Hong Kong's Family Office Boom: A New Era in Wealth Management
The family office industry in Hong Kong has experienced remarkable growth, positioning the city as a leading global hub for family wealth management. As of December 2023, over 2,700 single-family offices were operating in Hong Kong, reflecting a significant increase in demand for tailored wealth management solutions among ultra-high-net-worth individuals (UHNWI). This surge is largely driven by favorable economic conditions and strategic government initiatives aimed at attracting more family offices. Key measures include the Capital Investment Entrant Scheme (CIES), which simplifies residency for investors, and tax concessions for Family-owned Investment Holding Vehicles (FIHVs), which enhance the financial attractiveness of establishing a family office.
Major Benefits of Setting Up a Family Office
Favorable Tax Regime: Hong Kong offers one of the most competitive tax environments globally, with no capital gains tax or withholding tax on dividends. Recent legislative changes offer significant tax exemptions for family-owned investment holding vehicles (FIHVs), enhancing their appeal for families managing substantial assets. The new tax regime provides a 0% profits tax concession for eligible FIHVs managed by single family offices (SFOs) in Hong Kong, as well as for family-owned special purpose entities (FSPEs) regarding assessable profits from qualifying and incidental transactions.
Business-Friendly Ecosystem: According to the World Bank, Hong Kong ranks third out of 190 economies in its Ease of Doing Business report, highlighting its efficient regulatory environment and ease of starting a business. The city excels in key areas such as accessing finance and paying taxes, which are vital for entrepreneurs and investors. Deloitte’s International Wealth Management Centre Rankings reveal that Hong Kong has consistently been among the top three globally for wealth management competitiveness since 2013. As a major financial hub, it hosts nearly 80 of the world’s largest banks and 70 top global asset managers, underscoring its prominence in the financial services industry.
Government Support and Initiatives: The Hong Kong Government has established the FamilyOfficeHK team within InvestHK to facilitate the setup and growth of family offices. This dedicated team provides resources and support tailored to the unique needs of family offices, including guidance on regulatory compliance and access to investment opportunities. The government has also allocated HK$100 million over three years to enhance the capabilities of FamilyOfficeHK, allowing it to promote philanthropic activities and educational initiatives for families. Furthermore, the recently launched Capital Investment Entrant Scheme (CIES) enables eligible applicants to invest in local financial assets, facilitating residency and operational establishment in Hong Kong.
Flexibility and Privacy: In Hong Kong, family offices operate without the requirement for pre-approval or registration, enabling families to maintain a low profile while managing their wealth with discretion. Furthermore, family offices can establish transparent governance structures that promote clear decision-making while safeguarding the privacy that many affluent families seek.
