Singapore has a reputation as a jurisdiction with a stable government, robust legal structures and conducive for business. Wealthy families worldwide are always looking for ways to better and more professionally manage their wealth. Due to the complex demands, many families set up family offices to manage their wealth. Read on to find out how we can help you get set up.
Setting up family office in Singapore is similar to setting up company in Singapore, with a few more steps and considerations involved.
Singapore has a reputation as a jurisdiction with a stable government and robust legal structures that is conducive for business. It has a measured approach to regulation with agencies such as the Economic Development Board (EDB) and Monetary Authority of Singapore (MAS) promoting a business-friendly environment.
Wealthy families worldwide are always looking for ways to manage their wealth in a more efficient and professional manner, often by establishing family offices.
In Singapore, a Single Family Office (SFO) manages the wealth of members of a single family and is typically incorporated as a private limited company limited by shares. These shares may be held by the holding company of the family office, by common shareholders with the family fund entity, or by a family trust.
What is “Family”?
Under the Section 13(O) or Section 13(U) tax incentive scheme, the Monetary Authority of Singapore (MAS) defines “family” as individuals who are lineal descendants from a single ancestor, as well as the spouses, ex-spouses, adopted children and step-children of these individuals.
Minimum spending requirements for SFO
Single Family offices under the S13O scheme must incur a minimum total local business spending of S$200,000 annually.
Single family offices under the S13U scheme must incur a minimum local business spending of S$200,000 annually. For the local business spending requirements, expenses incurred should relate to the operating activities of the fund, as opposed to financing activities.
All minimum spending requirements are governed by a tiered framework based on the value of the Assets Under Management (AUM) and pro-rated from the commencement date of the incentive to the first financial year end after commencement. After that, the full minimum spending requirements apply for all subsequent years. Incorporation expenses would not be eligible as business spend as they are deemed capital in nature.
There are generally 2 different entities established under an SFO setup: the SFO and the fund entity. The SFO is the management entity that fulfils the family’s needs and manages the family assets held by the fund entity.
The incorporated fund entities may be variable capital companies (VCC) that the SFO invests in or sets up on its own, subject to regulatory requirements.
For family offices registering under the S13O scheme – locally incorporated structures – the minimum fund size is S$20 million at the point of application and throughout the incentive period.
The value of the minimum AUM for the S13U scheme is S$50 million at the point of application and throughout the incentive period.
Family offices under the S13O scheme must hire at least two investment professionals (IP), with at least one IP being a non-family member.
Under the S13U scheme, family offices are required to hire at least 3 IPs, with at least one IP being a non-family member.
An “investment professional” is a qualified Singapore tax resident employed as Traders, Research analysts, or Portfolio managers. They must earn more than S$3,500 monthly, have substantial industry experience and engage more than 50% of the time in the qualifying activity.
Investors who meet the minimum investment of S$2.5 million in a Singapore start-up or business may apply for permanent residence status for themselves and their immediate family under the Global Investor Programme (GIP).
Under the GIP SFO option, the family office principal (the person managing the SFO) may apply for permanent residency in Singapore. However, the SFO must have an Net Investible Assets* of at least S$200 million, with a minimum of S$50 million held in Singapore any of the 4 investment categories of:
Furthermore, the principal must have at least 5 years of entrepreneurial, investment or management track record and have net investible assets of at least S$200 million.
*Net Investible Assets include all financial assets, such as bank deposits, capital market products, collective investment schemes, premiums paid in respect of life insurance policies and other investment products, excluding real estate. The Singapore government has discretion to assess suitability of applicants’ Net Investible Assets.
There are a few tax exemption schemes available to a single family office in Singapore. The table below gives an outline of the various schemes.
