Setting up a single family office in Singapore can be a complex process, but it can also be invaluable in administering the assets of a high net worth family. A single family office is a private company that provides financial, legal, and administrative services to a single wealthy family. It is designed to manage the family’s wealth, assets, and investments in an efficient and effective manner.
Step-by-step walkthrough to starting a SFO
There are several steps involved in setting up a single family office in Singapore, and it is important to carefully consider each step in order to ensure the success of the family office.
- Determine the purpose of the family office: The first step in setting up a single family office is to determine the purpose of the family office. Is it to manage the family’s investments, provide legal and financial advice, or handle administrative tasks? Understanding the purpose of the family office will help to determine the type of staff and resources that will be needed.
- Define your family charter: These are the core goals and principles that your family office should abide to similar to a constitution. They can be broad/vague such as “always staying ahead of the market” or specific like commitments to philanthropy and other causes.
- Choose a legal structure: The next step is to choose a legal structure for the family office. There are several options to consider, including a private limited company, a partnership, or a trust. Each structure has its own advantages and disadvantages, and it is important to consider the specific needs and goals of the family when choosing the best structure.
- Register the family office: Once the legal structure has been chosen, the next step is to register the family office with the appropriate authorities. In Singapore, this typically involves registering with the Accounting and Corporate Regulatory Authority (ACRA) and obtaining a business license.
- Hire staff: The family office will need staff to manage its various functions and responsibilities. This may include financial advisors, lawyers, accountants, and administrative staff. It is important to carefully screen and select the right staff for the family office, as they will play a critical role in the success of the family office.
- Establish systems and processes: In order to effectively manage the family’s wealth and assets, the family office will need to have systems and processes in place to track and manage its financial affairs. This may include financial software, accounting systems, and other tools to help manage the family’s finances.
- Maintain transparency and accountability: It is important for the family office to maintain transparency and accountability in its operations. This may involve regular reporting to the family, as well as ensuring that the family office complies with all relevant laws and regulations.
Setting up a single family office in Singapore requires careful planning and attention to detail. With seeking the advice of professionals, it is possible to establish a successful and effective family office that will help to manage the family’s wealth and assets in a responsible and efficient manner.
Getting tax exemption for a SFO
Once the SFO is setup in Singapore, it may be of interest to create an investment fund through the Singapore VCC to manage the assets of the family in a tax efficient manner. SFO’s incorporated in Singapore may qualify for the 13O (Resident Fund Scheme) tax exemptions and a single family office must meet the following criteria:
- Licensed Singaporean fund manager: The VCC fund is to be managed or advised by a fund management company (FMC) in Singapore where the FMC is licensed under the Securities and Futures Act 2001.
- Purpose of the family office: The family office must be established for the sole purpose of managing the wealth, assets, and investments of a single family. The family office must be a private company, and it must not carry on any business other than the management of the family’s wealth and assets.
- Ownership of the family office: The family office must be owned and controlled by members of the same family. This means that the family office must be owned by family members or by a trust established for the benefit of the family.
- Use of the family office: The family office must be used exclusively for the management of the family’s wealth and assets. This means that the family office cannot be used for personal or business purposes unrelated to the management of the family’s wealth and assets.
If a single family office fund meets these criteria, it may be eligible to apply for the 13O tax exemptions. However, it is important to note that the 13O tax exemptions are not automatic, and the family office will need to apply for the exemptions and fulfil certain criteria.
13O Tax Exemption Requirements
|S$10m at the point of application; must commit to increase to S$20m within 2 years.
|Must invest at least 10% of its AUM or S$10m (whichever is lower) in local Singapore investments at any one point in time. Fund would be given a 1-year grace period to do so.
|SFO must have at least 2 investment professionals (‘IPs’).
|Tiered annual business spending framework
|For AUM under
For AUM of at least S$50m, but less than S$100m: S$500,000
For AUM equal or above S$100m: S$1m
Alternative to starting a single family office — Engaging Multi Family Offices
While starting a single family office may be an intensive and costly process, high net worth families may instead consider engaging a Multi Family Office to manage assets instead on behalf of the family and create funds through the new Variable Capital Company (VCC) in Singapore. This removes the need for hiring your own professionals to run your office and instead outsource the management to investment firms like multi family offices.
Multi Family Offices, family offices who cater to a select number of high net worth families, are also licensed fund managers in Singapore who would be familiar with the requirements and needs for high net worth families. This could be a cheaper and more time efficient alternative while still having a dedicated experienced professional administer your family assets.
Connect with our partners
If you’re looking for multi-family office advisors to advise on setting up your Single Family Office, send us an inquiry at [email protected] or use the contact form below: