Residence permit under
Hong Kong Single Family Office (SFO)

The Hong Kong government has announced the New Tax Concessions to attract more Single Family Offices set up in the region as the global hub for wealth management.

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The Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023 (the Amendment Ordinance) was gazetted and came into operation on 19 May 2023. The Amendment Ordinance amended the Inland Revenue Ordinance (Cap. 112) (IRO) to provide profits tax concessions for:

(a) eligible Family-owned Investment Holding Vehicles (FIHVs) managed by eligible Single Family Offices (SFOs) in Hong Kong; and

(b) Family-owned Special Purpose Entities (FSPEs).  Only the assessable profits of FIHVs and FSPEs arising from qualifying transactions and incidental transactions would be eligible for profits tax concessions, which would apply in respect of a year of assessment commencing on or after 1 April 2022.

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Key Advantages of Hong Kong SFO Tax Concessions:

• Investment income from qualifying transactions (e.g., financial instruments) can be exempted from profits tax

• profits tax rate for the assessable profits of an FIHV or an FSPE earned from the qualifying transactions and incidental transactions is 0%

• No local investment requirements, allowing single family offices to conduct global investments

• Simple process with no need for prior approval

• No requirement to obtain a license if the SFO serves the family only

• Broader definition of “family members” under the scheme​​

 

Key Requirement of FIHV:

• must be an entity (established or created in or outside Hong Kong) which is managed or controlled in Hong Kong. Entity includes a corporation, partnership and trust (including a discretionary trust)

• must be managed by an eligible SFO and meet the minimum asset of HKD240 million

• must carry out its substantial activities requirements of and required to have:

a) at least two full-time employees in Hong Kong; and

b) at least HKD2million operating expenditure incurred in Hong Kong

 

Key Requirement of SFO:

• must be a private company (incorporated in or outside of Hong Kong) which is managed or controlled in Hong Kong;

• must have at least 95% of the beneficial interest being held directly or indirectly by members of the family;

• must provide services to specified persons of the family such as FIHV, FSPE (family owned special purpose entities) , and member of the family; and the fees for the provision of those services are chargeable to tax;

• must fulfil the safe harbour rule, at least 75% of the eligible SFO's assessable profits should derive from the services provided to specified persons of the family such as FIHV, FSPE, and member of the family

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Source: https://www.familyofficehk.gov.hk/en/new-tax-concessions-family-offices/index.html