Hong Kong Family-owned Investment Holding Vehicles Tax Concessions
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Tax Concessions for Family-owned Investment Holding Vehicles
Hong Kong Family-owned Investment Holding Vehicles Tax Concessions
In an era of shifting global tax regulations, Hong Kong has solidified its position as the premier wealth management hub for Asia. The Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance, which took effect in May 2023, offers a highly competitive 0% concessionary profits tax rate for eligible family offices.
As of early 2026, the Hong Kong government has further enhanced these measures to include a wider range of asset classes and more flexible operational requirements, making it an ideal time for ultra-high-net-worth (UHNW) families to structure their wealth through a Family-owned Investment Holding Vehicle (FIHV).
1. Key Benefits: Why Choose Hong Kong for Your FIHV?
Hong Kong’s tax regime for family offices is designed for simplicity and maximum tax certainty. Unlike other jurisdictions that require complex pre-approvals, Hong Kong utilizes a self-assessment/election mechanism.
0% Profits Tax: Exemption from tax on profits derived from qualifying transactions in specified assets.
No Capital Gains Tax: Hong Kong does not tax capital gains, which is a cornerstone for long-term wealth preservation.
Extensive Asset Coverage: Qualifying assets include stocks, bonds, futures, foreign exchange, and—per 2025/26 enhancements—emission derivatives, carbon credits, and insurance-linked securities.
Administrative Simplicity: No prior application to the Inland Revenue Department (IRD) is required; families simply "elect" into the regime via their tax return.
2. Eligibility Criteria for the 0% Tax Rate
To qualify for the tax concession, the structure must meet specific ownership and operational thresholds.
Structure & Ownership
The FIHV: Can be a corporation, partnership, or trust (established in or outside Hong Kong) but must not be a business undertaking for general commercial purposes.
Family Control: At least 95% of the beneficial interest must be held by one or more members of a single family.
Charitable Inclusion: If a tax-exempt charitable institution (under Section 88) holds an interest, the family's beneficial interest requirement can be reduced to 75%.
The Single Family Office (SFO) Requirement
The FIHV must be managed by an Eligible Single Family Office (SFO) in Hong Kong that satisfies:
AUM Threshold: A minimum aggregate Net Asset Value (NAV) of HK$240 million (approx. US$30 million).
Management & Control: The SFO and the FIHV must be normally managed or controlled in Hong Kong.
Income Safe Harbour: At least 75% of the SFO’s assessable profits must be derived from services provided to the family.
3. Substantial Activities: The "Economic Substance" Test
To comply with international tax standards (OECD/BEPS), the FIHV must demonstrate a genuine economic presence in Hong Kong.
Requirement | Minimum Threshold |
Full-time Employees | At least 2 qualified employees in Hong Kong. |
Annual Operating Expenditure | At least HK$2 million incurred in Hong Kong. |
Pro-Tip: These requirements can be met by the FIHV directly or by the SFO managing it, providing flexibility in how you staff your operations.
4. 2025-2026 Enhancements: What’s New?
Recognizing the evolving nature of digital and green finance, the Hong Kong government has introduced updates (Global Economic Outlook) to keep the regime competitive:
Virtual Assets: Profits from qualifying transactions in virtual assets (cryptocurrencies) are now clearly eligible for the 0% rate.
Removal of the 5% Incidental Limit: Previously, incidental income (like interest) was capped at 5% of total receipts. Recent 2025 proposals aim to provide more flexibility for fixed-income heavy portfolios.
Synergy with New CIES: Investors under the New Capital Investment Entrant Scheme (CIES) can now more easily integrate their qualifying investments into an FIHV structure to enjoy the tax concession.
Conclusion: Securing Your Family Legacy
The Hong Kong FIHV regime provides a robust, low-maintenance framework for global wealth. By combining a 0% tax rate with a world-class legal system and proximity to Mainland Chinese capital, Hong Kong remains the "Gold Standard" for family office setups.
