Set up your own Single
Family Office in Singapore
Singapore - an ideal place
for your wealth
Singapore is one of the world's largest financial centers and is known as the "Oriental Switzerland". No inheritance tax, no capital gains tax, low personal income tax and corporate income tax. It is a tax haven in Asia and the world, and an ideal place for your wealth.
Deciding to set up a family office is only the first step. If you want to set up a Family Office in Singapore, you should consider the following seven key points. These points of course cannot cover all situations, but they can be used as a good reference to understand some common considerations.
Seven Key Considerations When Establishing a Family Office
What is your goal for setting up a family office in Singapore?
The family office is a centralized unit that helps coordinate various family activities.
These activities include providing a consistent investment strategy for the entire family, reporting taxes and consolidating accounts. Understanding the goals of setting up a family office will help you select the appropriate considerations and draw up the best structure for the family office.
For example, if the main goal of one of the founders is to ensure that the main family members obtain the legal qualifications for permanent work and residence in Singapore, it may be necessary to appoint these family members as members of the investment committee of the family office. If the client wishes to move overseas, the family office may review immigration matters to find possible tax residency status.
Another role that family offices are increasingly playing is to integrate reporting under the common reporting standards for companies.
The Common Reporting Standard is an information standard for the automatic exchange of tax and fiscal information around the world, aimed at combating tax issues. The tax consultants we work with will explain the different tax exemption plans and requirements to the family to understand how to enjoy the greatest tax benefits in a legal way. After considering the needs of the family, we can suggest the relevant family office structure. We will cooperate with major banks, top law firms and tax advisory agencies in Singapore to provide our clients with the best and most comprehensive advice.
What assets will you inject into the family office?
You can inject multiple types of assets into the family office, including financial investments, and even private or publicly listed companies.
Assets can also include real estate. The usual question in this field is whether the jurisdiction where the property is located levies inheritance tax and transfer tax, and whether there are other holding restrictions.
Some of our customers own valuable items, such as private jets, yachts, rare works of art, gems and precious metals, and heirlooms.
Before deciding which specific assets to inject, careful consideration is the most important part, because the characteristics, location and other details of the assets may affect the tax and legal advice provided by the lawyer to the client in the relevant jurisdiction, thereby affecting the Evaluation of the best asset transfer method.
We will review with customers the assets that can be accepted by the bank and discuss investment strategy options.
For example, we may recommend alternative structures for assets that are not accepted by banks, such as operating a business with a private trust company.
What investment strategies and investment mandates does the family office have?
First, we need to understand the customer's investment objectives and risk level. Then, determine the amount of personal assets that will be used for investment. After understanding these details, we will recommend investment strategies and investment products that meet the customer's risk level and goals.
As for the submission of applications to the Monetary Authority of Singapore and the Economic Development Board, the regulator expects the family office to establish a clear roadmap for investment strategies and business investment mandates as part of the evaluation process.
How to apply for permit and tax exemption from the Monetary Authority of Singapore?
When the business is established as a single family office, the family office structure will be incorporated into different holding companies. If the business plan applies for tax exemption under the Enhanced Tier Fund Tax Exemption Scheme (usually referred to as Article 13X), it needs to meet the relevant requirements.
For example, the office needs to hire at least three investment experts, invest at least SGD 50 million in the fund entity, and make local business expenses of at least SGD 200,000 per year.
The business representative of this business needs to attend the interview of the Monetary Authority of Singapore, and we will coordinate and prepare for the client.
The Monetary Authority of Singapore hopes to understand the investment strategy and other details of the business before granting approval to comply with Article 13X tax exemption.
The exemption in Article 13X allows certain income from certain designated investments to be exempted from taxation. Designated investments include a wide range of assets such as stocks, shares, securities and derivatives.
What are the requirements for continuous operation?
To set up a family office, you must first decide on the location of the family office to operate the business. Other administrative matters include the opening of required bank accounts and the implementation of information technology systems to integrate investment portfolios. We will also prepare annual tax declarations and other mandatory declarations, for example, in accordance with the common reporting standards and the provisions of the Overseas Account Taxation Act.
In addition, we will assist clients in appointing external auditors to conduct annual financial audits and continue to review investment strategies with clients.
Succession planning tools worth considering
In order to ensure the sustainable operation of the family office business, we need to formulate guidelines for family governance and a family constitution (Family Constitution). This procedure helps to avoid disputes or infighting when the founders pass on the inheritance. We also need to determine the inheritance of ownership of the family office.
The tools to choose from include wills, enduring powers of attorney and private trust companies. Many customers hope that when their children grow up and mature, they will understand the ways of business operations and investment and financial management.
Therefore, we provide training for the next generation to help the next generation have a deeper understanding of family business and wealth management.
What philanthropy strategy does the family have?
In the past few years, more and more family offices have added the element of charity. The office may consider setting up a charitable trust to donate to specific charitable organizations. It is a good measure for the family to set a charity goal to clarify which specific charity the family wants to focus on. In addition, we can introduce a network of charitable partners to the family and assist in holding meetings aimed at achieving charitable goals.
