Tax Concessions For Family Offices In Hong Kong  

In recent years, global financial hubs such as Singapore and Hong Kong have competed to attract ultra-high-net-worth families to establish local family offices. Hong Kong has stepped up with dedicated tax concessions: under the Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023, a 0% profits tax applies to assessable profits from qualifying transactions (and permitted incidental transactions) of Family-owned Investment Holding Vehicles (FIHVs) and Family-owned Special Purpose Entities (FSPEs) managed by an eligible Single Family Office (SFO). The concession applies from the year of assessment 2022/23, following a written, irrevocable election and subject to ongoing eligibility and anti-avoidance rules, reinforcing Hong Kong’s position as a leading wealth-management centre providing families with enhanced tax efficiency, governance transparency, and structured succession planning.

Key Takeaways

0% Profits Tax

Eligible FIHVs and FSPEs managed by Single Family Offices enjoy a 0% profits tax on qualifying transactions from 2022/23 onwards.

FIHV Structure

FIHVs consolidate family wealth, improve control and transparency, and support intergenerational succession planning.

SFO vs MFO Regulation

A Single Family Office (SFO) serving only one family may not require an SFC licence depending on activities (licensing in Hong Kong is activity-based). In contrast, Multi-Family Offices (MFOs) serving unrelated families as a business typically fall within the SFC licensing perimeter.

Eligibility Requirements

FIHVs must be 95% family-owned, hold at least HK$240M in assets, employ two full-time staff, and incur HK$2M annual Hong Kong expenses.

Future Enhancements

In the 2025–26 Budget, the Government signalled plans to expand qualifying assets (e.g., private credit, digital assets, insurance-linked securities) and streamline compliance processes.

What is a Family-owned Investment Holding Vehicle (FIHV)?

A Family-owned Investment Holding Vehicle (FIHV) is a legal entity established by one or more members of a single family to hold and manage the family’s wealth. Unlike commercial companies, FIHVs are not set up for trading or industrial purposes; instead, their purpose is to consolidate family assets, support long-term wealth management, and facilitate succession planning across generations.

An FIHV is typically managed by a Single Family Office (SFO) in Hong Kong. These vehicles are designed to make investment management more efficient, covering a broad range of asset classes such as securities, funds, derivatives, private company shares, and more. By centralising portfolio ownership in an FIHV, families can improve governance and transparency, support succession, and—if eligible and elected—benefit from concessionary profits tax on qualifying transactions.

The Hong Kong government recognises the importance of FIHVs in attracting ultra-high-net-worth (UHNW) families to the city. Through the 2023 tax concession regime, qualifying FIHVs benefit from a 0% profits tax rate on eligible investment income, strengthening Hong Kong’s position as a leading international family office hub.

Single Vs. Multi-Family Offices: Regulatory Landscape

When considering Hong Kong’s tax concessions for family-owned investment holding vehicles (FIHVs), it’s important to understand the difference between Single Family Offices (SFOs) and Multi-Family Offices (MFOs) under the local regulatory framework.

Single Family Office (SFO)

A Single Family Office manages the wealth of one family only. In Hong Kong, most SFOs are not required to obtain a licence under the Securities and Futures Ordinance (SFO) if:

• they operate on a cost-recovery basis (only reimbursed for expenses), or
• they are not run with a profit-making objective.

This regulatory light-touch approach is one of the reasons Hong Kong has become attractive for UHNW families establishing their first family office in Asia.

Multi-Family Office (MFO)

A Multi-Family Office serves the needs of multiple high-net-worth families and is typically operated as a commercial business. Because MFOs provide professional financial services to unrelated clients, they are more likely to fall within Hong Kong’s licensing regime. Depending on the services offered, an MFO may require one or more of the following licences from the SFC.

Read: FAQs about Family Offices Licensing

Why Is It Important?

