Singapore Family Office 13O and 13U Tax Exemption Schemes

The Singapore Family Office Tax Exemption Schemes (13O and 13U) are a combination of tax incentive policies for foreigners and employment immigration pathways, aimed at enhancing Singapores financial and wealth management landscape. Over the past few years, these schemes have become increasingly attractive to many high-net-worth individuals (HNWIs).

Based on Singapores FY2024 Budget, the application period for the 13O and 13U schemes has been extended by five years, now ending on 31 December 2029. This extension reflects the continued importance of these schemes in enhancing Singapore’s socio-economic status and maintaining its competitive edge. It also creates a more favorable environment for the expansion and development of Singapore’s wealth management industry. However, to improve application efficiency and strengthen capital due diligence, from 1 October 2024, applicants will be required to submit a background screening report provided by an authorized screening agency.

Basic Structure of a Singapore Single Family Office (SFO)

A Singapore Single Family Office (SFO) refers to a structure where a family member (the applicant) sets up a "Single Family Office" in Singapore (a locally incorporated company), either independently or with other family members. This SFO then provides wealth management services to a "family investment fund entity" (either a Singapore or offshore entity) that is also newly established or owned by the family. Under Singapore’s income tax laws, the tax exemption schemes apply mainly to Specified Income (SI) derived from Designated Investments (DI) held by the family investment fund entity, which can qualify for income tax exemption.

Diagram: Basic Structure of a Singapore Single Family Office

Examples of Specified Income (SI)

• Dividends
• Interest
• Gains from the sale of securities

Examples of Designated Investments (DI)

• Stocks and shares
• Bonds, notes, commercial papers, treasury bills, and certificates of deposit
• Exchange-traded funds (ETFs) and other securities

Furthermore, as an SFO must employ investment professionals (e.g., at least 3 for 13U applicants), this requirement creates an opportunity for family members to apply for Employment Passes (EP) as investment professionals. These passes can serve as a pathway to Singapore Permanent Residency (PR) and eventually citizenship. Having family members involved in the SFO also provides both immigration convenience and an opportunity to enhance their understanding of wealth management, facilitating the smooth succession of family assets.

Comparison of Section 13O and Section 13U

Criteria	Section 13O	Section 13U
Legal form of the family investment fund entity	Must be a Singapore company	Can be any legal form of fund
Assets Under Management (AUM)	Minimum of SGD 20 million in Designated Investments at the time of application and throughout the tax exemption period	Minimum of SGD 50 million in Designated Investments at the time of application and throughout the tax exemption period
Capital Deployment Requirement (CDR)	Yes; fund must invest in local Singapore equities, debt instruments, or private equity funds — Minimum of 10% of AUM or SGD 10 million (whichever is lower). Certain qualifying investments may be counted at 1.5x or 2x their value for CDR (e.g., MAS-approved investments, SGX-listed stocks with significant local participation)
Minimum Annual Business Spending Requirement	Tiered structure — Minimum SGD 200,000 in local annual business expenditure	Tiered structure — Minimum SGD 500,000 annual business expenditure
SFO Investment Professionals	At least 2 investment professionals, with at least 1 non-family member	At least 3 investment professionals, with at least 1 non-family member

Tiered Business Spending Requirement Based on AUM

Fund AUM	Section 13O Minimum Annual Business Spending	Section 13U Minimum Annual Business Spending
Less than SGD 50 million	SGD 200,000	Not applicable
SGD 50 million – < SGD 100 million	SGD 500,000	SGD 500,000
More than SGD 100 million	SGD 1,000,000	SGD 1,000,000