Written by Dave Lim
Singapore has established its prestige as a global financial and wealth management hub for investors all around the world. A business-friendly jurisdiction and attractive tax incentive schemes amongst other reasons have contributed to the increasing number of well-heeled families to set up offices here to manage their wealth in Singapore. This article gives a brief overview of setting up a single-family office (“SFO”) in Singapore, as well as what SFOs have to offer.
What are Single Family Offices (“SFO”)?
The term “SFO” is not defined under the Securities and Futures Act (“SFA”). In a nutshell, a single family office is an institutional structure which provides Ultra High Net Worth Individuals or families wealth management and associated finance and administration functions.
SFOs tend to enlist lean teams of investment professionals and advisors, as well as bring about indirect employment through engagements with operational and wealth planning personnel such as tax, legal, compliance and external finance professionals.
An SFO commonly conducts several activities to assist the routine management of the family’s assets. There is an assortment of activities involved, including tax filing, investment management and management of the family’s accounts.
Characteristics of an SFO:
- Assets of the family are entrusted to a company, partitioned from a natural person
- From an inheritance of assets perspective, only the shares of the company need to be transferred
- Professionals can be enlisted to manage family assets
- Ease of management
Structure of an SFO
A single family office is fundamentally a private limited company, but it is possible to structure it to be eligible for tax exemptions. According to MAS, the formation of a single family office in Singapore should be in accordance with the structure shown below to fulfill the exemption requirements:
- Set up a holding company
- Set up a single family office and investment fund wholly owned by the holding company
- A single family office manages family wealth through investment funds
The common structure of an SFO will be as shown in the following diagram:
By virtue of asset allocation and management in Singapore, the family office can be managed by the family members in Singapore. After obtaining permanent residency in Singapore, true asset migration can take place.
Benefits of setting up an SFO in Singapore
Singapore has consistently been selected as the jurisdiction of choice for their single family offices, utilizing the exceptionally advanced infrastructures, accommodating regulations and the various government incentives available. The number of single family offices in Singapore has swelled in recent years to about 200 as at 2020. The abundance of wealth management, legal, accounting, consulting and other expertise, as well as other advantages such as immigration/residence, quality education, security, and healthcare have cemented Singapore as the go-to location for family offices.
The fund manager (principal applicant) manages his or his family’s assets through the family office and thus is eligible to apply for the Employment Pass (“EP”). Singapore permanent resident (“PR”) status can also be applied. The Economic Development Board (“EDB”) has established the Global Investor Programme(“GIP”) for families intending to relocate to Singapore. The GIP awards Singapore PR status to eligible global investors, encompassing an option that is specifically devised for family offices. Spouses and unmarried children under the age of 21 can also apply for a family member permit, known as the Dependant’s Pass (“DP”). Parents can apply for a long-term visit pass (“LTVP”). For more information on the Global Investor Programme, please refer to our other article that covers Tax Incentive Schemes available to SFOs and Immigration to Singapore under the Global Investor Programme.
Singapore has become lauded as the prime location for high net worth families to set up their family offices. Credence has the experience and expertise in setting up and maintaining SFOs. To find out how we can help support your vision and private wealth business, please feel free to contact us today.