Setting Up a Family Office in Hong Kong: Tax Concessions, Structures & Licensing

Hong Kong Family Office Setup Guide

Setting Up a Family Office in Hong Kong: Tax Concessions, Structures & Licensing | Bestar

Setting Up a Family Office in Hong Kong: Tax Concessions, Structures & Licensing

Establishing a family office in Hong Kong gives ultra-high-net-worth (UHNW) families a gateway to Asia-Pacific wealth opportunities. Supported by the Inland Revenue (Amendment) Ordinance and enhancements expanding eligible asset classes to private credit, digital assets, and foreign real estate, Hong Kong offers a 0% concessionary profits tax regime for qualifying investment vehicles.  

This guide breaks down single-family office (SFO) vs. multi-family office (MFO) options, 0% tax eligibility rules, Securities and Futures Commission (SFC) licensing exemptions, and local setup requirements.  

Key Benefits of Hong Kong as a Family Office Hub

• 0% Profits Tax Concession: 0% tax rate on qualifying transactions derived by Family-owned Investment Holding Vehicles (FIHVs).  

  
  

• Favorable Tax System: No capital gains tax, no dividends/interest withholding tax, no estate duty, and no VAT/sales tax.  

  
  

• SFC Licensing Carve-Outs: Genuine single-family offices running on a cost-recovery basis generally require no SFC financial license.  

  
  

• Residency Options: The Capital Investment Entrant Scheme (CIES) provides a fast-track residency pathway for investors committing at least HKD 30 million (~USD 3.85M) into qualifying local financial assets and portfolio funds.  

  
  
  
  

Single-Family Office (SFO) vs. Multi-Family Office (MFO)

Choosing between an SFO and an MFO affects ownership control, operating expenses, and regulatory oversight.  

Feature	Single-Family Office (SFO)	Multi-Family Office (MFO)
Client Base	Serves 1 family exclusively	Serves multiple un-related UHNW families
Primary Purpose	Internal asset administration & legacy planning	Commercial financial service enterprise
SFC Licensing	Exempt under intra-group carve-outs or non-commercial operations	Required (typically Type 1, 4, and 9 licenses)
0% Tax Regime	Directly covered under the FIHV tax regime	Individual family vehicles may qualify separately
Operational Control	100% controlled by the founding family	Externalized governance and shared resources

Tax Concessions: Qualifying for 0% Profits Tax (FIHV Regime)

To qualify for the 0% concessionary tax rate under Hong Kong’s tax laws, a Family-owned Investment Holding Vehicle (FIHV) managed by an Eligible Single-Family Office (eSFO) must meet five mandatory conditions:  

                     [ Ultra-High-Net-Worth Family ]
                                   │
                    ┌──────────────┴──────────────┐
                    │                             │ 100% Beneficially Owned
                    ▼                             ▼
       ┌─────────────────────────┐   ┌─────────────────────────┐
       │ Eligible Single-Family  │   │ Family-Owned Investment │
       │      Office (eSFO)      │   │ Holding Vehicle (FIHV)  │
       └────────────┬────────────┘   └────────────┬────────────┘
                    │                             │
       Manages      │                             │ Holds Assets
       (Min 75%     │                             │ (Min HKD 240M AUM)
       income from) │                             │
                    └──────────────┬──────────────┘
                                   │
                                   ▼
                   0% Concessionary Profits Tax Rate

1. Ownership Requirement

At least 95% of the beneficial interest in the FIHV and eSFO must be held by members of the same family.  

2. Minimum Asset Under Management (AUM) Threshold

The aggregate value of Schedule 16C qualifying assets managed by the eSFO across up to 50 FIHVs must be at least HKD 240 million (~USD 30 million).

3. Local Economic Substance Requirements

The FIHV must maintain an authentic operational footprint in Hong Kong:  

• 2+ full-time qualified employees in Hong Kong (investment managers or financial specialists).

  
  

• HKD 2 million+ in annual local operating expenditure (rent, salaries, professional fees).  

  
  
  
  

4. Expanded Schedule 16C Qualifying Assets

Qualifying profits cover earnings from transactions in:  

• Listed/unlisted securities and private equity

  
  

• Corporate and government bonds

  
  

• Foreign currencies and OTC derivatives  

  
  

• Private credit and debt instruments  

  
  

• Digital assets & cryptocurrencies  

  
  

• Physical precious metals (e.g., gold)  

  
  

• Offshore real estate equity structures

5. Safe Harbour Rule for the SFO

At least 75% of the assessable profits of the single-family office must come from management services provided to the specific family.  

Licensing Requirements (SFC Guidelines)

Hong Kong does not issue a specific "family office license." Regulation is based on the specific regulated activities performed under the Securities and Futures Ordinance (SFO).  

Single-Family Offices (Exempt)

An SFO typically does not require a license from the Securities and Futures Commission (SFC) under two conditions:  

1. Intra-Group Carve-Out (Type 9 - Asset Management): The SFO manages investment assets exclusively for wholly owned subsidiaries, its direct holding company, or sister subsidiaries.  

   
   

2. Non-Commercial Operation: The SFO operates purely as an internal administrative vehicle funded on a cost-recovery basis, rather than a profit-seeking commercial business.  

   
   
   
   

Multi-Family Offices (Regulated)

Because MFOs operate commercially for third-party clients, they generally require SFC licenses:  

• Type 1: Dealing in Securities  

  
  

• Type 4: Advising on Securities  

  
  

• Type 9: Asset Management  

  
  
  
  

Step-by-Step Setup Process

1.Establish Strategic Family Governance & Structure:

Timeline: Weeks 1–2.

• Define family objectives, asset allocation strategy, and wealth succession plans.

• Choose between an SFO or MFO structure.

• Determine corporate entities (e.g., Limited Company, Discretionary Trust, Private Trust Company).

2.Incorporation & Company Registration:

Timeline: Weeks 2–4.

• Submit Form NNC1 and Articles of Association to the Hong Kong Companies Registry (CR).

• Obtain the Business Registration Certificate (BRC) via the Inland Revenue Department (IRD).

• Setup initial registered office address and company secretarial support.

3.Bank Account Opening & SFC Compliance Assessment:

Timeline: Weeks 4–8.

• Open corporate banking accounts with major Hong Kong or international private banks.

• Conduct legal review to confirm SFO exemption under the Securities and Futures Ordinance.

• If establishing an MFO, apply for SFC Type 1, 4, or 9 licenses.

4.Build Economic Substance & Hire Local Talent:

Timeline: Weeks 8–12.

• Secure physical office space in Hong Kong.

• Appoint at least 2 full-time qualified local employees.

• Establish internal accounting systems to track the HKD 2M+ operating expenditure threshold.

5.Asset Transfer & Tax Exemption Election:

Timeline: Ongoing.

• Transfer qualifying asset portfolios (minimum aggregate HKD 240M AUM) into the FIHV.

• File annual profits tax returns claiming the 0% concessionary tax rate under the FIHV regime.

Ready to Establish Your Family Office in Hong Kong?

Setting Up a Family Office in Hong Kong: Tax Concessions, Structures & Licensing

Partner with Bestar Hong Kong to streamline your structural design, secure 0% tax concessions, and ensure seamless regulatory compliance.

• Direct Advisory: Schedule a confidential consultation with our tax and corporate structuring specialists.

  
  

• Tailored Setup: Get a customized setup blueprint covering FIHV incorporation, banking, local substance, and IRD filings.

  
  

• Fast-Track Execution: Let our experienced team manage your licensing exemptions and Hong Kong operational footprint from start to finish.