust is not by itself a lawful channel for exporting capital, injecting Chinese assets or moving dividends and distributions without the applicable approvals, registrations and banking evidence.
For a family connected with mainland China, a trust, offshore company and succession plan cannot be assembled as a conventional offshore package: every element must be tested under PRC civil, foreign-exchange, tax and banking rules.
04
Beneficial ownership, banking and source of wealth
The Measures for the Administration of Beneficial Owner Information took effect on 1 November 2024 and reinforce transparency for covered companies, partnerships and other entities. A bank or payment institution separately identifies effective owners and controllers and examines the authority of a trustee, director or nominee, source of wealth and funds, tax residence, asset history and expected transactions. For a cross-border family, the account given in corporate registers, trust documents, foreign-exchange registrations, tax filings and bank questionnaires must be consistent. Nominee arrangements should never be used to conceal control or circumvent AML, sanctions, foreign-exchange or disclosure requirements.
05
Tax map and implementation sequence
The project begins by establishing the tax residence of every family member and entity, the source of income, asset location and transfer objectives. The analysis then covers individual and enterprise income tax, possible controlled-foreign-company treatment, dividends, interest, capital gains, contributions and distributions, treaty access, CRS/FATCA and reporting. Only then are a PRC trust, will, family company, insurance or investment solution and an eligible foreign structure compared. Documents, cash movements, legal ownership, corporate governance and the banking route should be designed as one evidentially coherent system rather than as disconnected products.
FAQ
FAQ
Can a family trust be created under PRC law?
The PRC Trust Law recognises a written relationship in which a settlor entrusts property rights to a trustee for administration in the interest of a beneficiary or a permitted purpose. The purpose and property must be definite and lawful, and registration is required where legislation or administrative rules prescribe it. A trust prejudicing creditors may be challenged. The law covers civil, business and charitable trust activities within the PRC, while trust institutions are governed by separate organisational and regulatory measures. A private arrangement should therefore not be presented as the automatic equivalent of an Anglo-Saxon offshore trust without confirming the eligible trustee, property, registration, regulatory perimeter and genuine purpose.
Can an offshore SPV be held through a trust?
Where a PRC resident establishes or controls an offshore SPV for investment, financing or round-trip investment, SAFE registration and foreign-exchange procedures require a separate analysis. Circular 37 addresses direct and indirect control, including operating, economic and decision rights obtained through trusts, entrusted holdings, voting rights, buy-backs and convertible bonds. For transactions within its scope, registration precedes the contribution of money or rights to the SPV, and later restructuring may require updates. An offshore company, foundation or trust is not by itself a lawful channel for exporting capital, injecting Chinese assets or moving dividends and distributions without the applicable approvals, registrations and banking evidence.
Does the structure guarantee a bank account?
The Measures for the Administration of Beneficial Owner Information took effect on 1 November 2024 and reinforce transparency for covered companies, partnerships and other entities. A bank or payment institution separately identifies effective owners and controllers and examines the authority of a trustee, director or nominee, source of wealth and funds, tax residence, asset history and expected transactions. For a cross-border family, the account given in corporate registers, trust documents, foreign-exchange registrations, tax filings and bank questionnaires must be consistent. Nominee arrangements should never be used to conceal control or circumvent AML, sanctions, foreign-exchange or disclosure requirements.
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Related pages
- Company formation in China
- Open primary source
- Banking and foreign-exchange control
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- Individual taxation
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- Trusts and foundations
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