The distinction between SFOs and MFOs is crucial to Hong Kong’s tax concession regime. The 0% profits tax concession introduced under the Inland Revenue (Amendment) Ordinance 2023 specifically targets FIHVs managed by eligible SFOs. This deliberate policy approach attracts wealthy families to set up dedicated offices in Hong Kong while ensuring that commercial service providers (MFOs) remain properly licensed and regulated. Hong Kong encourages SFOs with attractive tax benefits, while keeping MFOs within its licensing net — a balance that enhances the city’s appeal as a global family office hub.

Overview Of The Tax Concessions

Hong Kong’s tax concession regime for family offices is a major incentive for ultra-high-net-worth families to base their investment structures in the city. Under the Inland Revenue (Amendment) Ordinance 2023, eligible Family-owned Investment Holding Vehicles (FIHVs) and Family-owned Special Purpose Entities (FSPEs) can enjoy a 0% profits tax rate.

The concession is elective, written, and irrevocable. Once elected, it applies to qualifying and incidental transactions that meet statutory conditions and anti-avoidance rules, which are taxed at 0%. Profits from non-qualifying activities (e.g., active trading or commercial services) remain subject to the standard corporate profits tax rate of 16.5%.

For families using layered structures, the concession also extends to FSPEs, proportionate to the FIHV’s ownership interest. For example, if an FIHV owns 60% of an FSPE, then 60% of the FSPE’s qualifying profits would also be tax-exempt.

Learn more about tax concession here

Requirements For The Tax Concession

To qualify for Hong Kong’s 0% profits tax for family-owned investment structures, both the Family-owned Investment Holding Vehicle (FIHV) and the Single Family Office (SFO) must meet specific eligibility criteria. These requirements are designed to ensure that the tax concession benefits genuine family investment operations rather than general commercial businesses.

Eligible Requirements For Family-owned Investment Holding Vehicles (FIHVs)

• Entity type: Corp/partnership/trust (not for commercial/industrial business)
  
• Ownership: ≥95% family; ≤25% charity; ≤5% unrelated persons
  
• Control: Managed or controlled in Hong Kong
  
• Asset threshold: ≥HK$240M (family-wide aggregation allowed)
  
• Substance: ≥2 full-time staff + ≥HK$2M annual HK OPEX
  
• Management: Must be run by an eligible SFO (safe harbour rules apply)

Together, these features ensure that FIHVs are genuinely rooted in Hong Kong, with meaningful economic substance, while offering UHNW families a clear path to enjoy 0% profits tax on qualifying transactions.

Eligibility Requirements for Single Family Offices (SFOs)

• Entity Type: The SFO must be a private company, incorporated either in or outside Hong Kong, and managed in Hong Kong.
• Ownership: At least 95% of the beneficial interest must be held by the same family.
• Service Provision: The SFO must provide investment management or related services exclusively to specified family persons, including FIHVs, FSPEs, and family members.
  
• Profit Source: At least 75% of the SFO’s assessable profits must come from family-related services.
  
• Tax Treatment: Income derived from these services is subject to Hong Kong profits tax, but qualifying transactions of the FIHV can benefit from the 0% profits tax rate.

Family-owned Special Purpose Entities (FSPEs)

An FSPE established by an FIHV, and existing solely to hold or administer investee companies or specified assets, may qualify for Hong Kong’s 0% profits tax concession. Eligibility is subject to the following:

• Ownership: Must be directly or indirectly held by an FIHV.
• Purpose: Restricted to asset-holding/administration only; no trading or business activities.
• Restrictions: Cannot itself be an FIHV or a direct investee company.
• Tax Treatment: Concession applies pro-rata to the FIHV’s beneficial interest in the FSPE.

This structure allows FIHVs to segregate investments and administrative functions efficiently while benefiting from Hong Kong’s concessionary tax regime. FSPEs are commonly used to hold private company shares, bonds, funds, and other qualifying assets as part of family wealth management strategies.

