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Cook Islands *

Trust

The Cook Islands, located in the South Pacific, has established itself as a prominent jurisdiction for international trusts, particularly for those seeking asset protection. Since the enactment of the International Trusts Act in 1984, the legal system in the Cook Islands has provided a robust framework that appeals to individuals and entities seeking a legally sound and secure trust structure. The jurisdiction’s early recognition of the importance of protective trust legislation has resulted in comprehensive laws tailored to meet global demand for financial privacy and legal resilience.

A distinguishing feature of Cook Islands trusts is the jurisdiction’s approach to asset protection. The law sets strict parameters for fraudulent transfer claims, typically imposing a limitation period of two years from the date of transfer. In some cases, this period may be reduced to less than a year. If a transfer of assets is made during a period in which the settlor is solvent, such transfers are generally shielded from challenge, reinforcing the legal certainty of the trust structure.

Furthermore, the Cook Islands imposes a significant evidentiary burden on claimants. Creditors seeking to challenge a trust must demonstrate their claim beyond a reasonable doubt—a much higher standard than the balance of probabilities used in many jurisdictions. Legal proceedings must be initiated within the Cook Islands itself, and foreign judgments are not recognized or enforceable. This requirement for local legal representation and adherence to stringent procedural rules acts as a substantial deterrent against frivolous or opportunistic litigation.

Trusts governed by Cook Islands law can be discretionary or fixed, revocable or irrevocable, and may benefit individuals, classes of persons, or even specific purposes. The jurisdiction imposes no rule against perpetuity, meaning trusts may be established in perpetuity, offering long-term succession planning flexibility that is increasingly restricted elsewhere. These features make Cook Islands trusts suitable for diverse personal, charitable, and commercial objectives.

Trusteeship requirements also ensure local presence. At least one trustee must be a Cook Islands resident, which can be fulfilled by a licensed trust company or a private trust company incorporated locally. While foreign co-trustees can be appointed, the inclusion of a local trustee preserves the jurisdictional integrity of the structure. This element of physical presence in the Cook Islands further fortifies the trust’s legal standing within its legislative framework.

Confidentiality is also a cornerstone of Cook Islands trust law. Banking and financial information is protected by strict privacy rules, and disclosure is only permitted with the express consent of the client. This legal safeguard complements the broader asset protection regime, offering reassurance to those prioritizing discretion in their financial affairs. Additionally, foreign bankruptcy laws and forced heirship rules from the settlor’s home jurisdiction do not apply, thereby insulating the trust from external legal influence.

A well-structured asset protection trust in the Cook Islands often incorporates specific legal clauses to maximize its effectiveness. These include anti-duress clauses, trust protector provisions, flight clauses allowing relocation to a different jurisdiction, and clear choice-of-law clauses. Such features are designed to ensure that the trust remains resilient even under pressure, including during litigation or governmental scrutiny. However, care must be taken to ensure that settlors do not retain excessive control, which could undermine the independent nature of the trust in court proceedings.

Regarding taxation, the Cook Islands does not impose any taxes on trust income, capital gains, settlements, or distributions. This tax-neutral stance allows trusts to operate without local fiscal interference, although settlors and beneficiaries must remain compliant with tax obligations in their own jurisdictions. Depending on the structure of distributions, certain jurisdictions may treat loans or benefits from the trust as taxable events.

The process for establishing a Cook Islands trust typically begins with the drafting of a trust deed, tailored to the settlor’s instructions. The timeline for finalizing the deed depends on the complexity of the terms and the number of revisions required. If a private trust company is needed to serve as trustee, its incorporation can usually be completed within a week. Overall, the establishment of the trust and its associated entities can be coordinated efficiently with professional oversight.

In comparison with other asset protection jurisdictions, the Cook Islands offers a particularly high threshold of legal protection, making it a preferred destination for long-term estate planning and risk management. The integration of strong legal defenses, privacy norms, and the exclusion of foreign legal claims situates the jurisdiction as a leader in trust law.

Taxes *

A trust established in the Cook Islands may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of the Cook Islands benefit from the trust and no physical assets are located there.

It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.

You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in the Cook Islands , transfer assets to it and receive profits from said assets.

  • Offshore Income Tax Exemption * *
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  • - Offshore Income Tax Rate *
  • - Corporate Tax Rate *
  • 0% Capital Gains Tax Rate *
  • 0% Dividends Received *
  • 0% Dividends Withholding Tax Rate *
  • 0% Interests Withholding Tax Rate *
  • 0% Royalties Withholding Tax Rate *
  • 0 Losses carryback (years) *
  • 0 Losses carryforward (years) *
  • 30% Personal Income Tax Rate *
  • 12.5% VAT Rate *
  • 20 Tax Treaties *

Country details *

Cook Islands *
NZD
Avarua *
Oceania *
en-CK, mi
21,388

The Cook Islands is an archipelago of fifteen small islands, located in the South Pacific Ocean, between Hawaii and New Zealand. It is a member of the Commonwealth and it is freely associated with New Zealand. Cook Islands citizens are also New Zealand citizens.

The islands have a combined area of 236 sq. km, but the Exclusive Economic Zone occupies more than 1,800,000 square kilometers of ocean.

It is populated by about 21,000 inhabitants. Most of them living in Rarotonga Island, where is found its capital Avarua and its international airport.

Its official languages are the Cook Islands Māori and English. Its official currency is the Cook Islands dollar and the New Zealand dollar, the first pegged to the second.

The Cook Islands is a dependency with a representative parliamentary democracy, where the Chief Minister is the Head of State. The islands are self-governing in free association with New Zealand and are fully responsible for internal affairs. New Zealand retains some external affairs responsibilities, in consultation with the Cook Islands.

Its economy, like other South Pacific islands economies, is hampered by its isolation, lack of exploitable natural resources, a natural disaster-prone location, and poor infrastructure. Tourism is the main source of income and, to a lesser extent, the cultivation of tropical fruits and their processing, manufacture of clothing and handicrafts.

In addition to tourism, the other main economic sector is the offshore industry. The Cook Islands has attractive legislation that makes it possible to set up tax-free international companies, offshore banks, insurance companies, and asset protection trusts.

Tax treaties *

Country * Type * Date Signed *
Netherlands TIEA 2009-10-23
Ireland TIEA 2009-12-08
Greenland TIEA 2009-12-16
Norway TIEA 2009-12-16
South Africa TIEA 2013-10-25
Iceland TIEA 2009-12-16
France TIEA 2010-09-15
New Zealand TIEA 2009-07-09
Faroe Islands TIEA 2009-12-16
Finland TIEA 2009-12-16
Denmark TIEA 2009-12-16
Sweden TIEA 2009-12-16
Korea, Republic of TIEA 2011-05-31
Mexico TIEA 2010-11-22
Czech Republic TIEA 2015-02-04
Australia TIEA 2009-10-27
Germany TIEA 2012-04-03
Greece TIEA 2013-02-12
Canada TIEA 2015-06-15
Italy TIEA 2011-05-17

Tax treaties Map *

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Disclaimer *

Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.
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Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.

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