Notice : Damalion assists clients with private assets starting from $5 million cash (when you open a bank for wealth management, you must make a minimum deposit of $5 million). Please contact us if you want to open a bank account in Singapore or if you want to benefit from private wealth management services in Singapore.
Singapore is well organized as one of the dominating private banking and wealth management hubs in the world. It has a strong track record as an active and politically reliable jurisdiction with a clear legal system and a supportive government facilitating the development of the private wealth market.
Asian High-Net-Worth families choose Singapore for wealth management
Traditionally speaking, Singapore use to be a destination of choice for Asian High-Net-Worth families, but presently, the origin of wealth owners setting up a Single Family Office in Singapore is now more diverse, with a growing number of European families selecting the jurisdiction for their Single Family Offices and family trusts.
The Covid-19 pandemic has been a wake-up call for many Ultra-High-Net-Worth and their advisers, stimulating a shift of focus from founding new business ventures to protect family wealth. The pandemic risks have intensified the need for a succession plan in place and made families prioritize putting their plans to paper to avert conflicts.
What is a Single Family Office (SFO)
A single Family Office (SFO) is an entity that is entirely dedicated to overseeing the personal and financial affairs of a single wealthy family. An SFO can be entirely owned or regulated by the members of that same family.
An SFO generally conducts several activities to promote the day-to-day management of a family’s assets. The activities involved varies and generally include investment management, tax filing, and consolidation of the family’s accounts. Commonly, financial advisors, investment analysts, and legal professionals are assigned by SFOs for wealth planning and functional matters.
The reasons why Singapore is chosen for Single Family Offices
Singapore spent the last few decades being open to the world for business, emerging into an environment where businesses and family offices can thrive.
A growing number of SFOs in Singapore can be associated with the following factors:
- Political stability and strong rule of law
- Reduced risks of regulatory changes
- Clear Legal System.
- Existence of investment and multinational banks.
- Legislated financial market.
- High standard of living.
- Expertise in business services, banking, and Financial technology.
- Decent Business connectivity.
- Availability of financially competent manpower.
- No Bureaucracy.
- A business-friendly tax system
- Good infrastructure and facilities
- High levels of security and robust educational systems
- Singapore is also a major logistics and transportation hub.
- Rich in the human capital required to support the family office ecosystem
- Government motives that support family offices
The Activities carried out by Single Family Offices
- Long-term wealth administration
- Bookkeeping, accounting, and cash flow planning.
- Legal services
- Promoting family values and objective
- Investment planning
- Information insurance relating to personal information and family activities
- Succession planning and supervision
- Tax and financial planning
- Compliance and regulatory support
- Family governance, education, and succession planning
- Charitable services
- Risk management.
Business form of Single Family offices
An SFO structure generally involves a holding company or a trust directly possessing both the SFO and the fund entity as assets. Single-family offices are commonly formed by wealthy families obsessed with the management and control of their finances, businesses and several aspects of their lives and each beneficiary is a related person to the settlers of that trust or a charity.
The SFO structure strives at achieving dual goals, firstly attaining the licensing exemptions and then benefiting from tax incentives.
Incorporation of Single Family Offices
To incorporate a company in Singapore, one must file an application on the Accounting and Corporate Regulatory Authority website.
Also, they are various regulatory and administrative requirements involved in creating a Single Family Office including the registration of the corporate structures, bank account opening, annual filing of tax returns, and keeping to common reporting standards and the foreign account tax compliance act.
The Taxation for Single Family Offices
Singapore has a highly business-friendly tax system. The corporate tax rate of 17% is imposed on income that is either Singapore-sourced or remitted into Singapore. Singapore does not tax capital gains and the purpose of taxation is further decreased by a number of exemptions.
The Singapore government has established a number of tax incentive systems for funds overseen by family offices for both offshore vehicles and onshore vehicles. These need a Singapore manager that is either licensed or free under local securities law for giving fund management services. A Single Family Office is generally considered a related corporation of the family fund vehicle so that it is free from regulation. An immunity from licensing can also be bestowed to a single-family office that can indicate that it only governs the assets of the same family.
Certain tax exemption incentives for funds managed by family offices are available for both Singapore resident and non-resident fund vehicles, such that basically all investment incomes will be exempt from Singapore income tax.
Investment planning of Single-Family Offices
Depending on purposes and objectives, there can be numerous investment planning that an SFO can utilize. However, SFOs generally make their major investments in buying residential properties, buying shares of private equity firms, real estate investment, and investment in fund structures.
Challenges encountered by Single Family Offices in Singapore
- Cross-border tax issues at the personal level due to the presence of a family in various tax jurisdictions due to its international presence.
- Ineffective tax structure due to inappropriate business structure.
- Absence of a formalized governance structure due to the absence of ethical policies and methods.
Singapore has a great track record as a politically stable jurisdiction with a clear legal system, along with a supportive government facilitating the growth of the private wealth market. And as one of the world’s simplest places to do business, setting up a family office in Singapore is efficient.
To set up your family office in Singapore, let’s go ahead and contact your Damalion experts now.
