Family Office Models
Family offices are private wealth management advisory firms that serve ultra-high-net-worth (UHNW) investors. They are different from traditional wealth management shops in that they offer a total outsourced solution to managing the financial and investment side of an affluent individual or family. There are a wide range of family office models are in use today. Just as there are a number of key differences between single family offices, and multi-family offices that serve several unrelated families. But whatever the key differences may be, the common denominator is that the office serves only one family, which may include multiple generations or even family branches.
DIAGRAM 1
THE BASELINE STRUCTURE
DIAGRAM 2
A STRUCTURE INVOLVING TRUST & HOLDING COMPANY
Tax Exposure in Singapore
Singapore follows a territorial basis of taxation. In other words, companies and individuals are taxed mainly on Singapore sourced income.
Singapore income tax is payable on income that is:
- accrued in or derived from Singapore; or
- received in Singapore from outside of Singapore.
Singapore’s corporate income tax is levied at a flat rate of 17%.
Regulatory Framework of a Family Office in Singapore
Fund management activities in Singapore are regulated by the Monetary Authority of Singapore (“MAS”) under the Securities and Futures Act (Cap. 289) (“SFA”). When a trust structure is involved, the trust business will be regulated by the MAS under the Trust Companies Act (Cap. 336).
Entities carrying out fund management activities must either:
- Hold a Capital Markets Services (“CMS”) License for fund management as a Licensed Fund Management Company (“LFMC”);
- Be registered as a Registered Fund Management Company (“RFMC”); or
- Be expressly exempted from holding a CMS license*
* An entity that is in substance managing funds on behalf of a single family but does not fall neatly within the scope of existing class licensing exemptions may seek a licensing exemption from MAS under section 99(1)(h) of the SFA.