20/03/25

ASIA: Singapore And Hong Kong: Rise Of Family Office Hubs, Appeal Of Territorial Tax

As published on: wealthbriefingasia.com, Thursday 20 March, 2025.

While rivals in some ways, Hong Kong and Singapore also have points in common when it comes to attracting HNW and UHNW individuals – some of whom are more minded to seek a change in light of rising taxes and geopolitics, the authors argue.

The following article comes from Marco Mesina and Amy Zhang. Mesina is the founder of Move to Dolce Vita and an Italian lawyer specialising in strategic tax relocations to Italy and other jurisdictions. Zhang has over 20 years of experience in wealth management and wealth planning servicing high net worth individuals and families from Greater China and ASEAN regions.

In this article, the authors focus on advice to HNW and ultra-HNW people about cross-border matters, such as citizenship, residency, and optimising their tax positions. These tasks have become more urgent as governments in some countries, such as the UK and Norway, have gone after wealthy individuals, or because of rising geopolitical tensions.

In recent years, Singapore and Hong Kong have emerged as premier destinations for high net worth individuals and ultra-UHNW individuals seeking to establish single family offices and manage their wealth. The key driver behind this trend is their territorial tax system and friendly tax exemption schemes, which offer significant tax advantages for income generated outside these jurisdictions. However, beyond taxation, these financial hubs provide political stability, strong regulatory environments, and access to global financial markets, making them attractive choices for wealth preservation and legacy planning.

Understanding the territorial tax system
Unlike many Western countries that impose worldwide taxation on their residents, territorial tax jurisdictions such as Singapore and Hong Kong only tax income sourced within their borders. This means that foreign-sourced income – including offshore investments, dividends, capital gains, and business profits earned outside the jurisdiction – is either tax-exempt or subject to preferential treatment.

Hong Kong maintains a longstanding tax framework exempting foreign-sourced income, provided it is not remitted to Hong Kong. This flexibility is particularly beneficial for multinational entrepreneurs and investors who derive income from international activities. Singapore operates under a similar tax regime but enforces more stringent compliance and expenditure requirements. Singapore operates a modified territorial basis of taxation. Individuals and companies are taxed on income sourced in Singapore. Companies are taxed on income received in Singapore if it is sourced outside Singapore, except if certain prescribed conditions for exemption are met.

For a family with business interests in Asia, both Hong Kong and Singapore would be a good consideration for setting up operations to expand in the Asia region. With the territorial tax system and lower corporation tax (Hong Kong is 16.5 per cent and Singapore is 17 per cent) and income tax (Hong Kong is 2 per cent to 17 per cent and Singapore 0 per cent to 24 per cent).

Tax exemption scheme for single-family office
The Singapore Enhanced Tier Fund Scheme (13O/U/D) and the Singapore Variable Capital Company (VCC) structure incentivise family offices to establish investment entities within Singapore. All capital gains and Income generated from the investment vehicle are tax exempt. The Monetary Authority of Singapore (MAS) actively promotes these incentives to ensure that Singapore remains a competitive global wealth hub.

Hong Kong provides profits tax concessions for eligible FIHVs (family-owned investment holding vehicles) on assessable profits earned from qualifying transactions and incidental transactions, being a concessionary tax rate of zero. Both Hong Kong and Singapore’s single-family office framework offer tax residency status in either jurisdiction which allows wealthy families to optimise their tax obligations. Depending on their original citizenship, many individuals may benefit from Singapore or Hong Kong tax residency to significantly reduce their global tax burden.

The growing appeal for wealthy families
A key reason why family offices and HNW individuals relocate to Singapore and Hong Kong is the exceptional tax efficiency these jurisdictions provide. The absence of wealth tax or inheritance tax allows for efficient wealth accumulation and intergenerational transfer strategies.

Beyond taxation, both jurisdictions offer robust legal frameworks, strong financial ecosystems, and high levels of privacy protection, which are crucial for asset security and wealth management.

