FAMILY OFFICE

Definition of Single Family Office

A Single Family Office (SFO) generally refers to an entity that manages assets for or on behalf of a family, and which is also wholly owned or controlled by the members of that same family.

Depending on the needs of the family, different services are offered, but they typically include:

• Wealth & asset management
• Succession planning
• Concierge services
• Philanthropy advisory

Simplified SFO structure

Common SFO structures

Advantages of establishing an SFO in Singapore

Strong ecosystem for the funds industry:

• Developed financial market
• Strong regulatory frameworks
• Stable environment

Established network of family offices:

• 400 family offices currently established in Singapore. 

Competitive tax regime:

• Tax incentives
• Low personal and corporate income tax rates
• Extensive tax treaty networks

High standards of living:

• World-class standards for education, housing and healthcare.
•  Well-connected to international destinations.

Opportunity to obtain residency:

• Employment Pass
• Dependent Pass
• Permanent Resident

Requirements for licensing for SFOs

The Monetary Authority of Singapore (MAS) regulates fund management activities in Singapore under the Securities and Futures Act (SFA)

Fund managers must:

• hold a Capital Markets Services (CMS) license for fund management as a Licensed Fund
  Management Company (LFMC), or
• be registered as a Registered Fund Management Company (RFMC), or
• be expressly exempted from holding a CMS license or be otherwise approved by the Minister under (Cap.289).

Tax incentives available to investment funds

Sections 13O and 13U of the Singapore Income Tax Act provide tax exemption for funds managed by Singapore-based fund managers, including SFOs, on Specified Income derived
from Designated Investments.

Designated Investments include stocks, bonds and derivatives, but excludes immovable property in Singapore.

Specified Income refers to any income or gains derived from Designated Investments, except for distributions received from certain trusts and income or gains derived or deemed to be
derived from Singapore from a publicly traded partnership or limited liability company where tax is paid or payable in Singapore on such income by deduction or otherwise.

The MAS administers and approves these schemes. Once granted, the tax exemption status will be valid for the life of the fund, as long as all qualifying conditions are met.

GST remission:

• Funds are not required to be GST-registered in order to claim GST they may incur. Instead, funds qualifying for GST remission (i.e. managed by a prescribed fund manager in Singapore and satisfy the conditions for specific income tax concessions as at the last day of their preceding financial year) can recover GST on all expenses
  incurred for the purpose of their investment activities (except disallowed expenses).

Withholding tax:

• Funds that meet the conditions for tax exemption under Section 13O and 13U schemes for the entire relevant period can benefit from withholding tax exemption on interest and other qualifying payments made to non-residents (excluding permanent establishments in Singapore).

Sections 13O and 13U qualifying conditions

For funds managed by Family Offices

Requirements	13O Tax Exemption Scheme for Resident Funds	13U Enhanced-Tier Fund Tax Incentive Scheme
Legal Form and Tax Residency	Company incorporated in Singapore or Singapore VCC, tax resident in Singapore	No restrictions
Investment Professionals (IPs)	Must employ at least two IPs. A one-year grace period is given to employ the second IP, If it is unable to employ two IPs at the point of application.	Must employ at least three IPs, with at least one IP being a non-family member. A one-year grace period is given, If it is unable to employ one non-family member as an IP at the point of application.
Fund Administrator	Singapore-based	Singapore-based if the fund is a Singapore-incorporated and resident company
Fund Manager	A family office must manage or advise the fund directly throughout each basis period relating to any Year of Assessment (YA). The family office must be based in Singapore and fulfill the SFO licensing requirements.
Assets Under Management (AUM)	>S$10 million at the point of application, and the fund commits to increasing its AUM to S$20 million within 2 years.	>S$50 million at the point of application
Business Spending	>S$200,000 in total business spending (TBS) in each basis period relating to any YA, subject to the tiered business spending framework	>S$500,000 in local business spending (LBS) in each basis period relating to any YA, subject to tiered business spending framework
Minimum Local Investment3	The fund must invest at least 10% of its AUM or S$10 million, whichever is lower, in local investments at any one point in time. One-year grace period if the fund is unable to do so by the point of application.

Our Job Scope for Singapore Family Office

Design and structuring phase of new family office structure

• We will identify and design a tax-efficient structure, taking into consideration the
  “related corporation” exemption under the Securities and Futures Act, tax implications of locating the asset-owning vehicle, future receipts and gains, and funding mechanics.

Implementation of the proposed structure

• We offer our assistance with the application to the Monetary Authority of Singapore (MAS) for the approval of Section 13O and 13U incentive in respect of the fund structure implemented.
• e offer our assistance with the application to the Monetary Authority of Singapore (MAS) for the approval of Section 13O and 13U incentive in respect of the fund structure implemented.

FATCA / CRS analysis

• We will advise you the status of the family office and the asset-owning vehicle from a Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) perspective.