In recent years, as the founders of Bridgewater Hedge Fund, Haidilao, and Dyson Vacuum Cleaner opened their family offices in the garden city country Singapore, Singapore family office has received widespread attention.
So what exactly is a family office? Why do successful people choose to come to Singapore to open a family office? Today, let’s take a look the new darling of private banking clients.
Family office
Protect family wealth and handle family affairs
Family Office (referred to as "FO") is an organization that provides comprehensive wealth management and family services to wealthy families, so that the value of managed assets can be preserved and stable growth can be achieved, and it can be passed on smoothly down the generations. In addition to managing family wealth, the family office can also handle many family affairs, such as: managing family employees, travel arrangement, property management, accounting and payroll, legal, family governance, financial and investment education, philanthropy coordination, business succession planning, etc.
Family Office, through the establishment of an independent institution, hiring investment managers, manages the family asset portfolio on its own, helps the family to better complete the wealth management goals in a safe environment without conflicts of interest, realizes family governance, and protects the family's dreams. Family Office can be an ordinary limited company, or can be placed in the structure of a family trust, so as to achieve long-term succession planning and asset protection.
Features of Family Office
• Family assets are injected into the company and separated from natural person
• When transferring assets, only the equity of the holding company needs to be transferred
• FO can hire professionals to manage family assets
The modern concept of family office was developed in the 19th century. In 1838, the JPMorgan Chase family established the House of Morgan to manage family assets. In 1882, the Rockefellers established the family office, which is still today.
Why choose to open a family office in Singapore?
Choosing the right place to set up a home office will have a profound impact on the family. Families are not only considering choosing a location for investment and financial management, but also choosing a place that can provide stability and protection. Many people are willing to set up family offices in Singapore. Even those who already have family offices in Europe want to set up a satellite office in Singapore, because Singapore has scored high on many factors that should be considered when setting up a home office.
Stable and pro-business environment
Singapore is very politically stable, and the government has consistently adopted a very business-friendly stance in its policies. In the past ten years, according to the World Bank’s annual rankings, Singapore has been ranked as the easiest country in the world to do business or the second easiest country to do business.
Financial Trade Gateway
As a major transportation, logistics and financial hub, Singapore has one of the most extensive trade agreements in Asia. It has a network of more than 20 implemented Free Trade Agreements (FTAs) and has established contacts with more than 30 trading partners in the world. These partners include major Asian economies such as China, Japan, and India, as well as other major economies such as the United States, which makes trade and investment facilitation easy.
Reputable Legal System
When considering where to set up a family office, the legal framework of a country is an important consideration. In this regard, the Lion City once again ranks among the top according to the latest world legal system rankings, Asia ranks first and the world ranks 13th.
Preferential tax schemes
Singapore’s preferential tax schemes are very attractive to family offices. For example, there is tax exemption for specific investment income managed by the family office. This means that once approved by the MAS, these funds are not required to pay Singapore tax on designated income or designated investment income. Singapore has a comprehensive network of more than 100 Double Taxation Agreements (DTA), including agreements with countries such as China, Indonesia, and India. These DTAs mean that certain types of income will be tax deducted or even tax-free-which is very attractive for families with cross-border family businesses. If the structure is correct, a family office established in Singapore can benefit from Singapore’s extensive DTA network.
Singapore Family Office Tax Exemption Scheme
13CA/13R/13X
In order to encourage the development of family offices, the Monetary Authority of Singapore provides exemptions for license applications and relevant tax incentives for family offices. The main applicant setting up a single-family office in Singapore can be exempted from the registered fund management company (RFMC) and licensed fund management company (LFMC) fund licenses. The investment income of the fund can enjoy the tax exemption scheme of Singapore funds (13CA / 13R / 13X). The fund manager (the main applicant) manages his or his family’s own assets through the family office and obtains an Employment Pass (EP). After holding the work pass (EP) for 6 months and meeting the conditions, the applicant can apply for Singapore permanent resident status (PR). Spouses and unmarried children under the age of 21 can apply for a Dependant's Pass (DP); parents can apply for a long-term visit visa (LTVP). The following table simply compares the three tax exemptions 13CA, 13R and 13X.
13X | 13R | 13CA | |
|
Country of registration
|
Singapore local company or Overseas company |
Singapore local company
|
Overseas company
|
|
Minimum threshold
|
At least 50 million SGD
|
No requirement
|
No requirement
|
|
Business expenses
|
At least SGD 200,000
|
At least SGD 200,000
|
No requirement
|
|
Investment entity
|
Various entities
|
Company
|
Company or Trust Or Partnership |
|
MAS Approval
| Required | Required | Not Required |
Establishment of Singapore Family Office
A single-family office is essentially a private limited company, so what structure must be built to apply for tax exemption? To set up a single-family office in Singapore, in principle, the company should be established according to the following structure:
1. Set up a holding company
2. Set up a single-family office and investment fund wholly-owned by the holding company
3. Single-family office through investment funds
The family office for family wealth management can be an ordinary limited company, or it can be placed in the structure of a family trust. New Ark can provide clients with full consulting services for the family office, from structure to asset injection, and subsequent overseas identity applications.
Disclaimer
This article is written by New Ark Consulting and is for reference only. It may contain information that is proprietary to the Company and may not be published, distributed, reproduced or redistributed, in whole or in part, without the prior consent of the Company. The article itself is not an offer or invitation to set up a family office, trade any investment product, establish a trust or establish a specific corporate structure or establish any legal relationship. Nor does it in itself constitute advice or a recommendation regarding wealth planning structures or corporate advice. It is for general information only and does not take into account specific investment objectives, investment experience, financial situation and the specific needs of any particular person. You should approach any potential investment or proposed wealth structure with caution. You should independently evaluate and consider the suitability of such products or structures, taking into account your specific objectives, investment experience, financial situation and/or specific needs (including your own wealth management needs and circumstances). Please obtain independent financial, legal and/or tax advice from professional advisors as required before proceeding with any investment, purchasing any investment product or building your wealth. Investments in financial instruments or other products carry significant risks, including the possibility of loss of the principal invested. Past performance does not guarantee or represent future results. Neither New Ark Consulting nor any of its officers shall be liable for any damages (whether direct, indirect or consequential) arising out of or in connection with the use of this article.
While reasonable efforts have been made to ensure that the content of this article has been obtained or derived from sources believed by the Company to be reliable, New Ark Consulting has not independently verified the accuracy of such sources. New Ark Consulting's products, services or product packages may be subject to relevant laws and regulations and may be changed from time to time without prior notice. Neither New Ark Consulting nor its associates, employees, agents and representatives make any representations, warranties or guarantees, express or implied, as to the accuracy, timeliness or completeness of the information, data or current conditions referred to in this article. No liability is accepted for any direct or indirect loss or damage arising out of or in connection with the use of the content of this document. New Ark Consulting and its affiliates may publish other reports, analyses or other documents that may express opinions that differ from those contained herein, and all opinions expressed in all reports, analyses and documents are subject to change without notice.