Successful case study: How do I apply for a tax exemption after setting up a family office in Singapore?

According to investment advisory firm Henley&Partners, Singapore saw an increase of 2,800 new millionaires in the first half of 2022, bringing its total number to over 240,000. The city-state ranks as the fifth city in the world with the highest number of millionaires, behind New York, Tokyo, San Francisco, and London.

As families accumulate more wealth, they often turn their attention to preserving and growing their assets for future generations. By establishing a family office in Singapore, many families have been able to effectively manage their wealth and build their legacies. Singapore has become a popular location for family offices due to its stable political and economic environment, safe living conditions, and talented local individuals with expertise in asset management.

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Advantages of having a family office in Singapore

A family office is a comprehensive wealth management service designed for high-net-worth families. Single family offices cater to the needs of a single family, while joint family offices serve multiple families. Single family offices have become increasingly vital in wealth planning, with more than 400 expected to open in Singapore in the near future, managing assets worth over S$60 billion. Singapore is becoming an attractive destination for establishing family offices due to its numerous advantages, including:

1.      Leading financial services center

Singapore is a leading financial services center and serves as the gateway to the Southeast Asian regional market, making it easy to integrate into the global economy.

2.      Low tax rates

Singapore offers low tax rates, with a corporate tax rate of 17% and an individual income tax rate ranging from 0% to 24%. Setting up a company in Singapore can also provide access to more preferential tax policies.

3.      Rich people’s gathering place

Many high-net-worth individuals and their trusted advisors are based in Singapore, making it a hub for money connections and access to wealth opportunities.

4.      Overseas status planning

The Singapore Single Family Office can be used for immigration planning, as a sponsor for Employment Pass applications, and to apply for permanent resident status in Singapore under the Global Investor Program (GIP) framework.

5.      Regulatory and tax exemptions

Certain regulations within the framework of Singapore’s Financial Securities Act may be exempted in providing fund management services. Funds may also benefit from the Singapore Fund Tax Exemption Scheme.

6.      Family trust

Singapore is well-regarded as a judicial region for the establishment and administration of trusts. Single family offices and their funds are often set up as part of family trusts in Singapore.

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The venturing story of Mrs. W

Ms. W graduated from a prestigious Double First-Class university in China and went on to obtain a postgraduate degree. She later became an executive at a machinery company. As both her individual and company’s assets grew, Ms. W began to focus on family asset planning. After conducting extensive research and analysis, she and her family recognized the many advantages of Singapore. They were referred to Go Global Gem by friends and established a productive working relationship.

Go Global Gem developed a customized family office solution for Ms. W based on her specific circumstances. Her family has successfully established a family office in Singapore and obtained Employment Pass (EP), Dependent Pass (DP), and other permits. Moreover, they have applied for a tax exemption for their family office. How did they achieve this? We will now share their process with you.

 

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Tax exemption application guide

1.      Family office structure and setup

Understand the requirements for setting up a family office and begin the process of registering your company.

2.      Bank account opening and investment planning

Open a bank account and invest in a fund entity.

3.      Employment pass and dependent pass application

Apply for employment passes and dependent passes for family members through the company.

4.      Tax incentive application

Prepare a memorandum outlining the respective entity classifications of FATCA and CRS, and implement FATCA and CRS account registration for all financial institutions.

5.      CRS and FATCA registration

A brief memorandum outlining the respective entity classifications of FATCA and CRS will be prepared with reference to the relevant FATCA and CRS regulations; Implement FATCA and CRS account registration for all financial institutions.

These five steps can help you obtain a tax exemption for your family office. During the application process, there may be several things to keep in mind, some of which you may have overlooked. For more information, please leave a message or send a private message to us.

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13O and 13U adjustment

Since 18 April, 2022, Singapore adjusted its family office policies 13O and 13U accordingly.

1.      13O policy adjustment

• The 13O application threshold is adjusted to S$10 million, and the asset management scale is increased to S$20 million within two years;
• Must employ at least 2 investment managers, either family members or non-family members;
• The cost requirement of 13O structure is S$200,000 when the asset management scale is below S$50 million, S$500,000 when the asset management scale is between S$50 million and S$100 million, and S$1 million when the asset management scale is above S$100 million;
• At least 10% (or S$10 million) of the family office funds need to be invested in local investment products in Singapore.

2.      13U policy adjustment

• The 13U application threshold of S$50 million remains unchanged;
• At least 3 investment officers shall be hired. If this requirement cannot be met at the time of application, they shall meet the requirement within 1 year (one of them must be a non-family member);
• The cost of 13U structure is required to be S$500,000 when the asset management scale is below S$50 million, S$500,000 when the asset management scale is between S$50 million and S$100 million, and S$1 million when the asset management scale is above S$100 million. ;
• At least 10% (or S$10 million) of the family office funds must be invested in local investment products in Singapore.

What else would you like to know about the Singapore Family office?Don’t hesitate to get in touch with us or leave us a comment. We will continuously bring you more immigration and overseas asset allocation information.

 

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