Business Trends

Singapore has seen a sharp rise in family offices, growing from just 200 in 2019 to over 2,000 today which is an estimated 43% jump from 2023 alone. These offices now estimated to manage over S$90 billion in assets, with projections topping S$120 billion by 2025. This boom aligns with Singapore’s growing population of ultra-high-net-worth individuals and its appeal as a stable, tax-efficient wealth hub. As a result, more families are exploring how to set up family office in Singapore to capitalise on the city-state’s evolving regulatory and philanthropic landscape. 

This guide breaks down the key requirements and step-by-step process for establishing a family office in Singapore. 

Why Singapore is a Top Choice for Family Offices 

The remarkable rise of family offices in Singapore stems from several key advantages that make it an optimal jurisdiction for wealth management. The number of single-family offices has increased dramatically from just 400 in 2020 to 1,400 by the end of 2023, with more than 300 new offices added in 2023 alone. 

Political and economic stability 

Singapore consistently ranks as one of the world’s most stable and competitive economies, having topped the Global Competitiveness Report 2019 for infrastructure, health, labour market functioning and financial system development. This stability provides wealthy families with a predictable operating environment underpinned by a transparent legal system based on English common law. Moreover, Singapore ranks among the top 10 worldwide in the World Justice Project Rule of Law Index, offering robust investor protections and effective mechanisms for contract enforcement. 

Attractive tax environment 

Singapore’s competitive tax structure is particularly appealing for family offices. With a corporate tax rate of 17% and a quasi-territorial tax system, the city-state offers significant advantages including: 

• No capital gains tax or withholding tax on dividends 

• Tax exemptions for qualifying foreign-sourced income such as dividends, branch profits and service income 

• Specialised tax incentive schemes for funds under Sections 13O and 13U of the Income Tax Act 

Access to regional investment opportunities 

Strategically positioned at the heart of Asia-Pacific, Singapore serves as an essential gateway to some of the world’s fastest-growing economies. The city-state is located within a six-hour radius of any country in Southeast Asia, a region projected to become the world’s fourth-largest economy by 2030. Additionally, its international connectivity through Changi Airport and one of the world’s busiest shipping ports (connected to 600 ports across 120 countries) facilitates efficient access to regional markets. 

Supportive government initiatives 

The Singapore government actively fosters family office growth through targeted initiatives. In 2019, the Economic Development Board (EDB) and Monetary Authority of Singapore (MAS) established the Family Office Development Team (FODT) to enhance Singapore’s position as a global family office hub. The FODT implements a three-pillar strategy focused on: 

1. Enhancing the operating environment for family offices 

2. Developing industry capabilities to meet family office needs 

3. Engaging global family offices and building a diverse community in Singapore 

These comprehensive advantages have positioned Singapore as the leading family office hub in Asia. 

Understanding Family Office Types and Functions 

Family offices fundamentally serve as dedicated entities established to manage the assets and affairs of high-net-worth families. Understanding the distinctions between different structures is crucial when setting up family office in Singapore. 

Single Family Office (SFO) vs Multi-Family Office (MFO) 

A Single Family Office (SFO) exclusively serves members of the same family, offering highly personalised service with complete focus on one family’s specific needs and objectives. This structure provides maximum privacy, confidentiality, and control over wealth management decisions. Conversely, a Multi-Family Office (MFO) serves multiple unrelated families, providing shared resources and services that distribute operational costs across several clients. 

The primary differences between these structures include: 

• Customisation level: SFOs offer bespoke services tailored to one family, whereas MFOs provide standardised services with some customisation 

• Cost efficiency: MFOs typically offer greater economies of scale through shared resources 

• Privacy: SFOs provide higher levels of confidentiality as information is not shared among multiple families 

• Control: Families utilising SFOs maintain greater control over operations and investment decisions 

Core functions: investment, governance, philanthropy 

Investment management remains the central function of most family offices, involving strategic planning, execution, and ongoing management of the family’s portfolio. This includes asset allocation, risk management, and performance monitoring aligned with the family’s financial goals. 

Family governance functions encompass succession planning, education for family members about financial matters, and developing family constitutions that define values and decision-making processes. 

Philanthropic planning has grown increasingly important, with family offices managing charitable giving and foundations. 

Choosing the right family office structure 

The optimal family office structure depends on several factors, including asset size, family complexity, and specific objectives. Families with substantial wealth exceeding hundreds of millions typically benefit from SFOs, while those seeking cost efficiencies might prefer MFOs. For Singapore-based family offices, additional considerations include tax incentive eligibility under Sections 13O and 13U schemes, which offer significant advantages for qualifying structures. 

