A family office is basically a private advisory firm on wealth management, either for ultra-high-net-worth individuals or for a family. With its rather inviting tax laws, political stability, and sound financial infrastructure, Singapore has gained importance as an international hub where one can set up a family office. As families seek for long-term preservation of their wealth, Singapore offers a strategic location and world-class services.
In this article we’ll cover what Singapore family office is and a list to consider before you starting one.
Understand the Different Types of Singapore Family Office (s)
Before setting up a family office, it is better to understand the difference between single-family office and multi-family office. SFO deals with the assets of a single family with customized services and direct control. On the other hand, MFO serves numerous families, letting smaller families share the operation costs while accessing proficient wealth management. Your decision to either use an SFO or an MFO should lie in your family’s wealth and goals.
Overview of the Regulatory Framework of Singapore Family Office
The Monetary Authority of Singapore sets the regulatory environment within which family offices operate. Setting up a family office should include knowledge of the following key regulations, among others:
Section 13O Tax Exemption: This tax exemption is available to family offices which only manage one family’s wealth.
Section 13U Tax Exemption: Larger family offices, managing more entities and achieving higher minimum AUM, should qualify for this. Observe the requirements by the MAS through the inclusion of your family office in these tax schemes and anti-money laundering (AML) regulations.
Setting Financial Goals and Investment Strategy
Setting clear financial goals and defining an investment strategy rank among the first steps in setting up a family office. A good strategy strikes a balance between risk and opportunity for sustainable, long-term growth. From wealth preservation to asset diversification, or even philanthropy, the market in Singapore has a lot to offer. A strategic investment plan in relation to asset management and future creation of wealth should be prepared. So that the goals of the family will be in tandem with the financial decisions.
Tax Benefits for Family Office in Singapore
Singapore offers various types of tax incentives to attract family offices. The most lucrative are the Section 13O and 13U tax exemption schemes, which exempt certain types of income from tax, provided certain conditions are satisfied. Here is a checklist of the tax benefits available for the family offices in Singapore:
13O Tax Scheme: For family offices with lower AUM thresholds.
13U Tax Scheme: For larger family offices with higher AUM thresholds and heftier operations.
These incentives coupled with Singapore’s low corporate income tax further cement its position as a very good destination for family wealth management when it comes to being tax-efficient.
Staffing and Governance for a Singapore Family Office
A family office needs the right governance structure and the right team on board to operate. Here is a checklist of some key positions which you should consider:
Fund Managers: To manage investment decisions.
Legal Advisors: To address issues in relation to regulatory compliance and the drafting of contracts.
Accountants and Tax Specialists: For bookkeeping purposes and to optimize taxes.
Appropriate governance structures: Regarding succession planning and the integration of the next generation in the wealth management process.
Partnering with MFOs
Considering these factors, the decision to collaborate with a multi-family office might turn out to be very interesting for SMEs. MFOs can offer various services: investment management, tax planning, and legal advice, among others-outsource operational costs in a split among many families. However, working with an MFO means less control of particular family matters than an SFO would have since decisions are internally made. It is all about the size of your family’s wealth and the level of intricacy of your financial needs.
Conclusion: Last Steps to Establishment of Singapore Family Office
The steps to setting up a Singapore Family Office involve:
- Selection of the structure SFO or MFO.
- Compliance with MAS regulations, for example, the Section 13O and 13U tax exemption schemes.
- Formulation of distinct financial goals and investment strategies.
- Meeting with professional consultants in the areas of governance, investment management, and legal compliance.
- Manage to join hands with MFOs to have a variety of services.
- Finally, expert advice through advisory services would be paramount and easier to navigate regulatory and financial landscapes in the country.
How FastLane HR Can Help
We have assisted many businesses establishing in Singapore, starting from business registration to financial management, Cloud-based HRIS software, human resource matter, and employee onboarding. You can have a consultation with our experts by simply contacting FastLane HR. Let us help you to make things better and easier.