Why Singapore for Family Offices?
Singapore has emerged as Asia's premier destination for family offices, growing from ~50 in 2017 to over 1,400 in 2024. The combination of tax incentives, political stability, and regulatory clarity has attracted significant global wealth.
Key Advantages
- Tax incentives: Section 13O/13U provide tax exemptions on specified income
- No capital gains tax: Singapore doesn't tax capital gains
- Political stability: Strong rule of law, low corruption
- Time zone: Bridge between US/Europe and Asia markets
- Talent pool: Deep financial services expertise
- Privacy: Strong confidentiality protections
- Immigration: Family office employees can get Employment Passes
While Singapore offers excellent tax benefits, US citizens remain subject to US tax on worldwide income. The benefits of Singapore's 0% capital gains don't directly help Americans—you still owe US taxes. The value is in diversification, access to Asian markets, and estate planning opportunities.
Family Office Tax Incentives
Section 13O (Formerly 13R)
Tax exemption for funds managed by Singapore-based fund management company. Minimum AUM: S$20 million. Application to MAS required.
Section 13U (Formerly 13X)
Tax exemption for larger funds. Minimum AUM: S$50 million. More stringent requirements but greater flexibility.
Section 13O Requirements (2024)
| Requirement | Details |
|---|---|
| Minimum AUM | S$20 million at application and maintained |
| Fund Manager | Singapore-licensed or exempt fund manager |
| Business Spending | S$200,000/year local business spending |
| Professionals | At least 2 investment professionals in Singapore |
| Local Investment | 10% of AUM in local investments (phased approach) |
| MAS Application | Prior approval required |
Section 13U Requirements
| Requirement | Details |
|---|---|
| Minimum AUM | S$50 million |
| Business Spending | S$500,000/year |
| Professionals | At least 3 investment professionals |
| Local Investment | 10% of AUM in local investments |
Tiered Approach: MAS has implemented a tiered approach for local investment requirements. Funds under S$50M have lower requirements than larger funds.
What Income is Tax-Exempt?
Under 13O/13U, the following "specified income" can be exempt from Singapore tax:
- Dividends from foreign and Singapore companies
- Interest from deposits and bonds
- Gains from sale of shares, bonds, derivatives
- Foreign-sourced income remitted to Singapore
- Income from structured products
What's NOT Covered
- Income from Singapore real estate
- Active business income (not investment)
- Income from Singapore partnerships
Variable Capital Company (VCC)
The VCC is a corporate structure introduced in 2020 specifically for investment funds, including family offices.
VCC Advantages
- Umbrella structure: Multiple sub-funds under one entity
- Capital flexibility: Issue/redeem shares without court approval
- Asset segregation: Sub-fund assets are legally separated
- Privacy: Shareholder details not on public register
- Re-domiciliation: Existing offshore funds can migrate to Singapore
VCC vs Pte Ltd
| Feature | VCC | Pte Ltd |
|---|---|---|
| Share capital flexibility | High | Low (court approval needed) |
| Sub-funds | Yes | No (need separate entities) |
| Privacy | Higher | Public register |
| Setup cost | Higher | Lower |
| Regulatory | More oversight | Less oversight |
US Tax Considerations
As a US person, you're taxed on worldwide income regardless of where you live or where your investments are. Singapore's 0% capital gains and 13O/13U exemptions don't help you—the US will still tax your investment gains.
Key US Tax Issues
- CFC Rules: Controlled Foreign Corporation rules may apply, requiring current taxation of certain income
- PFIC: Non-US investment funds may be Passive Foreign Investment Companies with punitive US tax treatment
- GILTI: Global Intangible Low-Taxed Income rules may apply to foreign company earnings
- Form 5471: Extensive reporting requirements for US shareholders of foreign corporations
- FBAR/FATCA: All foreign accounts must be reported
Why Bother Then?
- Diversification: Geographic and jurisdictional diversification of assets
- Asia access: Better access to Asian investment opportunities
- Estate planning: Potential benefits for non-US family members
- Next generation: Children who renounce US citizenship may benefit
- Operational hub: Central location for Asia-Pacific business activities
Get Expert Advice: Family office structures for US persons are extremely complex. Work with advisors experienced in both US and Singapore tax law before making any decisions.
Setting Up a Family Office
Typical Structure
- Fund Management Company: Holds MAS license, employs investment professionals
- Investment Fund(s): Can be Pte Ltd, VCC, or LP structure
- Holding Companies: For specific assets or investments
Setup Costs (Approximate)
| Item | Cost |
|---|---|
| Legal structuring | S$50,000-150,000 |
| MAS application (13O/13U) | S$30,000-80,000 |
| VCC incorporation | S$10,000-30,000 |
| Annual compliance | S$50,000-200,000 |
| Staff costs (2-3 professionals) | S$500,000-1,000,000/year |
Timeline
- Initial structuring and planning: 2-3 months
- MAS application (13O/13U): 3-6 months
- Total setup time: 6-12 months
Immigration for Family Office Principals
Global Investor Programme (GIP)
Fast-track to Permanent Residence for high-net-worth individuals.
GIP Options
| Option | Investment Required |
|---|---|
| Option A: New Business | S$10 million in new business |
| Option B: GIP Fund | S$25 million in approved fund |
| Option C: Family Office | S$200 million AUM family office |
Employment Pass Alternative
Family office employees (including principals who work in the family office) can obtain Employment Passes:
- EP holders can eventually apply for PR through normal process
- Requires meeting salary thresholds and COMPASS criteria
- More accessible than GIP for smaller family offices
Key Service Providers
Types of Advisors Needed
- Singapore tax advisors: Big 4 and boutique firms with family office expertise
- US tax advisors: Essential for US persons—must understand both jurisdictions
- Legal counsel: Singapore law firm with MAS regulatory experience
- Fund administrator: Required for 13O/13U compliance
- Private banks: Custody and execution services
Family office setup is complex and mistakes are expensive. The regulatory requirements, US tax implications, and ongoing compliance needs require experienced professional advisors.