| Section 13D The Offshore Fund Tax Exemption Scheme | |||
|---|---|---|---|
| Fund’s Legal Form | Companies, trusts and individuals | ||
| Fund’s Residency | Non-tax resident of Singapore with no presence in Singapore | ||
| Fund Administrator | No restriction | ||
| Assets under Management (AUM) | None | ||
| Approval Requirement | No approval required from the MAS | ||
| Minimum Annual Business Spending | None | ||
| Minimum number of Experienced Investment Professionals | No | ||
| Local Investments Requirements | No restrictions | ||
| Reporting Requirements | Annual statements to investors Tax filing to IRAS for non-qualifying investors | ||
| Income Tax Filing | Generally not required | ||
| Annual Declaration to MAS | Not required | ||
| Exemption Restricted to “Specified Income” from Designated Investments | Yes, at the point of application and throughout the incentive period | ||
| Section 13O The Onshore Fund Tax Exemption Scheme | |
|---|---|
| Fund’s Legal Form | Singapore incorporated company, including VCC |
| Fund’s Residency | Singapore tax resident |
| Fund Administrator | Singapore based |
| Assets under Management (AUM) | Minimum of S$20 million in Designated Investments at the point of application and throughout the incentive period |
| Approval Requirement | Approval required from the MAS |
| Minimum Annual Business Spending |
Subject to a tiered framework with minimum S$200,000 in local business
spending and as follows: – S$500,000 for AUM of S$50 million and above, but less than S$100 million – S$1,000,000 for AUM of S$100 million and above |
| Minimum number of Experienced Investment Professionals | At least 2 investment professionals, with at least one IP being a non-family member |
| Local Investments Requirements | Yes, invest at least 10% or S$10 million of AUM (whichever is lower) in local investments |
| Reporting Requirements | Annual statements to investors Tax filing to IRAS for non-qualifying investors |
| Income Tax Filing | Annual tax return |
| Annual Declaration to MAS | Required |
| Exemption Restricted to “Specified Income” from Designated Investments | Yes, at the point of application and throughout the incentive period |
| Section 13U The Enhanced Tier Fund Tax Exemption Scheme | ||
|---|---|---|
| Fund’s Legal Form | Any, including Singapore VCC | |
| Fund’s Residency | Any | |
| Fund Administrator | No restriction | |
| Assets under Management (AUM) | Minimum of S$50 million in Designated Investments at the point of application and throughout the incentive period | |
| Approval Requirement | Approval required from the MAS | |
| Minimum Annual Business Spending |
Subject to a tiered framework with minimum S$200,000 in local business
spending and as follows: – S$500,000 for AUM of S$50 million and above, but less than S$100 million – S$1,000,000 for AUM of S$100 million and above |
|
| Minimum number of Experienced Investment Professionals | At least 3 Investment professionals, with at least one IP being a non-family member | |
| Local Investments Requirements | Yes, invest at least 10% or S$10 million of AUM (whichever is lower) in local investments | |
| Reporting Requirements | No requirement | |
| Income Tax Filing | Annual tax return | |
| Annual Declaration to MAS | Required | |
| Exemption Restricted to “Specified Income” from Designated Investments | Yes, at the point of application and throughout the incentive period | |
There are 3 options for investments under the GIP to qualify for PR status in Singapore. All approved GIP application grant the applicants and their dependents PR status for 5 years, subject to renewal.
| Option A | |
|---|---|
| Investment Conditions | Invest S$10 million in a new business entity or in the expansion of an existing business operation |
| Additional requirements |
a) Submit a 5-year business or investment plan with projected employment, expenditure and financial of Option A Company. The business plan will be assessed based on its feasibility, your role in growing the company, its business activities and the creation of local jobs; AND b) Owns at least 30% shareholding in the Option A Company and must be part of the management team of the company (e.g. C- suite / Board of Directors); AND c) Option A company must engage in a sector under the approved list of industry prescribed by EDB. |
| Singapore Citizenship | Possible to apply for Singapore Citizenship after 2 years (subject to approval). |
| *Offshore assets can be qualified as part of the AUM requirement, provided at least S$50 million investible AUM has been deployed into any of the specified 4 investment categories in Singapore. | |
| Option B | |
|---|---|
| Investment Conditions | Invest S$25 million in a GIP fund that invests in Singapore-based companies |
| Additional requirements |
a) Applicants who apply for Option B may be requested to share any other business plans for Singapore apart from the investment in a GIP-select fund. b) Please refer to http://www.edb.gov.sg/gip for the updated list of GIP-select funds. |
| Singapore Citizenship | Possible to apply for Singapore Citizenship after 2 years (subject to approval). |
| *Offshore assets can be qualified as part of the AUM requirement, provided at least S$50 million investible AUM has been deployed into any of the specified 4 investment categories in Singapore. | |
