Singapore is one of the most important financial centres in South-East Asia. It has become a favourite choice for many high-net-worth families looking to manage their global assets and investments. Hence, family offices have become a popular asset-management vehicle amongst them. They prove to be the most valuable resource.
Between 2017 and 2020, the number of family offices in Singapore more than doubled, as affluent families picked Singapore as their preferred location to establish their Single Family Office.
Besides being a stable and well-regulated financial hub, Singapore is one of the most appealing destinations to set up a family office because of its large pool of talent in the private banking, asset management, legal and financial industries.
Singapore is also known for being a well-governed and well-regulated financial centre with political stability and a business-friendly environment and the presence of local and international banks and other financial service providers and specialists.
It also boasts wealth-friendly legislation and a favourable tax structure. However, there are several elements to consider and comprehend to set up a family office that will most benefit you.
Definition Of A Family Office
A family office is yet another kind of family business designed to deliver integrated asset management solutions while promoting and safeguarding the family’s identity and values.
It is also in charge of ultra-high net worth individuals’ and families’ investments and assets. A family office’s functions include capital preservation, expansion, asset transfer between generations, and investment management.
After selling a family business or another big liquidity event, families may establish a family office to serve their overall financial needs. Every family office is as distinct as the people who work there.
Types Of Family Offices
There are two types of family offices;
- Single-Family Offices (“SFO”)
- Multi-Family Offices (“MFO”)
Single Family Office
The term “single-family office” is not technically defined. Still, it often refers to an entity that manages assets for or on behalf of a family and is wholly owned or controlled by the family members.
Single-Family Offices are excluded from registering with the Monetary Authority of Singapore (MAS) for certain licenses, such as those of a Registered Fund Management Company (RFMC) or Licensed Fund Management Company.
They usually perform a variety of tasks to aid in the day-to-day management of a family’s assets. Investment management, account consolidation, and tax filing are just a few of the operations that are involved.
An SFO is usually set up as a related corporation of the family fund vehicle to avoid being regulated. An SFO can also be given a license exemption if it can show that it only handles the assets of the same family.
Multi-Family Offices
A multi-family office is a sort of financial advisor who works with numerous clients at the same time rather than just one. The multi-family office does not limit its clientele to individuals in those fields. The majority of the money of the wealthy is held outside of their sector.
A multi-family office has access to all parts of a person’s finances and can prepare for their death. Additionally, for individuals who have various assets, this provides a one spot to manage them all and an administrator to assist with decision-making.
Factors To Consider When Setting Up A Family Office In Singapore
A trusted advisor can assist you in determining the structure and role of the Family Office. That partner will be in charge of management as well as investment and planning guidance.
Before establishing a family office, you must first determine your goals:
- How vital are privacy and secrecy?
- What are your total costs at the moment? Are you receiving the level of service that you expect in return?
- What is the use of tax breaks to encourage certain types of investments?
- The appointment of these family members as members of the Family Office Investment Committee to apply for
- Singapore Employment Passes if certain family members are considering relocating to Singapore
- Would it be beneficial to consolidate all of your administrative and accounting functions into a single entity?
Now that you’ve decided to start your own family office, there are a few things to consider for your specific scenario, so let’s get started.
It can be difficult to traverse the stages on your own because there is no standard blueprint for setting up a family office. Instead, consider enlisting the help of tax consultants and corporate secretarial services providers with Corporate Services Singapore to help you navigate Singapore’s wealth management market.
If you want to keep your family office slim, talk to a company compliance service provider about if any functions like accounting, corporate secretarial services, or tax may be outsourced. Your family office managers will have access to a whole team of skilled specialists as well as ancillary services such as an external CFO, financial reporting, and accounting solutions through outsourced services.
Professionals at HeySara can assist you in setting up a family office quickly and easily, as well as advising you on the various reporting requirements and tax exemption programs.
You can also lay a solid foundation for your family office, create a clear roadmap, and have peace of mind by partnering with a reputable corporate services solutions provider like HeySara.
A family office provider can help progeny not only set family governance norms through a family constitution but also educate them on how to handle their wealth prudently so that it may be passed down to their offspring.
Tax Incentives
The government has developed tax incentive programs to encourage the formation of family offices in Singapore. Almost all investment gains are exempted from Singapore income tax under these programs for funds managed by family offices.
The following are the exemption schemes:
- Section 13R of the Internal Revenue Code establishes the Onshore Fund Tax Incentive Scheme.
- Section 13X of the Internal Revenue Code establishes the Enhanced-Tier Fund Tax Incentive Scheme.
- (GIP – FO Principals profile) Global Investor Program Family Office Option.
Licensing Requirements: Legal & Regulatory Framework
Aside from tax benefits, applicants should be aware of the regulatory framework surrounding SFOs and the exemptions available to them.
In brief, the Securities and Futures Act (SFA) does not define “family office.” Similarly, no other Singapore regulation defines the term.
Anyone who desires to engage in regulated activities, such as dealing in capital markets products, providing corporate finance advice, or managing funds – all of which are typically performed by SFOs – must first get a Capital Markets License (“CMS”). SFOs, on the other hand, may take advantage of the exception under the Securities and Futures (Licensing and Conduct of Business) Regulations (“SS(LCB)R”).
This exemption enables a company to handle funds for its affiliated companies without requiring a CMS license.
Benefits Of Having A Family Office In Singapore
Singapore is a great place to handle your assets and wealth. It boasts a stable political and corporate climate, as well as an appealing tax structure that includes various tax treaties and free trade agreements that would benefit your family office.
Inheritance and capital gains taxes are also not levied in Singapore. There are also strong policies in place to encourage and govern the city-financial estate’s and asset management sector. Take the Variable Capital Companies (VCC) Structure, for example, which allows for greater flexibility in the creation of investment fund structures.
Family offices are designed specifically for a family’s wealth management needs. A family office can be set up to accomplish any financial aim, from protecting your wealth to extending your financial interests.
Your combined assets will be managed by a dedicated team of professionals employed by the family office, rather than letting your family members deal with their assets on their own.
Your combined assets will be managed by a dedicated team of professionals employed by the family office, rather than letting your family members deal with their assets on their own.
This isn’t to mean that your assets will be amalgamated; rather, the family office will function as a hub for coordinating and protecting everyone’s assets. As a result, your family will be able to share the greatest services while also saving money.
You may rest certain that with professionals in charge of specialized areas like legal compliance and financial planning, your resources will be managed safely.
Administrative Task Of A Family Office
Before and during the functioning of the family office, a variety of administrative tasks may occur. This includes:
- Opening bank accounts for the family office.
- Preparing for annual tax filing.
- Complying with other regulatory reporting duties, such as the Common Reporting Standards (CRS) and the
- Foreign Account Tax Compliance Act (FATCA), are just a few examples (FATCA).
Conclusion
Due to its proximity to local and worldwide private banks, investment banks, and other financial service providers, Singapore is regarded as one of the more notable financial centres in South-East Asia.
It is known for its stable governance and pro-business environment, and as a result, it has become a favourite choice for many high-net-worth families looking to manage their assets and interests around the world.