Singapore boasts a business-friendly environment, backed by strong governmental initiatives such as the Global Investor Program (GIP), which facilitates foreign investment and provides residency opportunities for qualifying investors. Singapore’s confidentiality laws further enhance its attractiveness for wealth preservation.

Hong Kong has a well-established financial services industry, with a deep network of private banks, legal advisors, and investment professionals. Its strategic location as a gateway to China provides access to a vast market of investment opportunities, particularly in the Greater Bay Area.

Fund tax incentive schemes and family office structures
Singapore and Hong Kong have implemented specific tax incentives to attract family offices, ensuring that these jurisdictions remain globally competitive for wealth management.

Singapore’s family office tax incentive schemes
According to MAS, Singapore offers several tax exemption schemes under the 13O, 13U, and 13D regulations:

-- 13O (Onshore Resident Funds): Minimum S$20 million ($15.029 million) AuM required (with S$10 million at the point of application, increasing to S$20 million in the second year). Requires two investment professionals and minimum annual business spending of S$200,000;

-- 13U (Enhanced Tier Funds): Minimum S$50 million AuM, three investment professionals (one must be non-family), and minimum annual business spending of S$500,000 to S$1 million, depending on the AuM; and

-- Singapore Variable Capital Company (VCC): Offers a flexible fund structure that allows family offices to pool multiple investment strategies under a single umbrella while benefiting from corporate tax exemptions.

Hong Kong’s family office landscape
The tax concession regime for family offices, which came into operation on 19 May 2023, is one of the policy measures which provides tax incentive intended to attract high net worth private families to set up family offices in Hong Kong and operate family-owned investment holding vehicles from Hong Kong.

Capital Investment Entrant Scheme (CIES): Reintroduced in 2024, requires a minimum investment of $5 million to qualify for residency.

Quality Migrant Admission Scheme (QMAS): Requires a tax receipt of $320,000 from China for residency eligibility.

Hong Kong’s financial sector provides a highly developed investment landscape, including access to IPOs, venture capital, and real estate investments.

Residency, lifestyle, and business considerations
Both Singapore and Hong Kong offer attractive residency and lifestyle benefits to wealthy families.

Singapore: Residency under the single-family office scheme grants two-year employment passes (renewable), with a pathway to permanent residency (case-by-case basis). The city-state offers world-class education, healthcare, and infrastructure, making it an ideal location for families seeking long-term relocation.

Hong Kong: The CIES programme requires seven years of residency for permanent status, allowing flexibility for business travel. Hong Kong’s international schools, luxury real estate, and vibrant cultural scene make it an appealing choice for expatriates.

Other key differentiators include:
-- Language: English is widely spoken in both cities, with Mandarin being common in Singapore and Cantonese predominant in Hong Kong;

-- Climate: Singapore has a tropical climate (25 to 38°C year-round), while Hong Kong experiences distinct seasons, with winter temperatures dropping to 5°C to 15°C;

-- Geography: Singapore provides easier access to Southeast Asia, whereas Hong Kong is a gateway to China’s Greater Bay Area, a hub for tech and financial innovation.

The future of family offices in Asia
As global tax regulations tighten and traditional tax havens face increased scrutiny from the OECD and EU, Singapore and Hong Kong are positioning themselves as legitimate, transparent wealth management hubs. Both jurisdictions are:

-- Encouraging ESG-focused investments and sustainable finance initiatives;
-- Embracing fintech innovations, including blockchain-based financial services and AI-driven investment solutions; and
-- Strengthening regulatory compliance and investor protections to attract global family offices.

For HNW and UHNW individuals seeking a stable, low-tax environment with access to sophisticated financial markets, Singapore and Hong Kong will remain top choices. Their combination of tax efficiency, legal stability, business incentives, and lifestyle benefits makes them unparalleled hubs for global wealth management and intergenerational legacy planning.

Tags

Singapore Hong Kong Family Offices