Learn more about family offices structure here 

Qualifying And Incidental Transactions

The profits tax concession applies only to transactions in certain qualifying assets and limited incidental transactions:

Qualifying Assets (Schedule 16C IRO):

• Securities, private company shares, bonds, and funds
• Futures, foreign exchange (FX) contracts, and over-the-counter (OTC) derivatives
• Deposits, certificates of deposit, exchange-traded commodities, and foreign currencies

Incidental Transactions:

• Transactions that support the qualifying transactions, such as hedging or related administrative trades, are considered incidental.
  
• Cap: Receipts from incidental transactions must not exceed 5% of total trading receipts of the FIHV or FSPE in the assessment year.

All qualifying transactions must be conducted in Hong Kong by or through the eligible SFO, or arranged in Hong Kong by the SFO. Only profits arising from these qualifying and incidental transactions are eligible for the 0% profits tax concession. Non-qualifying transactions, or transactions that fail anti-avoidance tests (e.g., immovable property, short-term holdings, or control of private companies), will not benefit from the concession, but other qualifying transactions remain unaffected.

Charitable Entity Involvement

Families can invite philanthropy into the structure within tight percentage limits:

Charitable Participation — Ownership Limits

• Charity: ≤ 25% (recognised charitable institution or trust under s.88 IRO)
• Family: ≥ 75% (must retain controlling beneficial interest)
• Unrelated persons: ≤ 5% aggregate

The charity cap allows genuine philanthropic participation without compromising the core policy intent—keeping FIHVs/SFOs family-owned and controlled. If these thresholds slip, the structure risks losing access to the 0% profits tax concession on qualifying and incidental transactions.

Quick compliance tips

• Keep an up-to-date cap table across the family tree, trusts and holding entities.
• Bake the 25% / 75% / 5% rules into constitutional documents and any transfer restrictions.
• Recheck ownership before making the concession election and at each year-end.

Anti-Avoidance & Anti-Round-Tripping Measures

Hong Kong’s regime is generous, but it comes with guardrails. Two sets of rules can switch a transaction or an entire structure out of the concession:

1. Private company investment tests (transaction-level filters)

If your qualifying portfolio includes private companies, these tests apply on each relevant disposal. Failing any test below means that disposal’s profits are not eligible for the 0% rate (other qualifying trades remain unaffected).

• Immovable property test (Hong Kong)
  If the private company (look-through applied) holds >10% of its assets in Hong Kong immovable property (excluding infrastructure), the exemption does not apply to profits from that investment.
  
• Holding period test
  Even if the immovable property test is not failed, a disposal will not enjoy concession if the stake was held for < 2 years. Aim for ≥ 2 years to pass.
  
• Control & short-term assets test
  If the immovable property test is passed but the FIHV/FSPE controls the private company and that company holds >50% of its asset value in short-term assets (generally, non-specified assets held < 3 years), the concession will not apply to the disposal.

Practical workflow:

• Add deal-entry checklists (property %, control status, asset ageing).
• Maintain a look-through asset register (by geography and holding period).
• Calendar a T+24 months flag for each private company investment to track the 2-year holding threshold.
  

2. Anti-round-tripping 

The anti-round-tripping rules are designed to stop Hong Kong residents from re-routing profits via FIHVs/FSPEs to obtain the concession inappropriately.

• General trigger: Where a Hong Kong resident person has ≥ 30% beneficial ownership (alone or with associates) in the relevant FIHV and the FIHV is an associate of that person, the resident’s share of assessable profits could be brought back into charge in Hong Kong.
  
• Important carve-outs: To reflect real family-office models, the law does not apply anti-round-tripping to:
  
  • Resident individuals; and
    
  • Certain resident non-individuals—notably the eligible SFO of the family and a specified passive investment entity that sits between family members and the FIHV, provided they meet the detailed conditions (e.g., passive, no trade/business, minimum 95% family ownership of the FIHV).

