Tax Concessions for Family Offices in Hong Kong

Tax Concessions for Family Offices in Hong Kong

The government of Hong Kong provides tax concessions, specifically in terms of profits tax, for certain entities.

Eligible Entities: These tax concessions are available for two types of entities:

    • Family-Owned Investment Holding Vehicles (FIHVs): These are investment holding vehicles owned by families and managed by eligible Single Family Offices (SFOs) in Hong Kong.
    • Family-Owned Special Purpose Entities (FSPEs): These are special purpose entities owned by families.

Eligible Profits
: The tax concessions apply only to assessable profits derived from specific types of transactions by FIHVs and FSPEs:

    • Qualifying Transactions: These are transactions that meet certain criteria set by the government.
    • Incidental Transactions: These are transactions that are closely related to or associated with the qualifying transactions.

Application Timeline
: These profits tax concessions come into effect for the assessment year starting on or after April 1, 2022.

Outlined the profit tax concession, Let's break down the conditions for an FIHV (Family-Owned Investment Holding Vehicle) to enjoy the profits tax concession.

  1. Structure:
    • The FIHV must be an entity, which can be established or created in or outside Hong Kong.
    • It should not be engaged in general commercial or industrial activities. In other words, it must not function as a typical business undertaking.
  2. Ownership:
    • The FIHV must be related to one or more members of a single family.
    • Ownership requirements: One or more members of the family must collectively hold at least 95% of the beneficial interest (directly or indirectly) in the FIHV throughout the entire basis period for the year of assessment.
  3. Normal Management or Control (NMC): The FIHV must be typically managed or controlled in Hong Kong during the basis period for the year of assessment. This means that its key decision-making processes and operations should primarily occur in Hong Kong.

At a minimum, the FIHV is required to have:

  • at least two full-time employees in Hong Kong who carry out the activities concerned and have the qualifications necessary for doing so; and
  • at least HK$2 million operating expenditure incurred in Hong Kong for carrying out the activities concerned.


4. Management of FIHV:

    • The FIHV must be managed by an eligible Single Family Office (SFO).
    • Eligibility criteria for the SFO include:
      • Being a private company, incorporated in or outside Hong Kong, with normal management or control in Hong Kong.
      • At least 95% of its beneficial interest should be held (directly or indirectly) by family members (except in cases involving charitable entities – 25%).
      • Providing services to specified persons of the family during the basis period for the year of assessment, with fees for these services being subject to tax.
      • Meeting the safe harbor rule, where at least 75% of the SFO's assessable profits should derive from services provided to specified persons of the family.

An FIHV is managed by an eligible SFO of the family to which the FIHV is related if the eligible SFO carries out the investment activities in relation to the FIHV. These activities include:

  • Conducting research and advising on any potential investments to be made by the FIHV.
  • Acquiring, holding, managing, or disposing of property for the FIHV.
  • Establishing or administering a Family-Owned Special Purpose Entity (FSPE) for holding and administering one or more underlying investments of the FIHV.

A cap is imposed such that not more than 50 FIHVs managed by the same eligible SFO may benefit from the profits tax concession.

  1. Minimum Asset Threshold
The aggregate value of assets specified under Schedule 16C to the IRO (specified assets) managed by an eligible SFO for the FIHV (or multiple FIHVs) of a family must be at least HK$240 million.
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