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Introduction: The Family Office Boom in Asia
The past decade has seen extraordinary growth in the number and scale of family offices globally, with Asia — and Hong Kong in particular — emerging as a major concentration of family office activity. Driven by the rapid accumulation of wealth in Asia, inter-generational wealth transfers, and the need for sophisticated investment management and succession planning, family offices have become one of the most dynamic segments of the wealth management industry.
This guide examines why Hong Kong has become a leading destination for family office establishment, the legal and tax framework for family offices, and the practical steps involved in setting up a family office in Hong Kong.
Why Choose Hong Kong for a Family Office?
Tax Advantages
Hong Kong has one of the most favourable tax environments for investment activity globally: no capital gains tax, no dividend tax, no inheritance tax, no VAT or GST, and a corporate profits tax rate of 16.5% (with a two-tiered rate of 8.25% on the first HK$2 million of assessable profits for corporations). Most investment income earned by a Hong Kong entity from offshore sources is not subject to Hong Kong profits tax under the territorial tax principle.
Financial Infrastructure
Hong Kong offers world-class financial infrastructure: access to global capital markets, deep liquidity in Asian equity and fixed income markets, a sophisticated banking system, and a concentration of investment banks, fund administrators, and prime brokers. For family offices deploying capital across Asia-Pacific, having a physical presence in Hong Kong provides direct market access and relationships with key financial institutions.
Legal and Regulatory Framework
Hong Kong’s common law legal system — underpinned by the Basic Law guarantee of continuity — provides the rule-of-law environment that family offices and their advisers require. The SFC’s licensing framework, the Companies Ordinance, the trust law regime, and the private wealth management infrastructure are all mature and well-developed.
Asia-Pacific Gateway
For families with wealth concentrated in Greater China or the broader Asia-Pacific region, Hong Kong provides unique access: to Mainland China investment opportunities (through Stock Connect, Bond Connect, and direct investment channels), to regional M&A and private equity deal flow, and to a network of advisers and counterparties with deep regional expertise.
Government Support
The Hong Kong government has actively courted family offices through a series of policy measures: the FIHV profits tax exemption regime, the Capital Investment Entrant Scheme (CIES), and the establishment of a dedicated family office team at InvestHK. These measures signal a long-term commitment to positioning Hong Kong as Asia’s leading family office hub.
What Does a Hong Kong Family Office Do?
The scope of activities of a family office varies widely depending on the family’s needs, but typically encompasses some or all of: investment management (equities, fixed income, private equity, real estate, alternatives), family governance and succession planning, philanthropic activities, tax planning and compliance, estate planning and trust administration, concierge and lifestyle services, and education and next-generation engagement.
Legal Structures for a Hong Kong Family Office
Investment Management Company
The core of most Hong Kong family office structures is a Hong Kong private company that serves as the investment management entity. This company employs the investment team, maintains relationships with banks and brokers, and manages the family’s investment portfolio under an investment management agreement with the family’s holding structures.
Holding Companies
Family assets are typically held through a layer of holding companies (Hong Kong companies or offshore entities such as BVI or Cayman companies) that segregate different asset classes, investment mandates, or family branches.
Trusts
Trusts are commonly used in family office structures for succession planning and asset protection. A Hong Kong trust or offshore trust (Jersey, Cayman, BVI, Singapore) can hold the family’s assets for the benefit of current and future generations, with the trustee (a licensed trust company) managing the assets in accordance with the trust deed and any letter of wishes from the settlor.
OFCs and LPFs
Open-Ended Fund Companies (OFCs) and Limited Partnership Funds (LPFs) are Hong Kong fund vehicles that can serve as family investment vehicles. They benefit from profits tax exemptions on qualifying transactions and are increasingly used as the investment vehicle within a family office structure.
SFC Licensing for Family Offices
Whether a family office requires an SFC licence depends on the structure. The key question is whether the investment management entity is managing assets for “others” in the regulatory sense, or solely for itself and group companies.
The “wholly intra-group” exemption from Type 9 licensing applies where the investment manager manages assets exclusively for its corporate group. For a single family office where all investment vehicles are wholly owned by the family holding structure, this exemption can cover the investment management activity — no SFC licence is required.
Where the structure is more complex (e.g., trust structures where the beneficial owners are not corporate entities forming part of a single group), SFC licensing advice should be sought.
The FIHV Tax Regime
The Family Investment Holding Vehicle (FIHV) regime provides a profits tax exemption for qualifying family-owned investment holding vehicles and their associated investment managers. Key conditions: the FIHV must be a family-owned vehicle managed by an SFC-licensed entity in Hong Kong; minimum assets under management (HK$240 million, reducible to HK$30 million); and minimum local substance (expenditure and employment in Hong Kong).
The FIHV regime covers the investment holding vehicles, their wholly-owned special purpose vehicles, and the associated management entity — providing a comprehensive tax exemption for the family office ecosystem.
The CIES: Immigration for Family Members
The relaunched Capital Investment Entrant Scheme (CIES) allows eligible persons to obtain the right to land and remain in Hong Kong by making a qualifying investment of HK$30 million in specified financial and real estate assets. For family offices, the CIES provides a mechanism for family members to establish Hong Kong residence in connection with their investment activities.
Practical Steps to Set Up a Hong Kong Family Office
- Define the scope: Determine what functions the family office will perform (investment management only, or also tax, legal, succession?), the AUM to be managed, and the family governance objectives.
- Structure the entities: Design the holding structure — management company, holding companies, fund vehicles (OFC/LPF if appropriate), and trust structures. Take advice on Hong Kong tax, SFC licensing, and offshore structuring.
- Obtain an SFC licence (if required): If the structure requires Type 9 licensing (e.g., managing assets for non-group entities or wishing to employ regulated persons), apply to the SFC. Allow 3–6 months for the licensing process.
- Establish banking relationships: Open accounts with Hong Kong banks or private banks. Prepare for robust KYC/AML documentation requirements, particularly for complex offshore structures.
- Recruit the team: Hire investment professionals (meeting SFC fit and proper requirements if licensed), operations staff, and compliance personnel.
- Apply for FIHV status (if eligible): Once the structure is established and minimum AUM thresholds are met, apply for FIHV tax exemption through the Inland Revenue Department.
- Consider the CIES: If family members wish to obtain Hong Kong residence, assess eligibility under the CIES and make the required qualifying investment.
Conclusion
Hong Kong offers an exceptionally compelling environment for family office establishment: tax efficiency, legal sophistication, financial infrastructure, and direct access to Asia-Pacific markets. The combination of the FIHV regime, OFC and LPF fund vehicles, the intra-group SFC licensing exemption, and the CIES creates a comprehensive ecosystem for family wealth management.
Alan Wong LLP advises on family office structuring, SFC licensing, FIHV applications, trust arrangements, and investment documentation in Hong Kong. Contact us for a consultation on setting up your family office in Hong Kong.
