As Asia’s economic influence continues to expand, high-net-worth individuals (HNWIs) are increasingly drawn to jurisdictions that offer tax efficiency coupled with strategic access to China. Among these, Hong Kong stands out as a premier destination for establishing a family office, thanks to its territorial tax regime, zero capital gains tax, and also its unrivalled connectivity with the Greater Bay Area.
But Hong Kong’s appeal is more than just fiscal. With recent policy updates, including a dedicated tax exemption for family investment holding vehicles and the relaunch of its Capital Investment Entrant Scheme (CIES), the city is redefining its position as a leading wealth management hub in Asia.
A pure territorial tax system with global reach
Hong Kong applies a pure territorial basis of taxation. Only income that arises in or is derived from Hong Kong is subject to profits tax. Foreign-sourced income, including dividends, capital gains, interest, and royalties, is fully exempt, provided it is not deemed to have a Hong Kong source through local value-creation or anti-avoidance rules.
This makes Hong Kong especially attractive for globally diversified families. Unlike Singapore, Hong Kong does not require any substance or foreign tax paid conditions to benefit from the exemption on offshore income, offering unmatched simplicity.
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Competitive tax rates with no capital gains tax
Under Hong Kong’s two-tier profits tax regime, companies pay:
- 8.25% on the first HKD 2 million of assessable profits
- 16.5% on the remaining profits
In addition, there is no capital gains tax, no wealth tax, and no inheritance or estate tax. Hong Kong taxes individuals at progressive rates up to a maximum of 17%, with most benefits and allowances keeping the effective tax rate even lower for most residents.
A dedicated tax regime for family offices: The FIHV framework
Introduced in May 2023, the Family-Owned Investment Holding Vehicle (FIHV) regime provides a 0% profits tax exemption on qualifying income for entities managed by a Single Family Office (SFO) in Hong Kong. To qualify:
- The family office must operate in Hong Kong and manage the FIHV
- Basic economic substance is required (staff and local expenditure)
- Income must be derived from qualifying transactions (such as equities, funds, and bonds)
- Only one family may benefit from the structure
This framework offers an appealing alternative to Singapore’s 13O and 13U schemes, particularly for families seeking lighter compliance obligations and closer ties to China.
CIES relaunched: A game-changer for investment migration
On 1 March 2024, Hong Kong reintroduced its Capital Investment Entrant Scheme (CIES), a move that has already triggered overwhelming interest from HNWIs globally.
Key requirements include:
- An investment of HKD 30 million (~USD 3.8 million), of which:
- HKD 3 million must go into a new government-managed investment portfolio
- The remaining HKD 27 million can be placed in eligible financial assets (stocks, funds, bonds, REITs, etc.)
Importantly, residential property is excluded as an eligible asset class. This aligns with Hong Kong’s goal of decoupling immigration from real estate inflation.
According to official figures:
-
- Between October 2023 and February 2024, 918 applications were received
- 341 approvals were granted
A total of HKD 10.5 billion (USD 1.34 billion) has already been committed, with none of the funds invested in residential property.
Government forecasts now suggest that investment inflows could reach HKD 27 billion (USD 3.45 billion) in the short term, marking a clear vote of confidence in Hong Kong’s repositioning as an investment-based residency destination.
Residency and family integration
CIES provides a clear path to temporary residence upon investment, with the possibility to apply for permanent residence after 7 years. The program extends to immediate family members, spouses and dependent children, making it ideal for entire family relocations through a central family office vehicle.
Proximity to China and the Greater Bay Area
Hong Kong’s geographic and economic integration with Mainland China and the Greater Bay Area (Shenzhen, Guangzhou, Macau) gives it a unique edge for families with business interests in the region.
No other jurisdiction combines:
- A common law legal system
- Unrestricted capital mobility
- World-class IP protection
- Direct access to China’s tech, real estate, and financial markets
This makes it the jurisdiction of choice for Asia-facing UHNW families.
Flexible wealth structuring and privacy
Hong Kong allows broad flexibility for family wealth structuring, including:
- Private trust companies
- Discretionary trusts and philanthropic foundations
- Layered holding companies and FIHVs
- No VAT or GST
- Minimal reporting obligations for private vehicles
Combined with low tax and strong banking secrecy, this creates an environment of confidentiality, efficiency, and continuity.
Business infrastructure and talent
Hong Kong provides:
- Access to top-tier financial and legal advisors
- English and Chinese bilingual professionals
- International schools and world-class healthcare
- A mature legal framework aligned with global business standards
Family offices benefit from quick entity setup, straightforward banking, and a responsive regulatory environment for private clients.
Compliance and substance
Hong Kong is fully aligned with international standards, including:
- OECD’s Common Reporting Standard (CRS)
- BEPS 2.0 Pillar Two rules (for large MNEs)
- Transfer pricing documentation and APAs
That said, the compliance burden for private family offices remains manageable. Basic local presence and business expenditure are generally sufficient for maintaining tax-exempt status.
Conclusion
Hong Kong today offers more than just territorial taxation. It also provides a sophisticated, light-touch ecosystem for family wealth management, immigration by investment, and access to the world’s most dynamic economic zone.
With the successful relaunch of CIES and the adoption of the FIHV regime, Hong Kong is rapidly becoming the go-to jurisdiction in Asia for modern family offices seeking privacy, residency, and long-term security.
For families with capital, legacy, and Asia in mind, Hong Kong is the place to be.
