Structuring Family Offices for Tax Efficiency in Hong Kong

Hong Kong is widely regarded as one of the world’s leading cities for establishing businesses. It has also become a prominent hub for ultra-high-net-worth individuals to set up family offices — private wealth management entities responsible for overseeing the day-to-day management of family assets. Generally, family offices can be categorized into two types: single-family offices and multi-family offices. A single-family office is dedicated to serving the financial and administrative needs of one family, whereas a multi-family office provides similar services to multiple ultra-high-net-worth families. This discussion will focus on the structuring of single-family offices in Hong Kong for tax efficiency.

A single-family office (“SFO”) typically provides a comprehensive range of services to family members and their investment holding entities. Its core function centers on portfolio investment and asset management, supported by personal, administrative and financial advisory services.

Special Purpose Vehicles (SPVs) are commonly established to hold assets on behalf of the family. Investment income is generally generated at the SPV level, while the SFO oversees strategy, governance and operations. 

Typical Structure of a Single-Family Office

Tax Treatment

• Service fees earned by eligible SFO are subject to Hong Kong Profits Tax
• Investment profits derived from Qualifying Transactions by SPVs may enjoy a 0% tax rate, offering significant tax advantages.

Investment Scope

• The SFO must maintain a minimum net asset value of HK$240 million
• Investments may be made across a wide range of permitted asset classes, providing flexibility in portfolio construction and management.

Eligibility Criteria

To qualify for tax concessions under the Hong Kong family office regime, an SFO must:

• Be normally managed and controlled in Hong Kong
• Employ at least two full-time employees in Hong Kong
• Incur operating expenditure of not less than HK$2 million in Hong Kong

How we Support Family Offices in Hong Kong

Strategic Advisory

• Design and implement SFO and SPV structures aligned with the family’s investment objectives, governance framework and long-term vision
• Advise on re-domiciliation strategies to support tax efficiency, regulatory alignment and succession planning
• Assist in obtaining advance tax rulings from the Hong Kong Inland Revenue Department (IRD) to provide certainty and mitigate tax risks

Investment Holding Support

• Review asset classes and investment eligibility to ensure compliance with the family office tax regime
• Structure SPV service fee arrangements and conduct transfer pricing studies to support arm’s-length principles
• Plan for liquidity events such as IPOs, exits and trust or estate transitions to manage tax exposure effectively

Tax Compliance & Reporting

• Prepare and file profits tax returns and employer filings in accordance with IRD requirements
• Ensure compliance with economic substance rules to qualify for tax concessions
• Monitor qualifying transactions to maintain the 0% tax rate on eligible investment profits

Family Office Governance

• Develop a family charter and governance framework to define roles, responsibilities and guiding principles
• Support succession and leadership transition planning
• Integrate trust and estate structures to align legal, tax and family governance considerations

Talk To Our Experts 

Connect with our RSM Hong Kong Tax & Advisory team for a no-obligation discussion and a comprehensive “health check” of your family office structure to identify potential risks and opportunities. With our ongoing tax compliance and advisory support, you can stay focused on preserving and growing your family wealth.