Setting Up a Family Office in Singapore

According to official data from the Monetary Authority of Singapore (MAS), the number of Single Family Offices (SFOs) awarded tax incentives in Singapore grew from roughly 400 in 2020 to over 2,000, with Singapore’s total assets under management (AUM) topping S$5.4 trillion.

However, as ultra-high-net-worth (UHNW) families flock to the city-state, Singapore's regulatory climate has matured. "Plug-and-play" family offices no longer work. MAS now demands stringent operational substance, active local capital deployment, and rigorous anti-money laundering (AML) controls. Establishing a Singapore family office requires navigating specific corporate structures, tax incentive conditions (Sections 13O and 13U), and ongoing compliance obligations.

How Should a Singapore Single Family Office Be Structured?

A standard Single Family Office setup in Singapore requires a two-tiered corporate architecture to segregate asset ownership from management operations:

• The Fund Entity (Asset Holder): A vehicle (typically a Singapore Private Limited Company or a Variable Capital Company—VCC) created solely to hold the family's investment portfolio. This entity applies for MAS tax exemptions.
• The Family Office Entity (Management Company): A Singapore-incorporated Private Limited company that provides investment management and administrative services to the Fund Entity.

Do Single Family Offices Need a MAS Fund Management Licence?

Under Section 99(1)(h) of the Securities and Futures Act (SFA), entities conducting fund management in Singapore must hold a Capital Markets Services (CMS) Licence unless specifically exempt.

An SFO can operate without a full CMS licence because it manages assets exclusively for a single family (i.e., there are no third-party investor funds). To qualify for this licensing exemption under current MAS guidelines, the SFO must meet three core statutory criteria:

• 100% Family Ownership: The fund management vehicle must be wholly owned directly or indirectly by members of the same family lineage.
• Designated MAS Liaison: The entity must appoint a Singapore-resident employee to act as the primary point of contact for regulatory queries.
• Financial Institution Alignment: The family office must establish and maintain an active account relationship with a MAS-regulated private bank or financial institution.

What Is the Difference Between Section 13O and Section 13U Tax Schemes?

To avoid paying Singapore's standard 17% corporate tax on investment returns, SFOs apply for tax exemptions under Section 13O (Onshore Fund Tax Exemption) or Section 13U (Enhanced-Tier Fund Tax Incentive) of the Income Tax Act, administered jointly by MAS and the Inland Revenue Authority of Singapore (IRAS).

Under the Capital Deployment Requirement (CDR), MAS actively incentivizes local investments. Capital allocated to Singapore-listed equities, MAS-approved climate/green investments, or local unlisted operating companies receives scaled multipliers (1.5x to 2x) toward fulfilling your statutory threshold.

What Are the Common Pitfalls That Delay Family Office Setup?

Setting up a family office typically takes 9 to 12 months. The most frequent delays occur during banking onboarding and regulatory submission due to two primary friction points:

1. Unprepared Source-of-Wealth (SoW) Audits

Private banks and MAS apply rigorous AML & KYC scrutiny. Family principals who cannot produce clear, auditable documentation tracing capital accumulation back across 2–3 decades (e.g., historic company sale contracts, audited dividend records, or inheritance deeds) face immediate onboarding freezes.

2. Treating Statutory Minimums as Operating Budgets

While Section 13O sets a statutory minimum AUM of S$20 million, annual operational running costs (commercial rent, non-family IP salaries, statutory audits, corporate secretarial, and ongoing compliance retainers) typically range from S$300,000 to S$600,000 per year. Operating an SFO with less than S$50 million in total assets often proves economically inefficient due to these fixed substance requirements.

FAQs on Setting Up a Family Office in Singapore

Can setting up a family office lead to Singapore Permanent Residency (PR)?

Yes. Under Option C of the Economic Development Board’s (EDB) Global Investor Programme (GIP), qualifying principal investors who establish a new Singapore-based Single Family Office with an AUM of at least S$200 million can apply for Permanent Residency status for themselves and their immediate families.

How long does it take to secure MAS tax exemption approval?

Once bank accounts are operational and formal applications under Section 13O or 13U are submitted via MASnet, review times generally range between 6 to 9 months, depending on the complexity of the family's ownership structure and capital deployment strategy.

This article is for general information only and does not constitute legal or regulatory advice. Contact Alder for advice specific to your circumstances.