Family office in Singapore
Choosing a location for a family office is an important step in the process of setting up your family office. In Southeast Asia, the most preferred location for the establishment of a single-family office or the use of a multi-family office is Singapore.
Singapore, a strong and stable financial centre in Asia
Singapore has built its reputation as a strong, stable and independent financial centre in Asia. The Republic of Singapore (the official name of the jurisdiction) achieved independence from the British in 1965. Singapore is a member state of the Commonwealth of Nations and is a parliamentary democracy organised as a republic.*
Singapore’s economy is highly innovative and is one of the most business-friendly and least corrupt economies in the world. International trade and financial services play an important role. Its currency is the Singapore dollar (S$) and Singapore holds a globally rare AAA/Aaa credit rating.
*Source: https://www.visitsingapore.com
Singapore’s (financial) infrastructure
Singapore’s financial and economic stability and the fact that the jurisdiction is well-organised and well-governed are relevant elements for family offices. As Singapore is considered the most important financial centre in the south-eastern part of Asia, proximity to local and global private banks, investment banks and other high-quality financial service providers is guaranteed. The presence of these institutions also makes it easier to recruit experienced family office staff. Recruitment of highly-qualified foreigners is, under conditions, also possible.
Singapore has a territorial tax regime. This means that corporate and personal income taxes only need to be paid on income accruing or derived from a Singapore source. The applicable tax rates are modest and the jurisdiction offers a considerable range of legal structures to hold and manage the assets of wealthy families. Singapore has also signed a large number of treaties for the avoidance of double taxation.
It has a highly reliable Common law legal system, which is based on the English system. Some areas of the legal system are primarily statutory in nature, other parts are judge-made, based on the decisions of local judges. It needs to be noted that legal advice may only be offered by lawyers from a registered law firm.
Due to its large international airport and modern infrastructure, Singapore is easily accessible and easy to get around.
Singapore family office offerings
There is a wide variety of reasons as to why Asian families consider setting up a single-family office. Most Asian families want control over their assets, professionalise their investment management and to organise their succession planning. Singapore can facilitate these families with a variety of offerings.
Economic Development Board Global Investor Programme – family office option
Singapore’s Economic Development Board (EDB) runs a Global Investor Programme (GIP)*, which allows families who want a permanent residency (PR) in Singapore to use the GIP Family Office route to establish a family office as well as to achieve PR. This means that setting up a family office in Singapore can be part of your family’s international residency strategy.
❝ The Global Investor Programme offers an attractive family office route ❞
Under the GIP Family Office route, families should invest at least S$2,500,000 in a new single-family office in Singapore. In addition to this investment, the most important conditions are that you must possess >5 years of entrepreneurial, investment or management track record and your new single-family office will need to manage at least S$200 million investible assets, of which S$50 million must be held in a Singapore based bank. More information about the Singapore Global Investor Programme Family Office option you will find on our ‘residence in Singapore’ page.
Sec 13X Tax Exemption
The Singapore government has put certain tax exemptions in place to make Singapore a place to consider when setting up a family office. Most notably, the family office investment fund (a private investment fund) can apply to the Monetary Authority of Singapore (MAS) to qualify for a tax exemption under section 13X** of the Income Tax Act (the Singapore Enhanced Tier Fund Tax Exemption Scheme)***. This will enable a family, acting as their own fund manager, to hold and invest their assets in a tax-efficient manner.
In order to qualify under section 13X, the fund should at least:
- Have a minimum size of S$50 million;
- The fund manager should employ three Singapore-based investment professionals;
- Have S$200,000 a year local business expenditure.
The family member(s) who may join the family office as investment professionals in Singapore may apply for an employment pass in Singapore. Once they fulfil the criteria of economic contribution and minimum stay over a three-year period, they may consider applying for PR in Singapore.
*Source: EDB Singapore
**A tax exemption under another section might also apply; this is very much depending on your specific family and wealth situation and the preferred structure.
***For investors residing in jurisdictions other than Singapore, the tax consequences of investing in and receiving distributions from such fund will differ from jurisdiction to jurisdiction.
Need for a (family office) licence
In order to act as a Singaporean single-family office, there is no need to apply for a single-family office licence from the MAS as, similar to most other jurisdictions, there is not such a thing as a (single-) family office licence in Singapore.
Nevertheless, all financial services providers in Singapore, which are managing funds for a customer, need to have some type of licence issued by the MAS, but exceptions or exemptions may apply. When you intend to establish a single-family office in Singapore, it is, therefore, important to carefully analyse and decide which activities it will provide and to verify in advance if a financial licence for that activity is needed or whether an exemption can or should be applied for. Please refer to the next paragraph for more information on this topic.
Singapore family office structure
Singapore offers a range of structures to hold your family assets, such as trusts established according to Singapore law, private trust companies or (private) investment funds, Singapore companies or limited partnership structures.
In most cases, the single-family office entity itself is established as a Singapore private limited company. Such a company will be subject to the standard corporate tax rates. This entity, which does not hold assets itself, could only act as a coordinator for the family’s assets. In most cases, it also acts as the investment manager or financial advisor of the family.
When it is structured correctly and only acts on behalf of family members, or for companies directly or indirectly held by family members, it can in most cases apply with the MAS for an exemption of financial regulations that will fall within the scope of the Securities and Futures Act and/or the Financial Advisers Act. In addition to standard exemptions, there is also the possibility to apply for an exemption on a case-by-case basis. On the other hand, it might in some cases be attractive to be in fact licensed under one of these Acts. For example, in case the family wants to evolve over time into a multi-family office.
You will find more about what needs to be considered when setting up a single-family office on our dedicated page.
