Family Office in Hong Kong

Tax regime

Hong Kong operates a territorial tax system: only income and gains arising in or derived from Hong Kong are subject to tax. Profits tax is levied on corporations at a standard rate of 16.5% (with a two-tiered concession reducing the rate to 8.25% on the first HKD 2 million of assessable profits). Crucially, there is no capital gains tax, no dividends tax, no withholding tax on dividends or interest paid to non-residents, and no estate duty (abolished in 2006). For a family office holding a diversified portfolio of listed equities and bonds, the practical tax burden on investment returns is therefore often negligible, as trading gains on securities are generally not regarded as 'profits arising in Hong Kong' when the underlying assets are offshore.

Since April 2023, Hong Kong has introduced a dedicated tax concession regime for family-office vehicles. Under amendments to the Inland Revenue Ordinance (Cap. 112), a qualifying single-family office (SFO) managing assets through a qualifying fund structure can access a profits-tax exemption on qualifying transactions, broadly aligned with the existing unified fund exemption, provided certain conditions on asset types, substance, and audit are met. The regime covers a wide range of asset classes including private equity, real estate (held through holding entities), and private credit, making it substantially broader than equivalent regimes in some competing jurisdictions. Salaries tax applies to locally employed staff at progressive rates up to 17% (or the standard rate of 15% of net income, whichever is lower).

Key regulations

• Securities and Futures Ordinance (Cap. 571)

  Primary legislation governing all SFC-regulated activities, including Type 9 Asset Management. Sets out licensing requirements, exemptions (incl. SFO exemption), and conduct obligations.

• Inland Revenue Ordinance (Cap. 112), Family Office Tax Concession (2023)

  Amendments effective April 2023 extending the unified fund exemption framework to qualifying single-family offices, covering a broad range of asset classes with minimum substance and AUM conditions.

• Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615)

  Imposes CDD, KYC, beneficial-ownership, and record-keeping obligations on licensed financial institutions and DNFBPs operating in Hong Kong.

• SFC Code of Conduct for Persons Licensed by or Registered with the SFC

  Sets out standards for dealing with clients, conflicts of interest, suitability, and internal controls applicable to licensed asset managers including MFOs.

• InvestHK Family Office Incentive Framework

  Non-legislative policy initiative coordinating between SFC, IRD and InvestHK to streamline establishment procedures and provide a dedicated concierge service for family offices.

Substance & residency

The 2023 family-office tax concession requires the qualifying single-family office entity to be a Hong Kong-resident company that provides investment management services exclusively to the family's qualifying fund. The SFO must employ at least two investment professionals in Hong Kong and maintain annual operating expenditure in Hong Kong of at least HKD 2 million. These thresholds are modest by international standards but represent a genuine substance floor: a purely nominee or shell arrangement will not qualify. The family's qualifying fund must hold a minimum of HKD 240 million (approximately USD 30 million) in assets under management at all times.

Beyond the tax concession, regulatory substance expectations are set by the SFC. Any entity that manages assets on behalf of the family and holds out to do so for reward must be licensed under the Securities and Futures Ordinance (Cap. 571) for Type 9 (Asset Management) regulated activity, unless an exemption applies. The principal SFO exemption, available to a single-family office, permits a company wholly owned by the family to manage solely the family's assets without SFC licensing, provided it does not solicit the public. Multi-family offices (MFOs) managing assets for more than one family must be licensed, which imposes ongoing fit-and-proper, capital adequacy (liquid capital requirements), compliance officer, and internal audit obligations consistent with full SFC licensing expectations.