Cambodia Trust Law: What It Really Regulates

In only a few years, the trust has become the standard way for foreign capital to hold Cambodian property it could not otherwise own. The register maintained by the Trust Regulator has grown quickly, and a clear majority of cases are tied to real estate. It is tempting to read a trust as a simple workaround for the ownership rules. That misses what is actually being bought. A trust does not settle a title question in one transaction. It opens a licensed counterparty relationship that runs for the full life of the holding, and often beyond it.

What the law regulates

The Law on Trusts was promulgated on 2 January 2019 and is supervised by the Trust Regulator, which sits under the Non-Bank Financial Services Authority within the Ministry of Economy and Finance. The structure has three parties. A trustor transfers property or funds to a trustee, who holds and manages it separately from its own estate for the benefit of a named beneficiary. That word, separately, carries the weight. Trust property is not the trustee's property and does not stand behind the trustee's creditors, and the tax framework follows the same logic, taxing the trustee on the fees it earns rather than on the assets it holds.

The licence, and when a trust earns its cost

No one may act as trustee without a licence from the Director General of the Trust Regulator. A corporate trustee holding a commercial trust licence must be incorporated and tax registered in Cambodia, capitalised at 4 billion riel, roughly one million dollars, and must post a security bond equal to 15 percent of that minimum capital at the National Bank of Cambodia. An independent individual trustee may manage no more than 10 billion riel, about 2.5 million dollars, unless the Regulator approves more. A trust is unnecessary for a standard strata title unit above the ground floor, where foreigners already hold freehold within the 70 percent quota. It earns its keep in a narrower set of cases:

• Land and landed housing, which the Constitution reserves for Cambodian nationals and entities
• Ground floor and shophouse units, which fall outside the co-ownership framework
• Buildings where the 70 percent foreign quota is already full
• Succession, where the deed can name beneficiaries so an interest passes under a registered instrument rather than a cross border transfer of title

On tax, a trust changes who files more than what is owed. Rental income is taxed, capital gains on a sale are recorded and paid through the trustee, and stamp tax applies to transfers of ownership, so the running compliance burden shifts to a licensed party who handles it for a living.

The statute itself is settled, which means the real variable is the trustee. The questions that decide the outcome are the fee schedule across the entire holding period rather than the first year, the cost and mechanics of renewing the registration, and what happens if the trustee entity is acquired or wound down. Those answers live in the deed and the counterparty, not in the law. Because the sums and the restrictions are significant, we always recommend independent legal and tax advice before any structure is chosen.