As Hong Kong continues to cement its status as a leading international family office hub, the government has introduced a dedicated profits tax concession regime for qualifying family-owned investment vehicles. This forms part of a broader strategy to attract global family offices and ultra-high-net-worth individuals to base their operations and investments in the city.

The legislative framework — gazetted in May 2023 et effective retrospectively from 1 April 2022 — offers a 0% profits tax rate for qualifying Family-owned Investment Holding Vehicles (FIHVs), provided certain criteria are met. Subsequent industry consultations in late 2024 and early 2025 have proposed additional enhancements, which are currently under review and expected to further expand the scheme’s flexibility and appeal.

Who Can Benefit?

The tax concessions apply to two types of family-owned entities:

1. Family-Owned Investment Holding Vehicles (FIHVs) – Investment holding entities owned by families and managed by an eligible Single Family Office (SFO) à Hong Kong.
   
   
2. Family-Owned Special Purpose Entities (FSPEs) – Specialized vehicles set up for specific investment purposes within a family office structure.
   
   

These profits tax exemptions came into effect for the 2022/23 assessment year, starting on April 1, 2022, dans le cadre de la Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023, gazetted in May 2023.

🔄 Proposed Enhancements (2024–2025): The government is currently reviewing proposals to allow broader use of asset classes (including virtual assets and private credit) and more flexible structures for FIHVs and FSPEs.

 

Eligible Profits: What Qualifies for Tax Concessions?

The tax benefits apply only to assessable profits derived from two types of transactions:

1. Qualifying Transactions – Investments that meet specific criteria set by the Hong Kong government.
   
   
2. Incidental Transactions – Transactions closely related to or arising from qualifying investment activities, such as interest or dividend income.

🔄 Crypto Update: As of 2025, virtual assets (e.g., cryptocurrencies) are not yet included in the current definition of “qualifying transactions.” However, the government has proposed adding them under ongoing legislative enhancements. If enacted, profits from eligible crypto investments made by FIHVs will qualify for the 0% profits tax concession.

This structure ensures that only genuine investment-related profits benefit from the tax concession, rather than general commercial income.

🔄 What’s Changing? The government has proposed removing the 5% cap on incidental income (previously capped at 5% of total income) to better accommodate passive income from investment portfolios.

Key Conditions for FIHV Eligibility

Pour un Family-Owned Investment Holding Vehicle (FIHV) to qualify for the profits tax concession, it must meet the following conditions:

1. Legal Structure
   
   

• The FIHV can be incorporated in or outside Hong Kong.
  
  

• It cannot engage in general commercial or industrial activities—it must function purely as an investment holding entity.
  
  ✔️ As of 2023, structures involving charitable trusts are permitted to hold up to 25% of an FIHV’s beneficial interest.
  
  

2. Ownership Requirements
   
   

• The FIHV must be owned by one or more members of a single family.
  
  
• At least 95% of the beneficial interest in the FIHV must be held (directly or indirectly) by family members for the entire tax assessment year.
  

✔️ Inland Revenue now has discretion to treat more complex family structures as compliant, provided they meet the economic intent of the rules.

3. Management and Operations in Hong Kong
   
   

• The FIHV must be managed and controlled in Hong Kong during the tax year.
  
  
• Key decision-making processes and investment activities should occur in Hong Kong.

At a minimum, the FIHV must have:

• At least two full-time employees based in Hong Kong, qualified to perform investment-related activities.
  
  
• A minimum of HK$2 million in annual operating expenses incurred in Hong Kong.
  
  

These requirements ensure that substantial economic activities related to the family office occur within Hong Kong.

🔄 Update: The requirement now refers to entities “normally managed or controlled” in Hong Kong, a more flexible standard introduced in 2023 to replace stricter “central management and control” language.

4. Management by an Eligible SFO
   
   

The FIHV must be managed by a qualified Single Family Office (SFO) that meets the following conditions:

• The SFO must be a private company incorporated in or outside Hong Kong, with normal management and control based in Hong Kong.
  
  
• At least 95% of its beneficial interest must be held by family members (or 25% if the entity involves a charitable organization).
  
  
• The SFO must provide investment management and administrative services exclusively to specified family members.
  
  
• At least 75% of the SFO’s assessable profits must come from providing services to family members.

Permitted Activities of an SFO Managing an FIHV

An eligible SFO managing an FIHV must oversee investment-related activities, y compris :

• Conducting investment research and advisory services for the FIHV.
  
  
• Acquiring, holding, managing, or disposing of investment assets.
  
  
• Establishing and administering Family-Owned Special Purpose Entities (FSPEs) for managing investments.
  
  

✔️ These activities must remain within the scope of unregulated or licensed activities, as the Commission des valeurs mobilières et des contrats à terme (SFC) licensing rules still apply.

Cap on the Number of FIHVs per SFO

Each eligible SFO can manage a maximum of 50 FIHVs under the tax concession scheme.

5. Minimum Asset Requirement
   
   

To qualify for the tax concession, the total asset value managed by an SFO for its FIHV(s) must be at least HK$240 million. These assets must fall under the “specified assets” category as defined in Schedule 16C of the Inland Revenue Ordinance (IRO). As of 2025, this includes traditional assets like stocks and bonds, but not yet virtual assets. However, the government has proposed expanding the definition to include digital assets such as cryptocurrencies, alongside private credit, carbon credits, and overseas real estate. These proposals are pending final legislative approval.

🔄 Pending Enhancements: The government has proposed expanding this list to include virtual assets, private credit, insurance-linked securities, overseas property, et carbon credits — aligning with global family office investment trends.

Key Takeaways

• Les offres de Hong Kong tax concessions for family offices, reducing profits tax for FIHVs and FSPEs to 0% on qualifying investment income.

• The FIHV must be family-owned, operate as a pure investment vehicle, and be managed by a qualified SFO à Hong Kong.

• Minimum requirements include:

  • Two full-time employees in Hong Kong,

  • HK$2 million in local expenses,

  • HK$240 million in assets under management.

• A cap of 50 FIHVs per SFO applies.

• Proposed enhancements will expand asset classes, remove incidental income caps, and improve structural flexibility.
  
  

Conclusion

The profits tax concession for family offices strengthens Hong Kong’s position as a leading global wealth management hub. With ongoing enhancements that reflect investor demand — including the potential to recognize digital assets, sustainable finance instruments, and cross-border real estate — Hong Kong is evolving rapidly to serve the needs of modern family offices.

For those considering setting up a family office in Hong Kong, ensuring compliance with these conditions is crucial to maximizing tax benefits. Consulting with a professional advisor is strongly recommended to navigate the regulatory landscape and take full advantage of Hong Kong’s family office tax incentives.