Singapore Single Family Office – What is a SFO and why Singapore?

Updated as of 9 August 2023

Singapore Single Family Office – Many investors and families have flocked to Singapore to setup single family offices to manage their offshore wealth.  This growth has brought about large capital inflows into Singapore due in part to its leading place as a global private banking hub.  Many investors are unaware of the finer details of the scheme and as a result are disappointed when the structure does not meet their family requirements. 

 

Singapore Single family office – What is it?

Singapore Single Family Office –  Most banks in Singapore or any major financial capital of the world need to have the customer have a connection (or known in legal parlance as a nexus) with the jurisdiction before the bank can open a bank account for the family.  So if you are not tax resident or not present in Singapore as a customer of a private bank, for some private banks they will be unable to open a private banking account for them.  A business family usually will task a second generation member to be in charge of managing the family fortune from Singapore.  A single family office when set up in Singapore is intended to manage money for the family only and not third party money.

It usually comprises 2 entities, namely an exempt fund manager (Singapore Company) and a fund entity (Singapore Company).  Most families would then apply for S13O or S13U tax incentive scheme which allows the fund entity to reduce its tax to 0%.  Do note that the exempt fund manager still has to pay tax in Singapore (which would be much less than if tax were payable on the fund entity).

As of the current date of this article, the Monetary Authority of Singapore has increased the tax conditions for a SFO application today so as of now the minimum assets under management of a single family office applicant (at the point of application) will be SGD 20 million.  Do check with us on the tax conditions at the point of your application as these change frequently given the large number of SFO applications to Singapore these few years.Singapore Single Family Office – What can setting up of a SFO do for me or my family?

• Second generation training are some current themes that business families are looking at.  Setting up the SFO will allow the second generation to learn how to manage the financial wealth of the business family under the watchful eye of the first generation.  Some families also employ external experienced bankers to be the non- executive directors of such SFOs to allow them to give their insight into the financial markets and offshore investment and handhold the second generation as they learn how to deploy wealth and invest.

• Pairing the SFO with a trust and other offshore structures can also help the family do legacy planning for multi-generation wealth transfer.  Large business families usually have large sprawling trust and fund structures to help manage operating companies and non-operating assets.  If the family for example has a mixture of real estate and operating companies more planning is required especially if the business empire spans many countries. 

• If the assets under management of the SFO is at least SGD 200 million, you can pair this SFO application with the global investor programme and get permanent residence for you and you’re your wife and kids (under 18 years old) in Singapore.

• If you are from an onshore jurisdiction (like China), having a SFO in Singapore will allow you to manage your funds from Singapore and store it in Singapore which is a stable jurisdiction with a strong rule of law.

• Setting up the SFO will allow certain customers from jurisdictions to open bank accounts and gain access to the Singapore banking system.

• Some families also want their kids to migrate to Singapore so use the SFO to employ their children and family members and get employment passes for them to stay in Singapore.

Singapore Single Family Office – How to set up a single family office in Singapore?

Singapore Single Family Office –  The best way to get started, is to generate a list of assets that you wish to manage from the SFO.  Such assets are usually bankable products and cash.  Then you should spend some time with a good lawyer to help you look at the structure and decide what works best for your purposes.

In conclusion, Singapore is a good stable country to set up a Singapore single family office.  It has tax incentives for the fund entity (tax free status) so if you qualify, do consider setting up a SFO in Singapore to manage your family wealth both for your generation and the next generation.

 

If you need Private Client Legal Services to set up a Single Family Office in Singapore, do click here to schedule a complimentary meeting with our Private Client Legal partner who can look into your specific requirements.       https://www.SingaporeLegalPractice.com is a corporate law and commercial law educational website headquartered in Singapore which aims to demystify business law and 新加坡商业法 for SME Company Owners, Startup Founders and 新加坡新移民老板。The information provided on this website does not constitute legal advice.  Please obtain specific legal advice from a lawyer before taking any legal action.  Although we try our best to ensure the accuracy of the information on this website, you rely on it at your own risk.  Click here to signup for our newsletter today to be kept updated on the latest legal developments in Singapore.