Comparison between Hong Kong and Singapore’s family office regimes
In 2026, Hong Kong and Singapore remain the top two global choices for family office domiciliation. While both offer a 0% tax rate on qualifying investment income, they cater to different family profiles and operational preferences.
Hong Kong focuses on flexibility and ease of entry, while Singapore emphasizes institutional rigor and social contribution.
1. Comparative Breakdown: HK FIHV vs. Singapore 13O/13U
Feature | Hong Kong (FIHV) | Singapore (13O & 13U) |
Minimum AUM | HK$240M (US$31M) | S$20M (US$15M) for 13O S$50M (~US$37M) for 13U |
Application Process | Self-Assessment. No prior approval needed; "elect" via tax return. | Formal Approval. Requires application to MAS (pre-approval needed). |
Asset Restrictions | High flexibility; no "local investment" quota. | 10% of AUM or S$10M must be in local investments. |
Staffing | 2 qualified employees (can be family members). | 2-3 Investment Professionals (13U requires at least 1 non-family professional). |
Operating Spend | Min. HK$2M (US$256k) annually. | Tiered: S$200k to S$500k+ based on AUM. |
Asset Scope | Broad (includes Virtual Assets and Carbon Credits). | Broad (includes Virtual Assets under specific digital asset rules). |
2. Key Differentiators for 2026
Why Choose Hong Kong?
Speed to Market: Because there is no "gatekeeper" (like the MAS), you can set up and start trading immediately. You only prove compliance if the Inland Revenue Department (IRD) audits you.
Regulatory Light-Touch: Hong Kong does not require a resident director, whereas Singapore mandates at least one local resident director.
Virtual Asset Hub: Hong Kong has more permissive and integrated regulations for holding cryptocurrencies and digital assets within an FIHV.
Why Choose Singapore?
Tax Certainty: Receiving a formal "Award Letter" from the MAS provides peace of mind that the tax exemption is guaranteed (provided conditions are met).
Gateway to ASEAN: For families looking to invest in Southeast Asian private equity and infrastructure, Singapore is the natural geographic and financial base.
Philanthropy Framework: Singapore’s Philanthropy Tax Incentive Scheme (PTIS) allows families to claim deductions for overseas donations, a unique feature not mirrored in HK.
3. Which Is Better for You?
Choose Hong Kong if: You have assets exceeding US$30M, want to avoid the administrative delay of a government application, and prefer a regime with no local investment "quotas."
Choose Singapore if: You value the "pre-approved" status from a central bank, intend to hire professional (non-family) investment staff, and want to leverage Singapore’s extensive Double Tax Treaty (DTA) network (over 100 treaties vs. HK’s 50+).
Summary of the "Dual-Hub" Trend
In 2026, many ultra-wealthy families no longer choose just one. They often use Hong Kong for North Asian/China-facing equities and virtual assets, while maintaining a Singapore office for Southeast Asian direct investments and family governance.
How Bestar Hong Kong can Help
Hong Kong Family-owned Investment Holding Vehicles Tax Concessions
As a premier international corporate service provider with over 20 years of experience, Bestar Hong Kong acts as your strategic partner in navigating the complexities of the 2023 Tax Concession Ordinance. We provide a "one-stop" solution that bridges the gap between high-level tax planning and daily operational compliance.
Here is how Bestar empowers your family office to thrive in Hong Kong’s 2026 financial landscape:
1. Structural Design & FIHV Incorporation
Setting up the right legal framework is the foundation of tax efficiency. Bestar guides you through:
Entity Selection: We advise on whether a Company Limited by Shares, a Limited Partnership Fund (LPF), or a Trust structure best serves your family’s succession goals.
Ownership Verification: We perform the necessary look-through analysis to ensure your structure meets the 95% family beneficial interest threshold.
SFO Establishment: We handle the incorporation of your Eligible Single Family Office (SFO), ensuring it is a private company with "Normal Management and Control" (NMC) in Hong Kong.
2. Comprehensive Tax & Regulatory Advisory
Compliance in 2026 requires more than just filing papers; it requires proactive risk management.