Map all resident touchpoints (persons and entities), test the ≥30% threshold, and document any carve-out eligibility (with board minutes, org charts and service agreements).

3. General anti-avoidance (purpose-based)

Even if you pass all technical tests, the Commissioner can deny the concession if the main purpose (or one of the main purposes) of an arrangement or of transferring assets/businesses into an FIHV/FSPE was to obtain a tax benefit.

• Safe harbour in practice: If a transfer is made on an arm’s length basis and the transferor is taxed on the disposal profits, the concession may still apply.
  
• Documentation is crucial: Keep valuation reports, third-party term sheets, and contemporaneous emails/IC memos evidencing commercial rationale.
  

Election Mechanism & Advance Rulings

To enjoy the concession, your FIHV must elect in writing. Three key features that are important are:

• Written election only – it keeps board minutes/partner resolutions and file copies with your tax pack.
• Applies to all future years – once elected, it rolls forward automatically (no annual re-election).
• Irrevocable – you can’t switch it off later, so sanity-check eligibility before electing.

Pre-election readiness checklist

• FIHV meets ownership, NMC in Hong Kong, SFO management, HK$240m Schedule 16C asset threshold (family-wide aggregation allowed), and substantial activities (≥2 qualified FTEs + ≥HK$2m HK OPEX).
• Eligible SFO safe harbour met (≥75% assessable profits from services to specified persons).
• Trade flow shows qualifying/incidental transactions executed or arranged in Hong Kong by/through the SFO.
• FSPE mapping complete (pro-rating of profits to FIHV’s beneficial interest).
  

Advance Ruling: Get IRD Certainty Upfront

Families can apply to the Inland Revenue Department (IRD) for an advance ruling on eligibility that is useful for complex multi-tier trusts, cross-border control, or private-company portfolios.

What IRD typically expects 

• Ownership & structure: family tree (Person A and related members), group chart from family level down to each FIHV/SFO/FSPE, plus registers/partnership agreements/trust or foundation deeds (where relevant).
  
• Normal management or control (NMC): who decides what, where meetings happen, how policies/strategy are set and implemented in Hong Kong.
  
• Substantial activities: description of Hong Kong CIGAs, outsourcing (if any) to the SFO, CVs/roles of the ≥2 qualified employees, and HK OPEX ≥ HK$2m.
  
• SFO safe harbour: pro-forma P&L showing ≥ 75% of assessable profits from services to specified persons (FIHV/FSPE/family).
  
• Minimum asset threshold: breakdown of Schedule 16C assets and NAV by vehicle/year, including any FSPE look-through.
  
• Deal execution evidence: investment management agreement, outsourcing agreements, trade process showing execution/arranging in HK.

Advantages Of Hong Kong SFO Tax Concessions

Hong Kong’s family-office regime is designed for simplicity, flexibility and certainty:

• 0% profits tax on assessable profits from qualifying transactions (Schedule 16C assets) and incidental transactions (kept within the 5% receipts cap).
  
• Global investment freedom – no local investment requirement; you can deploy capital worldwide via listed instruments, funds, private company stakes, FX, OTC derivatives, deposits, and more.
  
• No SFC licence if the SFO serves only the family (i.e., not holding out to the public) — easing regulatory friction for in-house management.
  
• Straightforward compliance – a simple written election with no prior approval process. Pair it with an (optional) advance ruling for added certainty.
  
• Broad “family” definition – captures spouses, lineal ancestors/descendants, certain siblings and their lineal descendants, and spouses thereof. This widens structuring options across branches and legacy entities.
  
• FSPE flexibility – use single-purpose entities to ring-fence private company holdings or specific asset pools, with the 0% rate applied pro-rata to the FIHV’s beneficial interest.
  
• Clear guardrails, predictable outcomes – well-defined private-company tests, anti-round-tripping rules, and a purpose-based anti-avoidance backstop offer certainty when you plan ahead.

