setting up a Family Office in Singapore
Step-by-step guide on how to setup Family Offices in Singapore
Family offices have become a vital tool for high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) to manage their wealth, preserve assets, and plan for future generations. As one of Asia's leading financial hubs, Singapore offers an attractive environment for establishing a family office with attractive tax incentives. With its robust regulatory framework, stable political climate, and favorable tax regime, Singapore has emerged as a preferred destination for families seeking to establish and operate their family offices.
This guide aims to provide a step-by-step overview of how to set up a family office in Singapore, taking into account the key considerations and regulatory requirements. By following these steps and seeking professional advice, families can navigate the process effectively and position their family offices for long-term success in Singapore's thriving wealth management industry.
What is a Family Office in Singapore?
A Family Office (FO) is defined as a private company that provides a range of services for wealth management for ultra-rich families. The Singapore family offices are usually set up with complex financial portfolios and need professional help to manage their assets.
FOs can be either standalone entities or part of a larger financial institution. Singapore family offices typically provide fund management, tax planning, estate planning, and philanthropy advice.
Family offices in Singapore often have a team of professionals with expertise in various financial disciplines such as fund management. Singapore family offices may also employ accountants, lawyers, and other financial advisors in addition to investment managers.
The goal of a Singapore FO is to help families in their business spending, philanthropic giving, and investment portfolio management. The best FOs cater their services to the specific needs of the families they serve and keep an eye on wealth management for the long term.
High-end families need professionals as their business spending, philanthropy, and investment portfolio management are much more complicated. Therefore, assets under management by Singapore family offices have been growing in recent years, as more wealthy families look to professionals to help them manage their finances.
Step 1: Define Objectives and Structure
Before embarking on setting up a FO, it is crucial to define the objectives and structure that best align with the family's unique needs and goals. This involves determining the purpose of the family office, whether it is primarily for investment management, wealth preservation, philanthropy, or a combination of these factors.
Another crucial decision is whether to establish a single-family office (SFO) dedicated solely to the family or opt for a multi-family office (MFO) that serves multiple families. The choice between these structures depends on factors such as the scale of the family's wealth, the complexity of their affairs, and the desire for cost-sharing and collaboration with other families.
Single Family Office (SFO):
This type of FO is set up to serve only one High Network family. It’s a private entity in which one family manages its own assets. Assets go into the family fund, the fund investment is selected by the client himself or the financial planner; a legal entity established by a wealthy family for the purpose of wealth management, and wealth planning for the member of the family.
The SFO, a single-family office, is exempted from registering fund licenses such as Registered Fund Management Company (RFMC) or Licensed Fund Management Company with the Monetary Authority of Singapore (MAS).
Based on the above family office structure, you would typically setup 2 entities via ACRA with one entity as the investment management company to management the fund and the other company as the fund company to hold the funds. Learn more about how you can Register a Company in Singapore.
Multi-Family Offices (MFO):
A private company that provides financial and other services to multiple wealthy families.
The MFO is a family office created by a combination of families that are not necessarily related to each other. There are three main sources: the first is the shift from a single family office, the SFO, to accept other family clients; the second category is private banking, set up to better serve big clients; the third category is created by professionals.
MFO (Multi-Family Offices) require Registered Fund Management Company (RFMC) and Licensed Fund Management Company (LFMC) fund licenses, similar to Enterprise Asset Management (EAM).
Additionally, assessing the specific needs and preferences of the family is essential. This involves considering factors such as the desired level of family involvement, decision-making processes, and the scope of services the FO will provide.
Step 2: Seek Professional Advice
It is important to note that setting up family offices involves navigating a complex landscape of legal, regulatory, and financial considerations. It is best to engage experienced professionals who are such as lawyers, accountants, and wealth advisors, to ensure that you comply compliance with Singapore laws and regulations and most importantly benefit from their expertise in family office structuring which can lead to savings in compliance and tax.
One Visa partner is a certified corporate secretarial and accounting firm that partners with a licensed professional like a lawyer, wealth advisor, private banks, insurance agents and fund management companies to guide families through the entire process, help define the family office's legal structure, and provide strategic advice on matters such as tax planning, compliance, and investment management. Our involvement from the outset can help families avoid pitfalls and make informed decisions that align with their long-term goals.