Tax Concession Election: Bestar manages the irrevocable election process via your Profits Tax Return (Form BIR51 and Supplementary Form S16).
Asset Monitoring (Schedule 16C): We audit your portfolio to ensure investments qualify for the 0% rate, specifically monitoring the 5% incidental income limit to avoid "tainting" your tax-exempt status.
FSIE & BEPS Compliance: We help you navigate the Foreign-Sourced Income Exemption (FSIE) regime, ensuring that your offshore dividends and disposal gains remain non-taxable through sufficient local economic substance.
3. Substantial Activities & Outsourcing Support
Maintaining the "Economic Substance" test is a year-round commitment. Bestar provides:
CPA & Audit Services: As a firm of qualified CPAs, we provide the mandatory statutory audits required for FIHVs and SFOs.
Qualified Staffing Solutions: We assist in the recruitment or secondment of the 2 full-time qualified employees required by the IRD.
Expense Tracking: We ensure your HK operations meet the minimum HK$2 million annual operating expenditure through meticulous bookkeeping and payroll management.
4. Synergy with the New CIES (Residency)
For families seeking Hong Kong residency alongside tax benefits, Bestar provides integrated support for the New Capital Investment Entrant Scheme (CIES):
Net Asset Assessment: We act as the Certified Public Accountant (CPA) required to verify your HK$30 million net asset requirement.
Investment Portfolio Reporting: We provide the ongoing annual reporting to InvestHK and the Immigration Department to maintain your residency status.
The Bestar Advantage: Why Clients Trust Us
"Bestar doesn't just process paperwork; we provide strategic clarity. From opening your corporate bank account in a high-scrutiny environment to drafting technical responses for IRD inquiries, we protect your family's legacy."
Preliminary Document checklist for your FIHV setup
To qualify for the 0% tax concession in 2026, your Family-owned Investment Holding Vehicle (FIHV) must maintain a rigorous trail of documentation. Bestar Hong Kong streamlines this process by categorizing your requirements into three phases: Entity Setup, Ownership Verification, and Ongoing Compliance.
Below is a preliminary checklist for your preparation.
1. Phase 1: Entity & Structural Documentation
These documents are required to legally establish your FIHV and Single Family Office (SFO) in Hong Kong.
[ ] Proof of Incorporation: Certificate of Incorporation and Business Registration Certificate (BRC) for both the FIHV and the SFO.
[ ] Articles of Association: Constitution documents that explicitly state the entity is not a "business undertaking for general commercial purposes."
[ ] Register of Members & Directors: Updated registers reflecting the management structure.
[ ] Significant Controllers Register (SCR): Required by Hong Kong law to identify anyone with >25% control.
[ ] Appointment of Company Secretary: Documentation confirming a licensed TCSP (like Bestar) as your local representative.
2. Phase 2: Family Ownership & "Look-Through" Documents
This is the most critical section for the 95% Family Ownership test (or 75% for charities).
[ ] Detailed Family Tree: A signed declaration or chart outlining the relationships between the "Single Family" members.
[ ] Identity Verification (KYC): Passports and proof of address for all beneficial owners.
[ ] Trust Deeds (if applicable): If the FIHV is held via a trust, the deed must be provided to verify the beneficiaries are family members.
[ ] Section 88 Verification: If a charity is a shareholder, its tax-exempt status letter from the Inland Revenue Department (IRD).
[ ] Self-Declaration of Relationship: A statutory declaration confirming that the individuals meet the definition of "family members" under the Ordinance.
3. Phase 3: Financial & Substance Evidence
To claim the tax concession, you must prove your "Economic Substance" in Hong Kong annually.
[ ] Asset Management Agreement: A formal contract between the FIHV and the SFO outlining the management of assets.
[ ] Valuation Reports: Evidence that the aggregate Net Asset Value (NAV) is at least HK$240 million.
[ ] Employment Contracts: Evidence of at least 2 full-time qualified employees in Hong Kong (including CVs and professional certificates).
