Single Family Offices in Hong Kong: Legal Structures, Licensing, and Tax Considerations

Introduction

Hong Kong has emerged as a leading global destination for family office establishment, driven by its strategic location, sophisticated financial ecosystem, favourable tax regime, and the Government’s proactive policy support for the family office sector. A single family office (SFO) is an entity established by an ultra-high-net-worth (UHNW) family to manage its wealth, investments, estate planning, philanthropic activities, and family governance on a private and consolidated basis.

This guide provides a comprehensive overview of the key legal, regulatory, and tax considerations for establishing an SFO in Hong Kong.

Why Establish a Family Office in Hong Kong?

Hong Kong offers several compelling advantages for UHNW families:

• Low and simple tax regime – no capital gains tax, no dividend tax, no estate duty; territorial profits tax at a flat rate of 16.5% with numerous investment income exemptions;
• Strategic access to Mainland China – proximity to and regulatory connectivity with Mainland China’s markets, enabling investment in A-shares, Mainland private equity, and other onshore opportunities;
• Regulatory sophistication – an internationally recognised regulatory framework under the SFC and HKMA, providing credibility for investment management;
• Government incentives – the SFC’s Capital Investment Entrant Scheme (CIES), SFO-friendly SFC licensing exemptions, and dedicated family office support through InvestHK;
• Professional services ecosystem – world-class legal, accounting, fiduciary, and investment management professionals with deep expertise in Asian and global markets.

Defining a Single Family Office

There is no statutory definition of an SFO in Hong Kong legislation. In practice, an SFO is characterised by:

• Managing assets and affairs of a single family (or a small number of related families);
• Not offering services to third-party clients;
• Providing investment management, estate planning, tax planning, family governance, concierge, and philanthropic services in an integrated manner.

The key distinction from a multi-family office (MFO) is that an SFO serves only one family and does not hold itself out to the public as providing investment management or advisory services to others.

Legal Structures for a Hong Kong SFO

1. Hong Kong Private Limited Company

The most common structure for an SFO is a Hong Kong private limited company incorporated under the Companies Ordinance (Cap. 622). Advantages include:

• Limited liability for the family;
• Flexible governance (shareholder agreements, board resolutions);
• Ability to employ investment professionals, compliance officers, and support staff in Hong Kong;
• Eligibility for the SFO licensing exemption (see below).

2. Holding Structure with Multiple Entities

Many SFOs use a multi-layered structure:

• A Hong Kong operating company – employing the investment team and managing investments;
• One or more investment holding companies (in Hong Kong, BVI, or Cayman) – holding specific asset classes (listed securities, private equity, real estate, alternatives);
• A family trust – holding the shares of the SFO and underlying investment vehicles for estate planning and succession purposes.

3. Limited Partnership Fund (LPF)

For families wishing to consolidate investments in a regulated fund vehicle, an LPF registered under the Limited Partnership Fund Ordinance (Cap. 637) provides a tax-efficient, professionally structured vehicle. The family acts as (or appoints) the general partner, managing investments for the benefit of family members as limited partners.

SFC Licensing: The SFO Exemption

Managing investments constitutes a regulated activity under the Securities and Futures Ordinance (SFO) – specifically Type 9 (Asset Management). However, genuine SFOs may benefit from an exemption from licensing if they meet certain conditions.

The SFO Exemption (Section 99 of the SFO)

Under section 99(1)(a) of the SFO, a person is exempt from the requirement to be licensed for Type 9 asset management if they manage assets only for a single family and do not hold themselves out to the public as carrying on a business in asset management. The SFC has confirmed this exemption applies to genuine SFOs managing the family’s own assets.

Key Conditions for the Exemption

• The SFO must genuinely manage assets for a single family only;
• The SFO must not manage third-party assets or accept external investors;
• The SFO must not advertise or hold itself out as a fund management business;
• Staff employed by the SFO are not required to be SFC-licensed for internal investment management functions, but must not conduct regulated activities for third parties.

When Licensing Is Required

If the SFO expands to manage assets for other families or external investors (i.e., becomes a multi-family office or an investment manager), it must apply for an SFC licence. Additionally, if the SFO engages in dealing in securities or futures on behalf of external parties, the relevant Type 1 or Type 2 licences are required.

Tax Considerations for Hong Kong SFOs

Profits Tax

A Hong Kong SFO is subject to Hong Kong profits tax (16.5% for companies) on profits from its chargeable business operations. However, investment income – including dividends, capital gains, and interest – is generally not subject to Hong Kong profits tax where it arises from non-trading activities.

Profits Tax Exemption for Qualifying Funds

Where the SFO is structured as a qualifying investment fund (e.g., an LPF or OFC), it may benefit from the profits tax exemption for qualifying funds under the Inland Revenue Ordinance, exempting it from tax on investment income and gains from qualifying transactions.

SFO Tax Concession (2023)

The Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023 introduced a dedicated tax concession for family-owned investment holding vehicles (FIHVs) managed by SFOs in Hong Kong. The concession provides:

• Tax exemption for qualifying investment income (dividends, capital gains on securities, interest on bonds) derived by the FIHV;
• The SFO managing the FIHV must be based in Hong Kong;
• The SFO must incur qualifying local expenditure of at least HKD 2 million per year and employ at least two investment professionals in Hong Kong;
• The family’s assets must exceed HKD 240 million (or equivalent).

This concession significantly enhances the tax efficiency of the SFO structure for large family offices and incentivises families to establish genuine substance in Hong Kong.

Governance and Succession Planning

Beyond investment management, a well-designed SFO addresses family governance – the structures, processes, and values that govern how family members interact, make decisions, and resolve disputes across generations. Key governance elements include:

• Family constitution – a non-legally binding document recording the family’s values, vision, and principles for family membership, employment, and wealth governance;
• Family council – a deliberative body of family members that participates in key SFO decisions, particularly around philanthropic strategy, family employment, and long-term investment philosophy;
• Investment committee – professional governance of investment decisions, separate from family council discussions;
• Succession planning – integrating the SFO structure with wills, trusts, and family agreements to ensure orderly succession of both family wealth and SFO governance roles;
• Next-generation education – programmes to prepare younger family members for responsible stewardship of family assets.

Practical Steps to Establish an SFO in Hong Kong

1. Define the family’s objectives – investment mandate, governance goals, philanthropy, and succession;
2. Select the appropriate legal structure – operating company, holding entities, and fund vehicles;
3. Assess licensing requirements – confirm eligibility for the SFO exemption or apply for the relevant SFC licences;
4. Establish substance – recruit investment and operational staff, lease office space in Hong Kong, and incur qualifying local expenditure;
5. Apply for tax concessions – assess eligibility for the FIHV concession and file appropriate tax filings;
6. Implement governance framework – draft family constitution, investment policy statement, and conflicts of interest policy;
7. Integrate estate planning – align SFO structure with trusts, wills, and succession planning instruments.

How Alan Wong LLP Can Assist

Alan Wong LLP’s Private Wealth & Trusts and Investment Funds teams have extensive experience advising UHNW families and family offices on establishing and operating SFOs in Hong Kong. Our integrated services include:

• SFO legal structure design and entity incorporation;
• SFC licensing assessment and exemption analysis;
• Application for the FIHV profits tax concession;
• Trust and estate planning integration with the SFO structure;
• Family governance advisory, including family constitution and council design;
• Ongoing corporate and regulatory compliance for the SFO entity.

Contact us to discuss establishing your family office in Hong Kong.