Key Legal and Tax Requirements in Singapore 

Navigating the legal framework forms a critical part of establishing a family office in Singapore. The city-state has created specific structures designed to attract global wealth while ensuring proper governance. 

Overview of Section 13O and 13U schemes 

At the heart of family office Singapore requirements are two tax incentive schemes that exempt qualifying income from investment activities. The Section 13O scheme (formerly 13R) targets smaller family offices with simpler requirements, whereas Section 13U (formerly 13X) suits larger operations with more substantial assets. Both schemes exempt income from designated investments, including dividends, interest, and specified derivatives. Furthermore, the schemes differ primarily in their minimum asset requirements and application process complexity. 

Minimum AUM and staffing criteria 

For Section 13O qualification, family offices must maintain a minimum Assets Under Management (AUM) of S$10 million at application, increasing to S$20 million within two years. Comparatively, Section 13U requires a minimum AUM of S$50 million. Specifically, both schemes mandate: 

• Annual local business spending of at least S$200,000 for 13O and S$500,000 for 13U 

• Employment of at least two investment professionals for 13O and three for 13U 

• Implementation of proper governance structures 

Variable Capital Company (VCC) structure 

Introduced in 2020, the VCC structure offers remarkable flexibility for family offices, allowing for segregated sub-funds under one legal entity. This structure provides confidentiality advantages since only the VCC’s constitution is publicly available, not individual shareholder details. The VCC can be used effectively with either 13O or 13U tax incentives, creating an optimal structure for family wealth management. 

Step-by-Step Guide to Setting Up a Family Office in Singapore 

Establishing a family office requires meticulous planning and execution. The following roadmap outlines essential steps to navigate Singapore’s regulatory landscape effectively. 

1. Define objectives and services 

First, clarify the core purpose of your family office. Determine whether it will focus on investment management, philanthropy, succession planning, or wealth preservation. Subsequently, identify which services will be managed in-house versus outsourced to specialists. Affluent families should develop a comprehensive family charter that articulates values, vision, and goals to guide long-term decision-making. 

2. Choose legal structure and register entity 

After determining objectives, select an appropriate legal structure. Options include Private Limited Companies, Limited Liability Partnerships, or the Variable Capital Company (VCC) introduced in 2020. For a private limited company, appoint at least one Singapore-based director and maintain minimum paid-up capital of S$1.  For approved schemes under the VCC structure, at least three directors are required, with a minimum of two being independent of the fund manager and key service providers. Among these directors, there must be at least one Singapore resident and at least one who is also a director or employee of the licensed or exempt fund manager. 

3. Hire professionals and build governance 

Investment professionals form the backbone of family office operations. For the Section 13O scheme, employ at least two investment professionals; for Section 13U, hire three professionals including at least one non-family member. These professionals must be Singapore tax residents earning a minimum of S$3,500 monthly. Establish clear governance frameworks, including decision-making protocols and risk management systems. 

4. Open bank accounts and set up operations 

Securing banking relationships with MAS-licenced institutions is mandatory for tax incentive eligibility. Formerly taking up to a year, this process has been streamlined to under three months for most applications. Implement robust back-office systems for accounting, portfolio management, and compliance functions. 

5. Apply for tax incentives and ensure compliance 

Beginning October 2024, all tax incentive applications must include a screening report from authorised providers. This screening process typically takes two weeks. Our services can help you navigate these complex requirements efficiently, ensuring your family office meets all regulatory obligations while maximising available incentives. 

Throughout this process, engaging qualified advisors proves invaluable. Professional guidance helps establish appropriate structures and recruit suitable talent, facilitating seamless operations and strategic investment decisions. 

Conclusion

Singapore has solidified its position as a leading destination for family offices, offering a stable environment, attractive tax incentives, and access to Asia’s dynamic markets. Whether you choose a Single Family Office for greater control or a Multi-Family Office for shared efficiencies, it is essential to understand the regulatory requirements, tax schemes such as Sections 13O and 13U, and structures like the Variable Capital Company. 

For families looking to combine wealth management with permanent residency, the Global Investor Programme provides a compelling option. While setting up a family office involves careful planning, the long-term benefits in terms of tax efficiency, wealth preservation, and regional access are substantial. 

Ready to establish your family office in Singapore? Our team is here to guide you through each step, ensuring a compliant and customised setup that aligns with your family’s goals. 

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