How families typically implement

1. Incorporate SFO in Hong Kong and hire at least 2 qualified staff; set budgets to exceed HK$2 millions annual HK OPEX.
   
2. Constitute FIHV(s) and any required FSPEs; align constitutions to sole-purpose rules.
   
3. Move or seed Schedule 16C assets to reach HK$240millions aggregate NAV (family group).
   
4. Execute/arrange trades in Hong Kong via the SFO; tag receipts as qualifying vs incidental; monitor the 5% cap quarterly.
   
5. Elect in writing (irrevocable) and consider an advance ruling if the structure is complex or private-company exposure is material.
   

With disciplined documentation and light-touch governance, Hong Kong’s regime delivers 0% on qualifying investment income plus global allocation flexibility—a potent combination for inter-generational wealth management.

Why These Tax Concessions Matter For Families

For ultra-high-net-worth (UHNW) families, Hong Kong’s FIHV/FSPE regime does three big things:

• Keeps Hong Kong competitive. A clear 0% profits tax on qualifying investment income, plus simple governance rules, makes Hong Kong a serious contender when families pick a base for their single family office (SFO).
  
• Supports intergenerational planning. The framework is built for family-owned vehicles and recognises a broad range of “family members”, so you can organise holdings across branches, trusts and FSPEs without losing concession access.
  
• Reduces tax leakage. Less tax on portfolio returns means more capital compounding inside the structure—preserving wealth for the next generation while you remain free to invest globally (no local-investment lock-ins). 

Enhancements And The Future

Hong Kong is not standing still. In the 2025–26 Budget, the Government signalled plans to enhance the family-office tax regime to further cement the city’s wealth-management hub status. Two headlines to watch:

1. Expanded scope of qualifying transactions (proposed)

Policymakers have flagged broadening the asset classes that qualify for concessions—examples cited include emission derivatives/allowances, insurance-linked securities, loans and private credit investments, and digital assets. Expect a more future-proof list that better matches how family portfolios allocate today. Learn more at  GovHK

2. Streamlined process and timeline

The Budget Speech states the Government will formulate proposals to enhance preferential tax regimes for funds and single family offices, with follow-up consultation/legislative work. The stated aim is to work through details and introduce legislative proposals to the Legislative Council, with measures targeted to take effect from the 2025–26 year of assessment once passed. Families should monitor the bill’s progress and align investment policies accordingly.Learn more at budget.gov.hk

What this means for your family office

• More investable opportunities are set under the concession (if the expanded list is enacted), covering areas like private credit and digital assets alongside traditional Schedule 16C instruments. Learn more at GovHK
  
• Policy clarity: Hong Kong’s direction of travel is pro-family-office and pro-capital, with active refinements rather than one-off changes. Keep your deal checklists, execution-in-HK controls, and 5% incidental-receipts monitoring tight so you’re “upgrade-ready” when the new rules land. 

Conclusion 

Hong Kong’s family-office regime offers a clear 0% pathway (where eligible) with substance-based requirements and predictable guardrails. With potential enhancements forthcoming, it remains a compelling base for UHNW families seeking concessionary treatment on qualifying investment income and long-term wealth governance.

How FastLane Group Can Help

At FastLane Group, we provide end-to-end support for families and investors looking to establish or restructure their family office in Hong Kong. Our team of experts can guide you through the entire process—from setting up Family-owned Investment Holding Vehicles (FIHVs) and Single Family Offices (SFOs), to ensuring compliance with the Inland Revenue Department’s tax concession requirements. We also assist with corporate structuring, tax advisory, accounting, and ongoing compliance, giving you peace of mind that your family office operates smoothly and efficiently. With our deep expertise in Hong Kong’s tax and regulatory environment, FastLane Group helps ultra-high-net-worth families unlock the full benefits of the 0% profits tax regime while safeguarding long-term wealth management goals. Contact us today for a consultation!

