Singapore Citizenship by Investment Through Family Fund Structures

Singapore passports and permanent residency are rising in demand as Singapore is recognized for its robust economy, strategic location, and political stability. Singapore offers a unique pathway to citizenship through investment by the Global Investor’s Programme. In 2023, Singapore has witnessed a significant increase in demand for permanent residency status due to the influx of wealth into the country and the implementation of a new 60% property tax for foreign buyers. By obtaining permanent residency, families can benefit from a property tax rate of 5% for permanent residents and relocate their family/assets to the island nation.

The Singapore Citizenship by Investment Program — Investment Options

The GIP offers three investment options to qualify for permanent residency:

  • Option A: Invest a minimum of S$10 million in a new business startup or the expansion of an existing business.
  • Option B: Invest a minimum of S$25 million into one of seven GIP-approved fund that focuses on investing in Singapore-based companies.
  • Option C: Families can establish a Singapore-based Single-Family Office with at least S$200 million in Assets-Under-Management (AUM*), deploying a minimum of S$50 million into Singapore-based securities, debts, and funds.

Option C — Family Office Funds

Setting up a Singapore fund structure for a family is often the preferred method for investors to meet the requirements for permanent residency. Option A necessitates extensive business and operational expansion planning, while Option B requires significant investment in one of the seven GIP-approved funds that focus on Singapore startups. These options may often not align with the family’s business or investment plans.

Therefore, families often consider creating a fund just for the family under a licensed fund manager in Singapore instead, customized to the family’s specific investment needs and goals. By administering their assets through a Singapore-based fund, families can retain control over their asset allocation and invest in jurisdictions both in and outside of Singapore while qualifying for the investor programme.

Singapore Fund Structure — Variable Capital Companies (VCC)

Families can establish a fund structure for their family using the Variable Capital Company (VCC) structure, which is specifically designed for funds. The VCC offers several benefits, including asset segregation for each family under a single umbrella, facilitating legacy and succession planning.

The VCC can also qualify for tax exemption at an umbrella level, enabling families to pool costs while enjoying the collective benefits of the vehicle. The VCC is eligible for the 13O/U tax exemption schemes, guaranteeing employment passes for the family and its dependents.

Setting up the Family Fund

To create a fund, families need to obtain a license, which can be achieved through two methods: applying for a fund management license or outsourcing to an existing licensed company.

Obtaining a license requires hiring at least two investment professionals and establishing an office in Singapore, which can be costly and time-consuming for families solely interested in obtaining permanent residency or citizenship. Alternatively, families can outsource fund administration and management to a licensed fund manager, such as a multi-family office and other licensed fund managers.

Maintaining Permanent Residency or Obtaining Full Citizenship

Apart from enjoying the 5% tax rate for permanent residents buying properties, residents through the programme can consider extending the PR after 5 years or converting to Singapore citizen after 2 years.

After holding permanent residency for two years, Singapore PRs are eligible to apply for Singaporean citizenship and a passport. For those seeking to maintain permanent residency without pursuing citizenship, the Single Family Office would need to employ at least five professionals (including three Singaporeans) OR ensure that the PR holder and their dependents have resided in Singapore for at least half the period. This provides flexibility for obtaining permanent residency without the requirement of full-time residence in Singapore.

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Singapore Finance is an editorial dedicated to navigating Singapore’s financial system, connecting you to Singapore’s professional services.