Step 3: Understand Regulatory Requirements: How do you qualify for a family office in Singapore?
When setting up family offices in Singapore, it is important to comply with the regulations. The MAS is the regulatory authority that overlooks financial institutions, and fund management companies including family offices. Understanding the MAS regulations is crucial to ensuring a smooth and compliant setup process.
It is important to determine if your Singapore FO qualifies under the MAS regulations as a family office and whether you need to obtain a license or register with the authority. As regulatory requirements can evolve, it is crucial to stay updated and consult with professionals to ensure compliance.
Step 4: Determine Office Structure and Operations
Choosing the right structure for the family office is a crucial step. Families need to decide whether to establish an independent office or outsource certain functions to external service providers. Each option has its pros and cons, and families must carefully evaluate their preferences, capabilities, and resources.
Identifying the staffing requirements and roles within the FO is another critical aspect. This includes determining the involvement of family members, as well as the need for investment professionals, legal advisors, and accountants. Outlining the scope of services the FO will provide, such as investment management, tax planning, estate planning, and administration, will further help define the office's operations.
Step 5: Develop an Investment Strategy for Wealth Management
Formulating a sound investment strategy is a pivotal aspect of setting up family offices. The investment strategy should be aligned with the family's financial goals, risk tolerance, and time horizon. Considerations include asset allocation, diversification across various asset classes (equities, fixed income, real estate, alternative investments), and investment vehicles.
Decide whether to manage investments in-house or delegate them to external investment managers. In-house management provides more control and customization, while outsourcing may offer access to specialised expertise and resources. Implementing robust risk management and performance monitoring processes is crucial to ensure effective investment management.
Step 6: Understand Tax Incentives Considerations, and Exemption Schemes
As Singapore is trying to attract more ultra-high-net-worth to set up their one-stop shop here, it offers a very attractive tax incentives regime for FO. There are various tax incentives exemption schemes available but in this article, we are only going to explore 2 key tax exemption schemes, namely 13O and 13U.
Section 13O: a qualifying FO can enjoy tax exemption on specified investment income derived from designated investments. The exemption applies to income such as dividends, interest, and gains from the disposal of designated investments. This scheme aims to attract family offices to establish and grow in Singapore.
Section 13U: provides a tax exemption for income derived from funds managed by a fund manager in Singapore. This exemption applies to both resident and non-resident family offices that meet the qualifying conditions.
| المعايير | S13O | S13U |
|---|---|---|
| Assets Under Management | Minimum S$ 20 million in Designated Investments at point of application and throughout the incentive period. | Minimum S$ 50 million in Designated Investments at point of application and throughout the incentive period. |
| Investment Professionals | Employ minimum 2 professionals, of whom at least 1 is not a family members of the beneficial owners at the point of application and throughout the incentive period. | Employ minimum 3 professionals, of whom at least 1 is not a family members of the beneficial owners at the point of application and throughout the incentive period. |
| Relevant formal work experience academic qualifications to qualify as investment professionals. | Relevant formal work experience academic qualifications to qualify as investment professionals. | |
| Qualified Investment Professionals must be employed as portfolio manager, research analyst, trader who will earn more than S$ 3,500 per month and engage more than 50% of the time in the qualifying activity | Qualified Investment Professionals must be employed as portfolio manager, research analyst, trader who will earn more than S$ 3,500 per month and engage more than 50% of the time in the qualifying activity | |
| Qualified Investment professionals must be Singapore tax residents throughout the incentive period | Qualified Investment professionals must be Singapore tax residents throughout the incentive period | |
| Spending Requirement | Tiered Spending Requirement, with minimum S$ 200,000 in Local Business Spending | Tiered Spending Requirement, with minimum S$ 200,000 in Local Business Spending |
| Donations to local charities and grants to be blended finance structures with substantial involvement of financial institutions in Singapore recognised in Tiered Spending Requirement computation. | Donations to local charities and grants to be blended finance structures with substantial involvement of financial institutions in Singapore recognised in Tiered Spending Requirement computation. | |
| Capital Deployment Requirement | Investing lower of S$10 million or 10% of AUM in: i. Equities, REITS, Business Trusts, or ETFs listed on MAS approved exchanges; ii. QualifyingDebt Securities; iii. Non-listed funds distributed by licensed financial institutions in Singapore; iv. Investments into non-listed Singapore operating companies; v. Climate-related investments; Blended finance structures with substantial involvement of financial institutions in Singapore. 2. 1.5x or2x amount invested in eligible investments recognised for Capital Deployment Requirement computation | Investing lower of S$10 million or 10% of AUM in: i. Equities, REITS, Business Trusts, or ETFs listed on MAS approved exchanges; ii. QualifyingDebt Securities; iii. Non-listed funds distributed by licensed financial institutions in Singapore; iv. Investments into non-listed Singapore operating companies; v. Climate-related investments; Blended finance structures with substantial involvement of financial institutions in Singapore. 2. 1.5x or2x amount invested in eligible investments recognised for Capital Deployment Requirement computation |
| Private Banking Account | The Fund must be a private banking account with a MAS-license financial institution at the point of application and throughout the incentive period | The Fund must be a private banking account with a MAS-license financial institution at the point of application and throughout the incentive period |
It is important to speak with our tax advisors to learn more about the eligibility criteria and optimize tax planning strategies based on the family office's specific circumstances.
