For more than 100 years, Hong Kong has been a leading international hub for family wealth in Asia.
This vibrant global city, located in the heart of Asia, offers an extraordinary breadth and depth of investment opportunities; access to world-class financial infrastructures; excellent professional service providers; and unique advantages under the ‘One Country, Two Systems’ framework. This framework allows Hong Kong to exercise a high degree of autonomy while preserving its own economic, social, and common law system.
It is within these advantageous conditions that Hong Kong has become a ‘plug-and-play’ destination for family offices catering to wealthy families from Asia, Europe and around the world. One recent report by Deloitte estimates there are more than 2,700 single-family offices (SFOs) thriving in the region.
In Hong Kong, setting up a family office (FO) is simple and straightforward – similar to setting up any other company in Hong Kong. An SFO does not need to apply for a licence from the government.
Now, in a move that will only serve to further cement its position as a global leader, Hong Kong has introduced alluring incentives for family offices and their investment activities. These include tax concessions, the new Capital Investment Entrant Scheme (CIES) and market facilitation measures.
With these new provisions, Hong Kong showcases its commitment to attracting family wealth management operations and developing a vibrant ecosystem for global family offices and asset owners.
Asia’s number 1 wealth management hub connects East and West
Situated in a strategically important part of the world, Hong Kong has cultivated a US $3.9 trillion asset and wealth management industry driven by wealth creators, UHNWs and their experienced advisers who understand the value of the city’s unique investment proposition.
The ‘one country, two systems’ framework facilitates extensive geographical, cultural and linguistic connections between Europe and China. Economic exchanges between the two regions continue to strengthen and many European countries increase investment in China in order to improve their business. In this position at the crossroads of the East and West, Hong Kong provides access to the world’s second largest economy while maintaining its own system based on Common Law, the free flow of capital, plus a transparent and low-tax regime.
The city’s simple and low tax regime is also a significant advantage. There is no sales tax or VAT, no estate tax, no investment withholding tax, no capital gains tax, no wine tax, and no tax on dividends or interest from savings. There are also measures in place to prevent double taxation.
Hong Kong has a burgeoning equities market and was the largest centre in the world for arranging Asian international bond issuances and first-time bond issuances in 2022.
It is also the largest cross-border private wealth management centre with diversified investment products in Asia. Hong Kong facilitates Chinese investors to enter the global capital market while simultaneously assisting foreign investors to penetrate the domestic capital market and the Mainland opportunities. UHNW clients and investors who have seized the opportunity have seen the benefits through witnessing a substantial increase in wealth in Hong Kong.
Hong Kong offers strategic advantages over other regional counterparts, such as Singapore, including greater data privacy. The city respects confidentiality, and the right to protect privacy is enshrined in the Personal Data (Privacy) Ordinance (PDPO), one of Asia’s longest-standing comprehensive data protection laws. Unlike Singapore’s centralised digital platform, COSMIC, Hong Kong maintains the independence of its financial system.
A thriving ecosystem
In March 2023, the Hong Kong government unveiled a new family office policy statement to help foster a robust industry that competes on an international stage.
This includes a profits tax exemption scheme for family-owned investment holding vehicles (FIHVs) managed by SFOs, and a Capital Investment Entrant Scheme which provides an entryway to residency for individuals who invest HKD 30 million or more.
Another highlight is the establishment of Hong Kong Academy for Wealth Legacy to provide the platform for networking and knowledge sharing for next-generation wealth owners and to launch a new network of Family Office service providers, creating an ecosystem of growth through comprehensive support systems for family offices.
Hong Kong also intends to explore setting up storage, display, and appreciation facilities for art at the international airport to enable global family offices with capital allocations in art to benefit from the city’s thriving art environment.
Philanthropy is also an important facet of life in Hong Kong – and a new initiative, iLink, connects family offices and asset owners with impactful charity projects across healthcare, early biotech research, poverty alleviation, education and youth empowerment.
With so much to offer, it is easy to see why this city, the jewel of South China, is a top spot for family offices. And the future looks bright.
