In recent years, the awareness and acceptance of family offices among high-net-worth individuals (HNWIs) in China have been on the rise. Amidst the wave of globalization, what are the advantages of setting up a family office in Singapore? Why are more companies choosing Singapore as the location for their family office?
Family offices are in growing demand
In recent decades, single-family offices (SFOs), a significant type of institutional investor, have been steadily growing as the number of ultra-high net worth individuals (HNWIs) worldwide has increased rapidly since the 1980s. More and more wealthy families are taking a long-term perspective and turning to FOs as their preferred choice when addressing sustainability issues.
In 2020, FOs on average allocated 16% of their investment portfolios to sustainable investments. By 2022, this figure had risen to 20%, and it is projected to reach 31% in the next five years. The increase in sustainable investments can be attributed in part to the younger generation within wealthy families gaining more influence in managing the family office as the older generation retires. In 2022, 37% of North American family offices engaged in sustainable investments, higher than the previous results of 34% in 2021 and 26% in 2019.
Note: The data are from the official account of @Hurun Report
Overall, the structure of a family office is expected to remain a viable and preferred option for wealthy families to grow and preserve their wealth and assets across generations. With the rise of the economy, it is expected that more new economy families in China will establish family offices in the next three to five years.
These new-generation family offices are expected to become a driving force, providing guidance to family leaders at every turning point, helping them find direction, security, and hope.
The advantages of setting up a home office in Singapore
In recent years, wealth management centers such as the British Virgin Islands, Cayman Islands, Switzerland and Hong Kong have struggled to meet the needs of their current clients as tax transparency has increased worldwide. The purpose of the overseas asset allocation of high-net-worth households has also changed. They are shifting from tax avoidance and asset hiding to business purposes such as investing in family asset allocation.
As one of the four major international financial centres, Singapore has been favored by global investors. The Singapore Family Office is an immigration program launched by the Singapore government specifically for high-net-worth individuals. The Singapore Family Offices provide HNWIs with services such as overseas investment, asset allocation, tax planning, immigration planning and family wealth inheritance through a modern business management system. The single-family office not only helps applicants achieve the purpose of immigration but also allows them to enjoy tax exemption on investment income.
In addition, Singapore has the following advantages:
1. Low tax rate
Singapore is a low-tax jurisdiction with a corporate tax rate of 17% and personal income tax rates ranging from 0% to 24%. Setting up a company in Singapore can benefit from favorable tax policies.
2. Regulatory and tax exemptions
The structure of a single-family office in Singapore can enjoy exemptions from certain regulatory requirements under the Singapore financial securities law framework and benefit from the Singapore tax-exempt fund scheme in providing fund management services.
3. Leading financial services center
Singapore is a gateway to the Southeast Asian market, and establishing a presence in Singapore allows businesses to seamlessly connect with the global economy.
4. Overseas identity planning
A single-family office in Singapore can be used for immigration planning, as a guarantor for applying for an Employment Pass, and can also be used for high-net-worth family members to apply for Singapore permanent residency under the Global Investor Program framework.
5. Family trust
Singapore is a well-regarded jurisdiction for establishing and managing trusts. A single-family office in Singapore and its affiliated funds are commonly established as part of a family trust.
The overseas identity planning story of Ms. C
Ms. C, a graduate from a prestigious university in East China with a major in urban and rural planning, has obtained a master’s degree in the field. After graduation, she worked as an urban and rural planner in a company. Over the years, as her personal and family assets grew, Ms. C began to pay more attention to family wealth planning.
Through the introduction of a relationship manager from Go Global Gem, Ms. C learned about the benefits of establishing a family office in Singapore. Not only could it help her manage and pass on her wealth, but it could also provide opportunities for overseas identity planning, such as applying for Employment Pass (EP) for her family members through the 13O program, which allows for 2 EP applications, or through the 13U program, which allows for 3 EP applications. In addition, if certain conditions are met, tax exemptions could also be obtained. Therefore, Ms. C and her family chose the family office solution offered by us for their wealth management and overseas identity planning needs.
Currently, Ms. C has successfully obtained Employment Pass (EP) status for herself and her family members in Singapore, and the family office project is progressing smoothly. It is believed that they will soon be able to venture into Singapore and realize their overseas identity planning and asset management goals.
Tax exemption application guide
1. Family Office Structure and Setup
Understand the requirements for setting up a family office and proceed with registering a company.
2. Bank account opening and investment planning
Open a bank account and invest in a fund entity.
3. Employment pass, dependant’s pass application
Through the company, apply for Employment Pass (EP) and Dependant’s Pass (DP) for family members.
4. Tax incentive application
Submit Form 13O or Form 13U to the Monetary Authority of Singapore (MAS) for tax incentive application.
5. CRS and FATCA registration
Prepare a concise memorandum outlining the entity classification for both FATCA and CRS, and register the family office with relevant financial institutions for FATCA and CRS account registration.
Note: By following the above 5 steps, you can apply for tax exemption benefits for your family office in Singapore. There are many important considerations during the application process, and you can leave a message or private message for further consultation.
What else would you like to know about family offices and tax exemptions? Feel free to contact us. Go Global Gem will provide business services, overseas asset allocation, overseas identity planning and other integrated solutions for going abroad.
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