Singapore: the family office, the 13O/13U regimes and the VCC
Tax exemption for qualifying fund income under the 13O and 13U schemes — from S$5 million in assets (13O) or S$50 million (13U), usually through a VCC structure.
- Fund Tax Incentive Schemes for Family Offices — Monetary Authority of Singapore (MAS), 2026
- MAS Amends Sections 13O and 13U Application Guidelines for Family Offices — Duane Morris LLP, 2025
Background
Singapore has deliberately built itself into Asia's hub for family offices, competing with Hong Kong and Switzerland. The key tools are the Monetary Authority of Singapore (MAS) tax schemes under Sections 13O and 13U of the Income Tax Act, and the flexible corporate wrapper the VCC (Variable Capital Company), introduced in 2020.
The number of family offices in the city-state rose sharply through the 2020s.
Problem
A large family needs a jurisdiction where it can manage global assets centrally, get tax certainty on investment income and, at the same time, build real substance — an office, professionals and local spending. The goal is not a hollow offshore but a transparent structure with economic substance.
Solution
The 13O (onshore) and 13U (enhanced-tier) schemes exempt a qualifying fund's income from Singapore tax when conditions are met. Since 1 January 2025 the minimum assets under management for 13O is S$5 million (in "designated investments"), with at least two investment professionals; for 13U the minimum is S$50 million with at least three professionals.
Local business spending is mandatory: at least S$200,000 a year for smaller funds, rising to S$500,000 for the largest. The AUM condition is tested at each financial year-end. The incentive attaches to an investment fund — for a family office, almost always a VCC, often an "umbrella" structure with ring-fenced sub-funds.
Result
Tax exemption for qualifying fund income under the 13O and 13U schemes — from S$5 million in assets (13O) or S$50 million (13U), usually through a VCC structure.
Lessons learned
- Modern incentives demand substance: without an office, professionals and local spending, the exemption does not apply.
- Thresholds rise: since 2023 the AUM and hiring requirements have tightened noticeably.
- The structure (VCC) and the incentive (13O/13U) are different layers: the tax scheme attaches to the fund, not to the family office itself.
Frequently asked questions
What is a VCC and why does a family office use it?
A VCC (Variable Capital Company) is a fund-oriented corporate wrapper introduced in 2020. It can hold several sub-funds with ring-fenced assets and liabilities inside one structure and serves as a convenient vehicle for the 13O/13U schemes.
Did the requirements change in 2025?
Yes. From 1 January 2025, 13O gained a S$5 million minimum-AUM test and a two-investment-professional requirement, local spending became tiered, and the AUM condition is now tested at each financial year-end, not only at application.