Singapore as a Family Office Hub

There is not a one-size-fits-all approach to establishing a family office. Often, the main drivers behind the specific family office structure are the set-up and annual running costs. Where the Assets Under Management (AUM) of the same family are substantial, a Single Family Office (SFO) that provides services to the same family is recommended. Contrary, if the AUM of the family are not substantial, from a cost-efficiency perspective, a Multi Family Office (MFO) set-up, which provides services to different families, is preferable.

Family Office Location – Singapore

Singapore has emerged as the leading Family Office Hub in Asia in recent years. As of 2023, more than 59% of the family offices in Asia are located in Singapore. Singapore has become the region’s preferred destination for establishing family offices due to a number of reasons such as it’s the ease of doing business, the political and economic stability, legal and transparent system, strategic location and last but not least the attractive tax and regulatory regimes.

Fund tax incentives and licensing

The most successful fund tax incentives for family offices in Singapore are Section 13O and Section 13U. Section 13O and Section 13U provide exemption on specified income (SI) derived from designated investments (DIs). The list of DIs covers a wide range of investments. Section 13O and Section 13U also provide a substantial GST recovery rate and WHT exemption on interest payments to non-residents.

Where a SFO manages the funds of one family and the Singapore fund vehicle of the SFO forms part of the same group of companies, the Singapore SFO should automatically benefit from the exemption from holding fund management license (i.e. exemption for “related companies”). Where these conditions are not met, the Singapore Family Office may apply to the Monetary Authority of Singapore (MAS) for an exemption from regulation. Where Singapore SFO is exempt from holding fund management licence, the Singapore fund vehicle of the SFO should be subject to a stricter criteria (conditions) than the normal Section 13O / Section 13U funds.

Philanthropy tax incentive scheme

This Philanthropy tax incentive scheme is scoped to SFOs who are managing a fund under Section 13O or Section 13U. This Scheme requires additional hiring and economic commitments on top of Section 13O and Section 13U commitments.

Approved donors through this scheme should be able to claim 100% tax deduction for their overseas donations made through qualifying local intermediaries. Tax deduction is capped at 40% of approved qualifying donors statutory income.

Conclusion

Singapore has emerged as the family office hub in Asia, primarily due to its mature and stable family office ecosystem and its access to both Asia and the West. In addition, the MAS and the Singapore Economic Development Board (EDB) jointly established the Family Office Development Team to continue enhancing Singapore’s competitiveness as a global wealth and family office hub, providing a robust legal, tax and regulatory framework for setting up family offices.

Every family is unique, and therefore requires a tailored approach. Hence, families need to engage with professional advisors to access personalized advise and guidance on setting up their family office.

To learn more, please refer to the attached brochure on Singapore Family Offices and contact any of the authors of this alert.