[ ] MPF & Payroll Records: Documentation of Mandatory Provident Fund (MPF) contributions for the staff.
[ ] Local Expenditure Ledger: Receipts and invoices proving at least HK$2 million in annual Hong Kong-based operating expenses.
4. Phase 4: Tax Election & Reporting Forms
Once the structure is operational, Bestar helps you prepare the following for the IRD:
[ ] Form IR1480: The statutory declaration for the application of tax concessions.
[ ] Supplementary Form S20: The specific form for FIHV tax concessions submitted with your Profits Tax Return.
[ ] Audit Reports: Financial statements audited by a Hong Kong CPA (Bestar can provide this service).
[ ] Schedule 16C Transaction Log: A detailed record of all trades to distinguish between "Qualifying Transactions" and "Incidental Transactions."
Bestar Tip: For 2026, all supplementary forms must be submitted electronically. Bestar provides the digital filing infrastructure to ensure your XML files are compatible with the IRD’s eTAX portal.
How Bestar Moves You Forward
We act as your "Local Compliance Officer." We don't just tell you what's needed; we draft the declarations, maintain the registers, and liaise with the IRD on your behalf.
Fee proposal for an FIHV setup
A professional fee proposal for a Family-owned Investment Holding Vehicle (FIHV) in Hong Kong typically covers three distinct phases: initial structural setup, tax concession election, and ongoing annual compliance.
Below is a standardized fee proposal based on Bestar Hong Kong’s 2026 service rates and prevailing market standards for specialized family office advisory.
Project: Establishment of FIHV & SFO Structure
Phase 1: Legal Incorporation & Structural Setup
This phase ensures the legal entities are established in accordance with the "Single Family" definitions under the Ordinance.
Service Item | Description | Fee (HKD) |
FIHV Incorporation | Registration of the holding vehicle (Co. Ltd, LPF, or Trust). | $12,000 – $25,000 |
SFO Incorporation | Registration of the Single Family Office entity. | $9,000 – $15,000 |
Government Fees | Incorporation fees, Business Registration (BR), and Levies. | ~$4,000 per entity |
Corporate Secretary | Named Company Secretary & Registered Address (Year 1). | $5,000 – $8,000 |
Bank Account Opening | Assistance with Tier-1 Private or Commercial banks. | $5,000 – $12,000 |
Subtotal (Setup) | $35,000 – $64,000 |
Phase 2: Tax Concession Election & Advisory
This is a specialized service to secure the 0% concessionary profits tax rate.
Service Item | Description | Fee (HKD) |
Tax Structural Review | Look-through analysis of the 95% ownership requirement. | $15,000 – $30,000 |
Irrevocable Election | Preparation and filing of formal election with the IRD. | $10,000 – $15,000 |
Compliance Manual | Internal guidelines for "Qualifying Transactions" (Schedule 16C). | $8,000 – $12,000 |
CPA NAV Verification | Verification of the HK$240M minimum AUM threshold. | $10,000 – $20,000 |
Subtotal (Tax) | $43,000 – $77,000 |
Phase 3: Annual Ongoing Maintenance (Retainer)
To maintain the 0% rate, the structure must meet "Substantial Activity" requirements every year.
Service Item | Description | Annual Fee (HKD) |
Statutory Audit | Mandatory annual audit by a Hong Kong CPA. | $15,000 – $40,000+* |
Tax Filing (S16 Form) | Filing the Profits Tax Return with the FIHV supplement. | $8,000 – $15,000 |
Accounting/Bookkeeping | Monthly/Quarterly maintenance of financial records. | $2,000 – $5,000/mo |
Payroll & MPF | Management for the 2+ qualified employees. | $1,500 – $3,000/mo |
Subtotal (Annual) | $50,000 – $100,000+ | |
*Audit fees vary significantly based on the number of transactions and complexity of the asset portfolio. |
Summary of Total Estimated Outlay (Year 1)
One-off Setup & Tax Election: HK$78,000–HK$141,000
Mandatory Local Expenditure: The IRD requires a minimum spend of HK$2,000,000 per year (which includes the professional fees above, plus salaries and rent).