FAQ About Hong Kong Tax Concessions

Q1. How are family office entities taxed in Hong Kong? 

Most family offices operate through a company and are taxed like any other Hong Kong corporation. Separately, eligible FIHVs/FSPEs can enjoy a 0% profits tax on assessable profits from qualifying transactions (Schedule 16C assets) and incidental transactions (within the 5% receipts cap), subject to meeting the regime’s requirements.

Q2. Apart from the FIHV/FSPE concessions, what general tax features help families?

Hong Kong does not tax capital gains or genuine offshore profits, and dividends are generally not taxable. In addition, the unified funds regime (2019) provides a broad profits tax exemption for eligible funds on transactions in specified assets (subject to conditions).

Q3. Does a Single Family Office (SFO) need an SFC licence?

Not necessarily. Hong Kong licensing is activity-based. A genuine SFO serving only one family and not operating as a commercial business may not require a licence, depending on activities and carve-outs.

Q4. Is “family” defined under the SFC licensing regime?

No. The SFC does not define “family” or “family office” for licensing. Whether you’re licensed depends on what you do, as a business, and in Hong Kong—not on labels.

Q5. What factors determine if an SFO must be licensed?

All three must be present:
(1) The services amount to a regulated activity;
(2) They are provided as a business; and
(3) The business is carried on in Hong Kong.
A genuine SFO set up only for members of a single family and not run as a commercial business (no third-party clients; only cost reimbursements) is less likely to trigger licensing.

Q6. If two SFOs share premises or admin staff, does that trigger licensing?

Sharing offices/admin doesn’t automatically trigger licensing. But sharing investment personnel or processes may look like a multi-family office—increasing the likelihood of a licensing obligation.

Q7. What is a multi-family office (MFO) and does it need a licence 

An MFO serves more than one high-net-worth family and is usually run as a commercial venture. Licensing then depends on the regulated activities provided, carried on as a business, and in Hong Kong.

Q8. Who qualifies as a Professional Investor (PI) and why does it matter?

Under the SFC Code of Conduct (para 15), PIs include Institutional, Corporate, and Individual PIs. Licensed MFOs may enjoy exemptions from certain conduct requirements when dealing with PIs, subject to procedures and suitability safeguards.

Q9. What employment obligations apply when hiring SFO staff in Hong Kong?

Follow the Employment Ordinance (e.g., holidays, sick leave, maternity), maintain Employees’ Compensation insurance, and contribute to MPF schemes.

Q10. Any immigration points for relocating principals or key hires?

Short-term visitors can negotiate and sign contracts, but working in Hong Kong requires a suitable visa. Options include the Employment Visa (special skills/experience) and Entrepreneur/Investment routes (substantial contribution to the HKSAR economy).

Q11. Do the FIHV concessions require local investments?
No. There is no local-investment requirement—you can invest globally. What matters is meeting eligibility (e.g., Schedule 16C asset classes, HK execution/arranging by the SFO) and staying within the 5% incidental receipts limit.

Q12. How do private company investments affect the 0% rate?
Each disposal is tested. The concession won’t apply if:

• The company holds >10% HK immovable property; or
• The holding period < 2 years; or
• (Where there is control) >50% of assets are short-term (non-specified, held <3 years).
  Other qualifying trades remain unaffected.

Q13. Can charities hold a stake in our structure?
Yes—within limits. A recognised charity can hold up to 25%; family members must retain ≥75%, and unrelated persons ≤5% in total.

Q14. What is the “election” and can we reverse it?
The FIHV must elect in writing to access the concession. Once made, the election applies to all future years and is irrevocable—so confirm eligibility first. Complex cases can pursue an advance ruling from the IRD.

Q15. What records should we keep?
Maintain sufficient beneficial ownership records for the FIHV/SFO, deal evidence showing trades carried out/arranged in HK, and ledger tagging for qualifying vs incidental receipts. Poor records risk losing the concession and may attract penalties.