Jurisdictions: choosing the right base for your family office

Single family offices are becoming more global in their outlook and strategic about where to put down roots. So, what makes a desirable destination?

The decision about where to establish a single-family office (SFO) is both complex and crucial for a successful wealth preservation and growth strategy. The regulatory landscape, tax regime, and proximity to skilled talent and financial markets are just some of the considerations for high-net-worth (HNW) families looking to select and build a new base for their SFO.

In recent years, Switzerland, Luxembourg, Hong Kong, Singapore, Dubai and the UK have all emerged as strong SFO hubs, each with their own advantages and challenges.
Switzerland’s robust confidentiality provisions and light-touch regulatory regime have long made the jurisdiction attractive for the establishment and management of SFOs. To actively support global initiatives for transparency, the Swiss government is currently pursuing a draft law requiring firms to declare their ultimate owners and contribute to a UBO Register, albeit one not available to the public.^[1]

Whether or not Switzerland’s parliament adopts such rules remains to be seen, but the country continues to stand out as a compelling destination among HNW individuals and families who are balancing reporting requirements with a desire for privacy.

Switzerland’s SFOs are not regulated per se but are governed by two main financial regulatory laws: the Financial Institutions Act (FinIA) and the Financial Services Act (FinSA) - and it is a well-established and stable jurisdiction.

It also benefits from a well-developed banking and professional services environment with a particular focus on private wealth services. Neutral Switzerland has been a natural place for HNW families to administer and invest their wealth and in an increasingly volatile geopolitical landscape, Switzerland should continue to appeal to the world’s wealthiest families and those that administer and invest their wealth.

Elsewhere in Europe, Luxembourg has been developing for years a unique onshore wealth management ecosystem with access to skilled “human capital” and financial markets at the heart of Europe. It is worth noting that the Grand Duchy adopted in 2012 a specific law on Family Offices to regulate (i) the nature of family office activities, (ii) the professional authorized to use the “family office” title as well as protect the interests of clients of family office.

Asia and Middle East continue their rise as global wealth hubs

Other jurisdictions such as Hong Kong, Singapore and Dubai are increasingly attracting the attention of SFOs, thanks to less onerous regulatory requirements, favourable tax regimes and their geographic proximity to global HNW families with diversified business interests.

In 2023, Hong Kong unveiled a slew of new initiatives to lure family offices and wealthy individuals and businesses. For example, the government announced new tax incentives that exempt SFOs from the 16.5 per cent tax on profits from specified transactions across securities, futures, forex and a host of other investment vehicles, while adding in the offer of residency in Hong Kong for investors and their families.^[3]

“The regime provides tax certainty to HNW individuals and families and encourages family offices to establish a presence in Hong Kong, enhancing Hong Kong’s position as a prime wealth management hub,” states Jeffrey Lee, Partner at Charles Russell Speechlys, who works across the Hong Kong and Singapore offices.

In Singapore, capital gains are not taxable, corporate tax is capped at 17 per cent for both local and foreign companies^[4] and the country has income tax exemptions aimed at SFOs which are an important part of its regulatory offering. Its Global Investor Program also offers a specific route to Singaporean Permanent Residency for the principals of Family Offices based there.^[5] Also, an SFO may not be required to be licensed by the Monetary Authority of Singapore if it satisfies certain criteria.

According to Lee, Singapore’s AML legislation and data protection legislation, applies to SFOs – even if not regulated.^[6] In both cases, however, these regulatory regimes are less prescriptive and extensive than their European equivalents, he points out.

Like Singapore, Dubai’s competitive tax regime is attracting a record number of HNWIs to its shores. In fact, the UAE, more broadly, is the world’s “leading millionaire magnet”, according to the Henley Private Wealth Migration Report 2024, with an estimated 6,700 millionaires migrating to the federation in 2024 alone^[7].

Beyond the draw of hot weather, the Dubai International Financial Centre (DIFC) does not charge inheritance tax and offers certain exemptions from corporate tax, subject to meeting the relevant requirements. Additionally, its 2023 Family Arrangements Regulations enable families to manage their businesses and preserve wealth through succession and legacy planning within the DIFC.

Dubai is also cultivating a rich network of skilled professionals on the ground as it attempts to position itself as a hub of choice for SFOs. For example, its Global Family Business and Private Family Wealth Centre (the FWC) – which also launched in 2023 – is a central entity administering certification and accreditation of professional advisors supporting family offices, running education programmes and offering alternative dispute resolution tailored to global family businesses.

UK well-versed in SFO requirements

Once a leading destination for migrating millionaires, the UK has seen its share of HNWs decline in recent years on the back of political and economic upheaval post-Brexit and reform to non-dom rules announced by the Government in 2024^[8]. Indeed, Henley’s 2024 estimates projected a net outflow of 9,500 millionaires for that year.

Its regulatory regime is robust: SFOs in the UK fall under the Financial Services and Markets Act 2000 (FSMA) and associated regulations, supervised by the Financial Conduct Authority (FCA). However, an SFO may not need to be regulated by the FCA if it can fall within the “group exemption”. They may be subject to broader legal requirements such as those relating to AML, data protection and tax reporting^[9] obligations.

Despite this extensive regulation, the treatment of SFOs has remained broadly stable for a quarter of a century, says Jeremy Arnold, Senior Counsel in Charles Russell Speechlys London office, with no known plans for major overhaul, and professional advisors in the UK are well-versed in their requirements and obligations. The UK retains its position as a key talent pool in the financial services industry and related professions when it comes to staffing an SFO.

With the global tax and regulatory landscape subject to ongoing change, SFOs must keep a close eye on policy changes and their ongoing obligations when choosing where to set up or maintain operations.