The government of Hong Kong is promoting the establishment of family offices through various tax incentives and business support initiatives. A recent amendment bill has provided tax concessions for family-owned investment holding vehicles, and further enhancements are being formulated. The government is also facilitating the setup and expansion of family offices through support from InvestHK.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
SPOTLIGHT ON
FAMILY OFFICES
The Family Office ("FO") sector plays a critical role in asset and wealth management, significantly contributing to private banking and private wealth management. As per the Asset and Wealth Management Activities Survey 2023, the business size attributed to FOs and private trusts reached $1,452 billion by the end of 2023.
The Legislative Council passed the Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Bill 2022 in May 2023. This bill allows family-owned investment holding vehicles managed by single FOs in Hong Kong, with a minimum asset threshold of HK$240 million and substantial activities requirement, to enjoy profits tax exemption for qualifying transactions. Further enhancements to this tax concession regime have been announced in the 2025-26 Budget, including expanding the scope of 'fund', increasing types of qualifying transactions, and enhancing tax concession arrangements on carried interest distributions by private equity funds. These proposals are expected to be finalized and submitted for legislative consideration by the end of 2026.
A single FO is exempt from applying for a license under the Securities and Futures Ordinance if it does not engage in regulated business activities in Hong Kong. Research indicates that as of the end of 2023, approximately 2,700 single FOs were operating in Hong Kong, with over half set up by ultra-high-net-worth individuals possessing wealth of US$50 million or above. Since the establishment of the FamilyOfficeHK team by InvestHK in June 2021, they have assisted over 160 FOs in setting up or expanding their businesses in Hong Kong, including 135 that did so post the profits tax exemption regime.
The government continues to explore measures to attract more Mainland high-net-worth individuals to invest through Hong Kong-based family offices. Various investment promotion activities, such as roundtables, seminars, and meetings with investors, are being undertaken to encourage Mainland high-net-worth individuals to establish FOs in Hong Kong. The government is also enhancing cross-border wealth management initiatives, including increasing the individual investor quota, lowering the threshold for participating in the Southbound Scheme, and enhancing promotion and sales arrangements. Additionally, discussions with Mainland financial regulatory authorities are ongoing to facilitate cross-border remittances while managing risks.
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