Some of Hugill & Ip’s team members are on their way back to Hong Kong following their successful participation in the recent GGI Asia Pacific Regional Conference, which concluded on 7 December at the Peninsula Hotel on the Chao Phraya River in Bangkok. A small delegation from Hugill & Ip proudly represented the firm, with Alfred Ip delivering a highly anticipated presentation on the burgeoning landscape of family offices in Hong Kong.
The GGI Asia Pacific Regional Conference once again proved to be a pivotal gathering, bringing together leading legal and accounting professionals from across the region. Bangkok, with its vibrant culture, pleasant December weather, and festive atmosphere, provided an ideal backdrop for networking, professional development, and cultural exchange. Attendees enjoyed a dynamic blend of professional enrichment and the unforgettable charm of one of Asia’s most exciting destinations.
Hugill & Ip’s team members actively engaged with colleagues, explored new perspectives, and strengthened invaluable relationships within the GGI global network. This participation underscored the firm’s commitment to staying at the forefront of international legal trends and fostering crucial cross-border collaboration.
A significant highlight of the conference was the insightful presentation by Alfred Ip. Drawing on his extensive expertise in private client and wealth management, Alfred addressed the critical topic of “Setting Up Family Offices in Hong Kong: Advantages and Tax Benefits”. His session was well-received, sparking engaging discussions among attendees keen to understand the opportunities Hong Kong presents.
During his comprehensive address, Alfred thoroughly explored the Hong Kong Family Office regime.
This initiative offers significant tax concessions and a flexible regulatory environment for global families.
The cornerstone of the regime is a zero percent profits tax on qualifying transactions for eligible single-family offices (SFOs), applied retroactively from the 2022/23 assessment year. Crucially, there’s no pre-approval process required; families can benefit through simple self-declaration, minimizing administrative burden. Hong Kong further enhances its tax appeal by having no capital gains, dividend, or estate taxes. The regime also allows for incidental income, like bond interest, to be tax-exempt up to a five percent threshold of total assessable profits, with only the excess taxed if the limit is surpassed.
To qualify, the structure must be a Single Family Office managing a Family-owned Investment Holding Vehicle (FIHV). The family must maintain at least 95% beneficial ownership of the investment vehicle (or 75% if a tax-exempt charity holds 20% of the remainder). Both the SFO and FIHV must be managed and controlled in Hong Kong to establish economic substance.
Substantial activity requirements ensure genuine operations: the family office must manage at least HK$240 million in assets, employ at least two full-time qualifying investment professionals in Hong Kong, and have a minimum annual operating expenditure of HK$2 million. Additionally, at least 75% of the SFO’s profits must come from providing services to the family’s investment vehicles. All these are met via self-declaration.
A key advantage for SFOs is the general exemption from Securities and Futures Commission (SFC) licensing, recognizing they manage family wealth, not third-party assets. Multi-family offices, however, typically require SFC licensing. The 0% profits tax applies to a broad range of financial assets, from traditional securities to derivatives, allowing for diversified global investment strategies.
When compared to Singapore, Hong Kong offers a higher minimum AUM (HK$240M vs. S$10-50M) but requires no local investment mandate, providing complete global investment freedom. The most significant difference lies in the regulatory approach: Hong Kong emphasizes flexibility and speed with self-declaration and no pre-approval, leading to a low compliance burden. Singapore, conversely, requires mandatory MAS approval, involving a longer process and higher compliance.
Hong Kong’s strengths are further bolstered by its world-class market infrastructure, deep financial talent pool, robust common law legal system, and unique connectivity to Mainland China via Stock Connect. The choice between Hong Kong and Singapore often depends on a family’s geographic investment focus (North Asia/China for HK, Southeast Asia/India for Singapore) and their preference for regulatory flexibility versus detailed government oversight.
In summary, Hong Kong presents a highly competitive proposition for family offices, blending tax efficiency, operational flexibility, and robust infrastructure, making it a premier choice for managing and growing global wealth, especially for those looking towards the Greater China market.
Reflecting on the event, Alfred Ip commented, “The GGI Asia Pacific Regional Conference was, as always, an incredibly valuable experience. It was a pleasure to connect with our international peers and share insights on topics that are increasingly relevant to our global clientele. Hong Kong has truly cemented its position as a premier destination for family offices, and I was delighted to discuss the compelling advantages and tax benefits that make it such an attractive proposition for families worldwide. The engagement and questions from the audience were truly encouraging.”
Hugill & Ip’s presence at the conference, particularly Alfred Ip’s expert contribution, reinforced the firm’s dedication to thought leadership and its pivotal role in guiding clients through complex international legal and wealth management landscapes. The team returned with fresh perspectives and strengthened global connections, all of which will undoubtedly benefit their clients in Hong Kong and beyond.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.