How Bestar Hong Kong can Help
As a premier international corporate service provider with over 20 years of experience, Bestar Hong Kong acts as your strategic partner in navigating the complexities of the 2023 Tax Concession Ordinance. We provide a "one-stop" solution that bridges the gap between high-level tax planning and daily operational compliance in the 2026 regulatory landscape.
Here is how Bestar empowers your family office to thrive:
1. Structural Design & FIHV Incorporation
Setting up the right legal framework is the foundation of tax efficiency. Bestar guides you through:
Entity Selection: We advise on whether a Company Limited by Shares, a Limited Partnership Fund (LPF), or a Trust structure best serves your family’s succession goals.
Ownership Verification: We perform the necessary look-through analysis to ensure your structure meets the 95% family beneficial interest threshold (or the 75% threshold for charitable inclusions).
SFO Establishment: We handle the incorporation of your Eligible Single Family Office (SFO), ensuring it is a private company with "Normal Management and Control" (NMC) in Hong Kong.
2. The "Bestar Edge": Defense-Ready Tax Compliance
In 2026, the Inland Revenue Department (IRD) has shifted to a "data-first" audit approach. Bestar protects your 0% tax status through:
Irrevocable Election Management: We manage the formal election process via your Profits Tax Return (Form BIR51) and the mandatory Supplementary Form S16.
"Defense File" Creation: Unlike automated software, Bestar’s CPAs build a manual "Defense File" for your offshore and concessionary claims, documenting contract negotiations and operational flows to withstand IRD scrutiny.
Schedule 16C Monitoring: We audit your portfolio to ensure investments qualify for the 0% rate, specifically monitoring the 5% incidental income limit for non-qualifying receipts.
3. Substantial Activities & "Substance-as-a-Service"
Meeting the "Economic Substance" test is a year-round requirement. Bestar provides:
CPA & Statutory Audit: As a firm of qualified HKCPAs, we provide the mandatory annual audits required for all Hong Kong active companies.
Qualified Staffing & Payroll: We assist in managing the records for the 2 full-time qualified employees required by the IRD, including MPF contributions and employment contract compliance.
Expense Tracking: We ensure your HK operations meet the minimum HK$2 million annual operating expenditure through meticulous bookkeeping and local expense management.
4. Integration with Residency (New CIES)
For families seeking Hong Kong residency alongside tax benefits, Bestar provides integrated support for the New Capital Investment Entrant Scheme (CIES):
CPA Verification: We act as the external auditor required to verify your HK$30 million net asset requirement for the CIES application.
Ongoing Reporting: We handle the annual reporting to InvestHK and the Immigration Department to maintain your residency status.
Why Choose Bestar in 2026?
Feature | The Bestar Advantage |
Experience | 20+ years in the HK market with a dedicated "Private Tax & Family Office" leader. |
Technology | AI-enhanced auditing for 100% transaction surveillance (moving beyond manual sampling). |
Transparency | Fixed-fee pricing models with no hidden disbursements or bank confirmation surprises. |
Regional Reach | Offices in HK, Singapore, and Malaysia for seamless cross-border wealth management. |
Strategic Note: In 2026, a successful family office setup is no longer "set-and-forget." It requires a partner who can bridge the gap between digital accounting efficiency and high-touch senior CPA advisory.
Would you like to schedule a confidential consultation with our Family Office Leader to review your current structure
Why Choose Bestar for Your FIHV?
Integrated CPA Services: We handle both the corporate secretarial and the complex tax/audit work under one roof.
Regulatory Liaison: We act as your primary point of contact for inquiries from the Inland Revenue Department (IRD) and InvestHK.
2026 Ready: All our processes are optimized for the latest electronic filing (eTAX) requirements.
Would you like to schedule a confidential consultation with a Bestar tax specialist?
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