License Requirements Under the Monetary Authority of Singapore (MAS):
If you plan to set up a family office, there are some Monetary Authority of Singapore(MAS) license requirements that you need to consider.
1. First, you need to have a minimum capital of $1 million.
2. Additionally, your FO must be licensed as a financial advisor or moneylender.
3. Finally, you must have a compliance officer responsible for ensuring that the FO complies with MAS regulations.
MAS licenses are not easy to obtain, but if you follow the MAS requirements, you should be able to get your family office up and running in no time.
Types of Singapore Residency Visa Options under the Singapore Family Office
There are various Singapore Visa Schemes available for those setting up their FO in Singapore to encourage foreigners to stay in Singapore. See below for visas' available:
1. SINGAPORE PR under the Global Investor Program (GIP): For those who are setting up a family office with at least 200 million Asset Under Management, they can explore this direct Singapore PR scheme under the برنامج المستثمر العالمي.
2. Employment Pass: Every family office will be given 1-3 employment pass quota for the principal to reside in Singapore. Check out our Singapore Employment Pass Guide.
3. Overseas Network & Expertise Pass (ONE Pass): If the principal of the family office is paying himself/herself a monthly salary of 30,000 SGD, he/she can explore the ONE Pass Singapore.
License Requirements Under the Monetary Authority of Singapore (MAS):
With all the different aspects of setting up and running a single-family office, it's important to find the right professionals to help you. A professional will ensure that your assets under management are being handled with expertise.
This is where One-Visa Comes in.
We are a team of experts with over a decade of experience setting up and running single-family offices. With our professionals, we can provide you with all the advice and support you need to set up your family office and help you find the right investment professionals to provide the services you need. Business spending accounts, such as family office accounting, bookkeeping, and payroll, can be easily managed by our team.
Assets under management are important, and with investment professionals managing your assets, you can rest assured they will be protected and will grow as well.
Not sure where to start for your Family Office?
We have over 10 years of expertise serving highly established business owners or high net-worth individual in their immigration need. For a limited period only, we are offering a Complimentary Consultation.
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A family office is a private entity that manages the financial and wealth-related affairs of high-net-worth individuals (HNWIs) and their families.
Singapore offers a stable political environment, favorable tax policies, a well-established financial sector, and a robust regulatory framework, making it an attractive location for family offices.
There are mainly two types: Single-Family Offices (SFOs), which serve one family exclusively, and Multi-Family Offices (MFOs), which serve multiple families.
Whether you need to register or obtain a license depends on the structure and activities of your family office. Some may qualify for exemptions, while others may require regulatory approval from the Monetary Authority of Singapore (MAS).
Family offices offer a range of services, including investment management, wealth planning, tax optimisation, estate planning, philanthropic guidance, and more.
Family offices must adhere to regulations set by the MAS, including compliance with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) requirements.
Singapore offers various tax incentives and exemptions for family offices, such as the Section 13O and Section 13U schemes. Consulting with tax professionals is essential to optimise tax planning.
The timeline can vary, but it generally takes 4 – 8 months to complete the setup process, including legal and regulatory approvals.
Investment decisions should align with the family’s financial goals and risk tolerance. Diversification across asset classes and thorough risk management are crucial.
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