| Option C | |
|---|---|
| Investment Conditions | Invest S$50 million in a new or existing Singapore-based single family office (SFO) having Assets-Under-Management (AUM*) of at least S$200 million. |
| Additional requirements |
a) Submit a 5-year business plan with projected employment and annual financial projections. The business plan will be assessed based on your role in your single-family office, the functions of your family office, your proposed investment sectors, asset types and geographical focus. b) Offshore assets can qualify as part of the AUM requirement provided at least S$50 million investible AUM has been transferred into and held in Singapore. At least S$50 million must be deployed in any of the below 4 investment categories no later than 12 months from the Final Approval of your PR status, and thereafter maintained throughout the validity of the Re-Entry Permit: i. Equities, REITS or Business Trusts listed on Singapore-approved exchanges; ii. Qualifying debt securities listed on MAS’ enquiry system; iii. Funds distributed by Singapore-licensed/registered managers or financial institutions; and iv. Private equity investments in non-listed, Singapore-based operating companies. |
| Singapore Citizenship | Possible to apply for Singapore Citizenship after 2 years (subject to approval). |
| *Offshore assets can be qualified as part of the AUM requirement, provided at least S$50 million investible AUM has been deployed into any of the specified 4 investment categories in Singapore. | |
| For a 5-year renewal | |||
|---|---|---|---|
| Option A Applicants | Option B Applicants | Option C Applicants | |
| i) You must have fulfilled the investment conditions under Option A of the GIP; AND | i) You must have fulfilled the investment conditions under Option B of the GIP; AND | i) You must have fulfilled the investment conditions under Option C of the GIP; AND | |
| ii) Your Option A Company1 in Singapore must employ minimally 30 employees (at least half of whom must be Singapore Citizens), out of which there must be at least 10 incremental employees AND | ii) Maintain the S$25 million investment in a GIP-select fund AND | ii) The Single-Family Office1 in Singapore that you establish must employ at least 5 incremental Family Office professionals2 (with at least 3 Singapore Citizens) and maintain the S$50 million AUM across any of the 4 investment categories3 AND | |
| iii) You or all your dependants, who obtained PR under your GIP application, must have resided in Singapore for more than half of the time. | |||
| For a 3-year renewal | |||
|---|---|---|---|
| Option A Applicants | Option B Applicants | Option C Applicants | |
| i) You must have fulfilled the investment conditions under Option A of the GIP; AND | i) You must have fulfilled the investment conditions under Option B of the GIP; AND | i) You must have fulfilled the investment conditions under Option C of the GIP; AND | |
| ii) Your Option A Company1 in Singapore must employ minimally 30 employees (at least half of whom must be Singapore Citizens), out of which there must be at least 10 incremental employees OR | ii) Maintain the S$25 million investment in a GIP-select fund OR | ii) The Single-Family Office1 in Singapore that you establish must employ at least 5 incremental Family Office professionals2 (with at least 3 Singapore Citizens) and maintain the S$50 million AUM across any of the 4 investment categories3 OR | |
| iii) You or all your dependants, who obtained PR under your GIP application, must have resided in Singapore for more than half of the time. | |||
|
1) If you have invested into an existing Singapore-based company/Family Office, only incremental numbers for employment from the date of Final Approval of your PR status may be taken into consideration for the purpose of determining the fulfillment of the economic conditions for your REP renewal. This company must be engaged in one of the industries listed in Annex B and your shareholding in the company must be at least 30%. 2) The 5 professionals in the family office must hold advisory roles or board appointments in functions related to legal, tax, investment or philanthropy. 3) Option C applicants are expected to submit documentary proof of the deployment of their S$50 million AUM in Singapore. Failure to do so may affect their REP renewal. |
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While the GIP is a fast track to obtain Singapore PR status, the requirements are more onerous and the application process is much longer. Professional seeking Singapore residency may choose to apply for an Employment Pass (EP) as an alternative route to Singapore residency. In general, approval of EPs are quicker than GIP applications. However, most EPs are valid for a maximum of 2 years and is subject to renewal. There are also salary requirements that companies need to fulfil in order to apply for EPs for their candidates.
EP holders who wish to apply for Singapore Citizenship may do only after obtaining Singapore PR status, which generally require working in Singapore for a number of years.
Besides the criteria mentioned above, business owners applying for PR under the GIP must be engaged in one or more of the industries designated by the EDB that is crucial for Singapore’s growth.