Hong Kong Treasury Bureau: About 150 family offices say they are preparing or have decided to set up or expand their business in Hong Kong

The Zhitong Finance App learned that on July 30, the Secretary for Financial Services and the Treasury of Hong Kong, Hui Ching-yu, said in response to questions from lawmakers that the Hong Kong Government actively promotes the business development of family offices, enhances the development advantages of Hong Kong's asset and wealth management and related professional sectors, and has always maintained close communication with the family office industry to understand the development needs of family offices. The Hong Kong Investment Promotion Department's family office team (dedicated team) has helped 50 family offices set up or expand their business in Hong Kong in the first five months of 2025, an increase of 19% over the same period last year. Another 150 family offices said they are preparing or have decided to set up or expand their business in Hong Kong.

In response to comments from the industry and in order to enhance the synergy between the “New Capital Investor Entry Scheme” and the establishment of family offices in Hong Kong, the Hong Kong Government has implemented optimization measures on March 1, 2025, including allowing applicants to manage through an eligible single family office as defined by section 2 of Schedule 16E of the Inland Revenue Ordinance and wholly owned by the applicant to invest under the “New Capital Investor Entry Scheme” and be included in the eligible investment amount.

At the same time, the Hong Kong Government is committed to expanding the wealth management and family office talent pool to meet the needs of family offices for professionals. Since 2016, Hong Kong has implemented a pilot program to enhance talent training for the asset and wealth management industry to cultivate more talents in the industry. So far, the program has approved more than 4,800 tuition funding applications for eligible professional training courses, and provided internship opportunities for more than 1,100 tertiary students, supporting the industry to provide more professional training and learning opportunities, and improving the professional level of practitioners.

Furthermore, Hong Kong included “Asset and Wealth Management Professionals” and “Asset and Wealth Management Compliance Professionals” in the “Talent List” in 2018 and 2021, respectively, to facilitate the development of outstanding talents in related fields in Hong Kong. The Hong Kong Government also established the Wealth Inheritance Institute in 2023 to provide a platform for exchange and collaboration, knowledge sharing and talent training, and to provide relevant training for asset owners, wealth inheritors, and the family office industry.

Hui Ching-yu mentioned that the Hong Kong Government issued the “Policy Declaration on the Development of Family Office Business in Hong Kong” in March 2023, proposing eight major measures to create a competitive enabling environment for global family offices and asset owners to flourish in Hong Kong. As one of the support measures, the Inland Revenue (Amendment) (Tax Relief for Family Investment Control Instruments) Regulations 2023 will take effect on May 19, 2023 and apply to tax years beginning on or after April 1, 2022. Family investment control instruments (household control instruments) managed by a single family office in Hong Kong and that meet the minimum asset threshold and substantive activity requirements of HK$240 million are exempt from paying profits tax on eligible transactions.

The family office industry has responded well to the measures proposed in the Policy Declaration, including the tax incentives system, the “New Capital Investor Entry Scheme” and the Hong Kong Institute of Wealth Inheritance (Hong Kong Wealth Inheritance Institute), and the number of family offices interested in setting up or expanding their business in Hong Kong has also increased. However, since the tax relief system is still in its infancy, there are few household control tools to apply for tax relief in the 2022/23 and 2023/24 tax years. Furthermore, since the industry needs time to adjust its operating model to qualify for tax relief, the application figures at this stage may not be suitable as an indicator to reflect the effectiveness of the tax relief system.

Hui Ching-yu also mentioned that the Hong Kong Government has announced proposals to further optimize the preferential tax system for single family offices in the 2025-26 fiscal year, including increasing the types of transactions eligible for tax relief for single family offices, such as carbon emission derivatives/emission limits, insurance-linked securities, loans and private equity investment and digital asset transactions to attract more family offices to settle in Hong Kong. The Hong Kong Government has completed industry consultation on measures to optimize the preferential tax system, and is currently discussing relevant optimization measures with financial regulators on the collected opinions. The Hong Kong Government aims to formulate specific plans within this year and submit legislative proposals to the Legislative Council for consideration in 2026. If approved, the measures could take effect from the 2025/26 year of assessment.

The current preferential tax system for family offices does not include home control tools managed by joint family offices because joint family offices are generally independent service providers and are not owned by the families concerned. Joint family offices may provide investment management services or other financial services to third parties. In fact, it is no different from the business of banks, private banks, and asset and wealth management companies. Furthermore, if the home control tools of different families are managed by a joint family office, it is also difficult to determine whether the relevant home control tools meet the minimum asset threshold and actual activity requirements. The actual benefits and financial implications of further extending tax incentives to joint family offices should be carefully studied.

On the other hand, if a home control tool meets the definition of a “fund” under the Inland Revenue Ordinance and a licensed institution of the Hong Kong Securities and Futures Commission (including the Joint Family Office) conducts or arranges eligible transactions in Hong Kong, it is now possible to obtain tax relief for related transactions under the Unified Fund Exemption System.