Hong Kong’s ambition to solidify its status as Asia’s premier wealth management hub has reached a critical juncture. Following the introduction of the unified tax concession regime for family-owned investment holding vehicles (FIHVs) in May 2023, the landscape has evolved rapidly. While the initial framework provided a robust foundation for single-family offices (SFOs) to enjoy profits tax exemptions on qualifying transactions, the investment preferences of ultra-high-net-worth (UHNW) families have shifted decisively towards alternative assets.
In response to this paradigm shift and fierce regional competition, the Financial Secretary’s 2026-27 Budget proposals represent a watershed moment. By expanding the scope of qualifying assets to include digital assets, gold, and specified commodities — and broadening the definition of a “fund” to encompass specific funds-of-one — the Hong Kong Government is directly addressing the modern family office’s need for portfolio diversification. Coupled with the Securities and Futures Commission’s (SFC) July 2025 licensing guidance, the regulatory and tax environment in Hong Kong has never been more conducive to family office establishment.
Today we provide an analysis of the Hong Kong family office tax regime, charting its evolution from the 2023 foundational ordinance to the transformative 2026 Budget enhancements, and outlining the critical structuring and compliance considerations for families navigating this dynamic jurisdiction.
The 2023 foundation: The FIHV tax concession framework
The Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023 marked Hong Kong’s decisive entry into the competitive global family office arena. Applicable retrospectively from the year of assessment commencing 1 April 2022, the regime provides a 0% concessionary profits tax rate for eligible FIHVs managed by SFOs in Hong Kong.
To qualify for this concession, the FIHV and its managing SFO must satisfy several stringent criteria. The FIHV must be an entity — whether a corporation, partnership, or trust — that is not operated for general commercial or industrial purposes. Crucially, it must be normally managed or controlled in Hong Kong and relate to one or more members of a single family, who must hold at least 95% of the beneficial interest (or 75% if a charitable entity is involved).
The minimum asset threshold is set at HK$240 million (approximately US$30 million) in specified assets under Schedule 16C to the Inland Revenue Ordinance (IRO). Furthermore, the FIHV must adhere to substantial activities requirements in Hong Kong, necessitating at least two qualified full-time employees and an annual operating expenditure of no less than HK$2 million.
While this framework was warmly received, the definition of “specified assets” under Schedule 16C was initially traditional, encompassing securities, futures contracts, foreign exchange contracts, and exchange-traded commodities. As family offices increasingly sought exposure to digital assets and precious metals, a structural gap emerged between the tax concession’s scope and modern investment realities.
The 2026-27 Budget: A paradigm shift for alternative assets
The 2026-27 Hong Kong Budget, delivered in February 2026, directly addressed these structural limitations. Recognising that digital assets and precious metals are no longer peripheral but central to UHNW portfolio construction, the Financial Secretary proposed a sweeping expansion of the tax concession regime.
- Inclusion of Digital Assets and Gold
The most significant enhancement is the proposed classification of digital assets, precious metals (notably gold), and specified commodities as qualifying investments eligible for tax concessions. This legislative amendment, expected to take effect from the year of assessment 2025-26, effectively removes the tax uncertainty that previously deterred family offices from managing these assets through their Hong Kong vehicles.
For families with substantial crypto-asset holdings or those utilising gold as an inflation hedge, this expansion means that profits derived from trading these alternative assets will now benefit from the 0% concessionary tax rate, provided the transactions are carried out or arranged in Hong Kong by the eligible SFO.
- Expanding the Definition of “Fund”
In tandem with asset class expansion, the 2026 Budget proposes broadening the statutory definition of a “fund” to cover specific funds-of-one, such as single-family investment vehicles. This structural enhancement provides greater flexibility for families who prefer to utilise bespoke fund structures rather than traditional corporate FIHVs, aligning Hong Kong’s regime more closely with international wealth management practices.
These enhancements, which are slated for introduction into the Legislative Council via an amendment bill in 2026, demonstrate the Government’s agility and commitment to maintaining a competitive edge over rival jurisdictions like Singapore.
Regulatory compliance: The SFC July 2025 Guidance
While the tax concessions offer compelling incentives, navigating the regulatory perimeter remains a complex endeavour. The core challenge lies in the intersection between the FIHV tax regime and the SFO regulatory framework. The SFO, which governs asset management in Hong Kong, does not contain a blanket exemption for family offices.
In July 2025, the SFC issued enhanced guidance to clarify licensing obligations. The regulator reiterated its activity-based approach: if a family office conducts a regulated activity — such as Type 9 (asset management) or Type 4 (advising on securities) — in Hong Kong as a business, it must be licensed unless a specific carve-out applies.
The primary exemption relied upon by SFOs is the “intra-group” carve-out, where services are provided solely to wholly owned group companies. However, the SFC’s guidance highlighted that a single-family office serving non-family members or managing third-party monies would likely trigger licensing requirements. The July 2025 circular also introduced an extended period for visiting professionals (itinerant professionals) from overseas group companies to conduct regulated activities in Hong Kong for up to 45 days annually, up from the previous 30 days.
For legal practitioners advising UHNW families, the imperative is clear: a structure that satisfies the FIHV tax concession criteria does not automatically bypass SFO licensing obligations. The definition of “family members” under the tax regime is significantly broader than the “related entities” exemption under the SFO [6]. Consequently, meticulous structuring is required to ensure that the SFO either operates entirely within the intra-group exemption or obtains the necessary SFC licences to manage the FIHV’s assets legally.
Structuring considerations for the modern Family Office
The convergence of the 2026 tax enhancements and the 2025 regulatory guidance necessitates a sophisticated approach to family office structuring in Hong Kong. Families must consider several strategic imperatives:
- Asset Segregation and Schedule 16C Compliance: With the impending inclusion of digital assets and gold, families should review their asset allocation strategies. Ensuring that these newly qualifying assets are properly segregated and managed by the Hong Kong SFO will be crucial to maximising the tax concession.
- Substantial Activities Documentation: The IRD requires robust documentation to prove that core income-generating activities (CIGAs) occur in Hong Kong. Families must maintain meticulous records of the two full-time employees’ qualifications and the HK$2 million operating expenditure, particularly when managing complex alternative assets that may require specialised personnel.
- Regulatory Mapping: Before establishing the FIHV and SFO, a comprehensive regulatory map must be drawn. If the SFO intends to manage trusts with non-family beneficiaries or pool capital from extended family members who fall outside the strict intra-group definition, an SFC Type 9 licence may be unavoidable.
- Anti-Avoidance and Private Company Investments: The FIHV regime contains stringent anti-avoidance measures, particularly regarding investments in private companies holding Hong Kong immovable property or short-term assets. Families must conduct rigorous due diligence before the FIHV acquires private equity stakes to ensure these investments do not inadvertently taint the tax exemption.
Final thoughts
Hong Kong’s family office regime has matured from a promising framework in 2023 into a highly competitive, modernised ecosystem in 2026. By proactively embracing digital assets, gold, and flexible fund-of-one structures, the Government has demonstrated a profound understanding of the evolving needs of global wealth.
However, the intersection of generous tax concessions and strict regulatory oversight demands careful navigation. For ultra-high-net-worth families and their advisors, the key to unlocking Hong Kong’s full potential lies in bespoke, compliant structuring that harmonises tax efficiency with regulatory integrity. As the 2026 legislative amendments take effect, Hong Kong is unequivocally positioned as the jurisdiction of choice for the forward-thinking family office.
If you require assistance or have any query related to Wealth & Estate Planning matters, please do not hesitate to contact our Private Client team.
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.
