The family office is an increasingly popular business entity in Singapore, providing affluent families the opportunity to formally safeguard and optimise their wealth for the benefit of future generations.
Family offices are most often used for asset management. However, they are also useful for conducting additional activities such as wealth and succession planning, lifestyle management and philanthropy.
Family offices involve various day-to-day administration tasks, usually carried out or supported by external professionals and service providers.
Single-family offices (SFO) service members of the same family, while multi-family offices (MFO) service members of different families.
This article explores the process of setting up a family office in Singapore and outlines reasons you might set up a family office, including the latest tax incentives you may be eligible for.
Why set up a family office in Singapore?
As an established financial hub, Singapore holds immense appeal for local and overseas high-net-worth (HNW) individuals looking to establish a family office. In 2021, it ranked as the second most competitive location for international wealth management globally. Furthermore, in 2022, it had the world’s third fastest-growing population of HNW individuals.
Singapore’s allure can be attributed to its:
- open, well-regulated economy;
- strategic and convenient geographic location – a gateway to Asia with ready access to global and regional financial markets;
- diverse ecosystem of wealth management talent (e.g. bankers, law firms and advisors);
- companies and service providers;
- economic and political stability;
- pro-business regulatory system;
- extensive double tax treaties with more than 80 countries;
- low corporate tax rate of 17% (and no capital gains tax);
- abundant tax incentives and exemptions; and
- quality medical and education systems.
What are the family office tax exemptions in Singapore?
The Singapore Government is actively nurturing the growth of private banking locally due to the fast-growing pool of capital it generates, which can be utilised for urgent climate change mitigation efforts. In July 2023, it announced several enhancements to Singapore’s tax incentive schemes for SFOs.
Eligible family offices can now take advantage of these schemes and exemptions:
Each entails a set of conditions that family offices must meet to qualify.
How do I set up a family office in Singapore?
The company incorporation process for family offices in Singapore can be complex, but the outcome can provide considerable benefits for HNW families.
“First of all, you need to consider your objective for setting up this family office – whether it is for investment or philanthropy purposes,” says Kevin Cho, Director of Corporate Secretarial for BoardRoom Singapore. “You need to consider what funds will be set aside for philanthropy or charitable purposes.”
Defining the goal you want to achieve will help guide the structure and operations of your family office and indicate the legal and tax implications you will need to navigate. Potentially, you may realise that a different investment vehicle (e.g. company limited by guarantee, trust or VCC) or even a different location will be more suitable.
Next, you will need to undertake the following:
Family office formation is a significant undertaking. To ensure a smooth process, it is important to partner with an experienced corporate services provider for assistance with navigating Singapore’s complex legal, tax and regulatory requirements. Working with such a partner will give you access to a team of business specialists, plus a network of trusted advisors and consultants who can guide you through the beginning stages of your family office and beyond.
The benefits of setting up a family office
According to Eunice Hooi, Head of Corporate Secretarial for BoardRoom Singapore, top uses for a family office include asset protection and succession planning.
“One possible arrangement is to put the assets under a trust structure instead of a standard company structure,” she says. “Having a trust arrangement protects the assets under law, assuming the parents are acquiring the assets for the benefit of the minor child under the trust arrangement.”
The trust agreement can set the terms on when and how the child will legally own the assets – this might be when they turn 21 or get married.
“So the family office structure allows you to plan ahead of time,” Eunice explains.
Additional uses for a family office can include:
- consolidated wealth management;
- customised financial solutions and investment strategies;
- diversification of assets and risk mitigation; and
- the preservation of family values and legacies.
As a centralised hub, the family office provides an efficient, streamlined solution for managing family affairs.
What are the regulatory requirements for setting up a family office in Singapore?
Understanding and complying with local regulatory requirements is paramount when establishing any new company in Singapore.
If you are considering starting an SFO, it will likely be exempt from regulations and won’t need to apply for a fund management licence.
“As SFOs only manage assets belonging to one family, SFOs in Singapore are not subject to licensing or regulation under the Securities and Futures Act (SFA),” Eunice says. “However, MFOs are. This is to safeguard the interests of the different families that are being served by the MFO.”
Before commencing operation, MFOs need to obtain a capital market services licence from the MAS. They then need to conduct their activities in line with regulations. A skilled corporate services provider with extensive knowledge of the local rules can help ensure your company remains compliant from the start.
While SFOs may not be subject to MAS regulation, they still need to meet certain requirements to qualify for the available tax exemptions under the Income Tax Act 1947.
Expert guidance for your new venture
Establishing a family office in Singapore can be an effective way to secure your family’s financial future. At BoardRoom, our business experts work closely with you to ensure your new venture succeeds. We will guide you through every phase of the company formation process, ensuring your entity meets local standards and requirements while capturing all the benefits and opportunities Singapore offers.
In addition to company incorporation and corporate secretarial services, we provide a full suite of complementary services to support your business throughout its lifecycle.
“BoardRoom provides a one-stop shop for family office clients, providing a range of corporate services, such as accounting and tax advisory services,” Eunice says. “We work very closely with other stakeholders in the family office ecosystem, such as lawyers who can assist with drafting trust agreements, and licensed fund managers.”
With over 50 years of experience servicing clients in Singapore, BoardRoom can be relied upon to consistently provide accurate solutions that minimise risk and hassle.
Adopting a tailored approach, we help you achieve your short and long-term wealth management goals.
“When a client comes to us with the intention to set up a family office, we start by gaining a strong understanding of their goals, needs and background as an investor,” Eunice says. “This way, we can ensure that their choice of investment location and vehicle best suits their needs.”
For a discussion about how we can assist you with establishing a family office in Singapore, please contact us today.
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