⚠ Critical: The FIHV Exemption Has Strict Qualifying Conditions — Non-Compliance Is Retroactive
The Family Investment Holding Vehicle (FIHV) exemption under s.13P-13Q of the IRO provides significant tax relief, but imposes strict conditions: minimum AUM of HK0 million, local expenditure requirements (minimum HKM/year on HK-based operational costs), investment scope limitations, and qualified management entity requirements. Failing any condition during any year retroactively invalidates the exemption for that entire year, creating an unexpected and potentially large tax liability.
주요 과제
FIHV Exemption Qualification & Maintenance
The FIHV exemption requires careful ongoing compliance: HK0M AUM threshold, HKM minimum local expenditure, and portfolio within permitted asset classes. One year's non-compliance retroactively removes the exemption for that year.
⚠ Risk: Technical non-compliance → retroactive loss of entire year's exemption
Passive Income Under FSIE — Dividends & Interest
Since 2023, FSIE requires entities receiving passive income (dividends, interest, royalties) to demonstrate genuine economic substance or meet participation exemption conditions. Family office holding companies must structure carefully or face 16.5% tax.
⚠ Risk: FSIE non-compliance → foreign-sourced dividends taxable at 16.5%
Cross-Border Asset Holdings & Multi-Jurisdiction Tax
UHNW families typically hold assets across HK, UK, US, Singapore, and offshore structures. Without integrated planning, families routinely pay tax in multiple jurisdictions on the same income.
⚠ Risk: Uncoordinated planning → double taxation across jurisdictions
Succession & Generational Wealth Transfer
HK has no estate duty, but family members may hold assets in jurisdictions with 40%+ inheritance tax. Without proactive cross-border succession planning, UHNW families face tax bills of tens of millions on wealth transfer events.
⚠ Risk: No succession plan → catastrophic estate tax in UK/US/AU jurisdictions
대상 고객
Single family offices
Dedicated SFOs managing assets exclusively for one UHNW family, seeking FIHV exemption and governance structuring.
Multi-family offices
MFOs managing assets for multiple unrelated families — more complex qualification but significant economies of scale.
Private investment offices
Family-controlled investment companies not formally structured as family offices but seeking equivalent tax efficiency.
Property family groups
Property-owning families restructuring to separate investment from operating assets and optimise succession planning.
Cross-border UHNW families
Families with members in multiple jurisdictions requiring integrated cross-border tax and succession planning.
서비스 내용
FIHV Exemption Structuring (s.13P-13Q)
Qualification assessment, holding entity structuring, and ongoing compliance monitoring to maintain the FIHV exemption.
AUM threshold monitoring, HKM expenditure planning, permissible asset review
FSIE Passive Income Planning
Structure dividend, interest, and royalty income flows through qualifying participation arrangements under the FSIE regime.
Participation exemption structuring, economic substance analysis, annual FSIE compliance
Carried Interest Concessionary Rate
Qualify for the 0% profits tax rate on carried interest under s.14C-14D for HK-resident single family offices.
Management entity structure, qualifying conditions compliance, annual reporting
Trust Structuring & Governance
Advise on discretionary, fixed, purpose, and charitable trusts for asset protection, succession, and governance objectives.
HK trust tax analysis, cross-border trust implications, CRS/AEOI reporting
Succession Planning & Estate Structuring
Integrated cross-border succession plans maximising HK's no-estate-duty environment while managing overseas exposure.
Multi-jurisdiction estate tax mapping, lifetime gifting, insurance-linked planning
서비스 절차
Family Wealth Mapping & Tax Exposure Assessment
Weeks 1-3Comprehensive mapping of the family's assets across all jurisdictions — HK equities, real estate, offshore accounts, trust structures — identifying tax exposure and opportunities.
FIHV Qualification Analysis & Structure Design
Weeks 3-8Detailed analysis of FIHV eligibility against HK0M AUM, HKM expenditure requirement, portfolio composition, and management entity criteria.
Implementation & Legal Execution
Months 3-6Coordinate trust deeds, holding company establishment, asset transfers, and FSIE-compliant income flow arrangements with solicitors and custodians.
Annual FIHV Compliance & Tax Management
OngoingAnnual compliance review of all exemption conditions, tax return preparation, FSIE reporting, and ongoing advisory on new transactions.
성공 사례
Single family office — HK0M AUM qualified for FIHV
- •HK0M AUM, primarily HK equities and PE interests
- •Previously paying 16.5% on HK.5M annual returns
- •Minor adjustments needed to formalise management entity
“Our previous advisers said the FIHV exemption was complex and unlikely to apply. TAX.hk confirmed we qualified in three weeks. The annual saving is HK.4 million.”
Property family — holding company restructuring for succession
- •7 commercial properties worth HK0M held personally
- •Direct transfer stamp duty exposure of HK.8M
- •Restructured into holdco — share transfers at 0.2% stamp duty
“Restructuring our property portfolio before succession transfers saved us HK.4 million in stamp duty alone. TAX.hk handled the entire process seamlessly.”
자주 묻는 질문
What is the FIHV tax exemption and who qualifies?
The Family Investment Holding Vehicle exemption under ss.13P-13Q of the IRO (effective April 2022) provides profits tax exemption on investment returns for qualifying family investment holding vehicles. Requirements include: AUM of at least HK0 million, minimum HK million annual operating expenditure in HK, investment activities within permitted asset classes, managed exclusively for one family, and management by a qualified investment manager. The exemption is applied year-by-year — failure to meet any condition retroactively removes the exemption for that entire year.
What is the FSIE regime and how does it affect family office dividend income?
The FSIE regime (effective January 2023) removed the blanket exemption for offshore passive income. Specified foreign-sourced income (dividends, interest, royalties, disposal gains) received by a HK entity is now taxable unless the recipient meets the participation exemption (for dividends — 5% shareholding or HKM acquisition cost, minimum holding period) or demonstrates adequate economic substance. Family offices must structure dividend flows carefully to satisfy these conditions.
How does the 0% carried interest rate work for single family offices?
Under ss.14C-14D of the IRO, qualifying carried interest received by HK-resident SFOs is subject to a 0% concessionary profits tax rate. The carried interest must be received by a HK entity managing a qualifying fund, the fund must meet investment scale requirements, and the arrangement must be properly documented as a profit allocation rather than a service fee. We design the management entity structure and documentation to qualify.
Do HK trusts need to be registered and how are they taxed?
Hong Kong does not require trust registration — there is no public register. For HK tax purposes, a trust is generally not itself taxable in the same way as a company. Taxation depends on whether the trustee carries on a business or holds investment assets. Distributions of capital gains are generally not HK taxable. However, overseas jurisdictions where beneficiaries reside may impose tax on trust income and distributions regardless of HK treatment.
HK has no estate duty — does this mean no succession taxes?
HK abolished estate duty in 2006, removing domestic succession tax concerns. However, UK inheritance tax at 40% applies to UK-situated assets of non-domiciled individuals (e.g., a London flat worth GBP 5M creates a GBP 1.87M IHT exposure). US estate tax applies at up to 40% on worldwide assets of US persons. Planning around these exposures requires trust structures, lifetime gifting programmes, and careful domicile management.
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