Setting up a single-family office: location, running costs, substance and structure

A single-family office manages the wealth of one family: investments, reporting, tax compliance, philanthropy, and often the administration of family life. Families usually consider one after a liquidity event, when the assets become too large or too varied for a private bank relationship alone. The decisions about where to put it and how to structure it have lasting tax consequences, and they are much easier to make at the start.

Choosing a location

Families commonly look at Switzerland, Luxembourg, the UK, Singapore, the UAE and a few others. The comparison should rest on a handful of criteria.

• Where the family lives, or plans to live. The office's decisions are made by people, and where they sit affects the tax residence of the office and the entities it manages.
• Regulation. Managing only one family's money is exempt from licensing in many places, but the definition of a single family varies, and adding a second family or outside investors can bring the office into regulation.
• Tax on the office itself and on the investment income it oversees, including any incentive regimes. Singapore, for example, offers fund tax incentives with minimum requirements for staff, assets and local spending.
• The treaty network and withholding tax on investments the family holds.
• Staff, service providers and banks available locally, and whether family members and employees can obtain visas.

What it costs to run

Most of the cost is people: an investment lead, finance and reporting staff, and administration, plus external lawyers, auditors and tax advisers. Premises, systems and insurance come next. Because these costs are largely fixed, a family office makes more sense as assets grow. Whether its costs are deductible depends on how it is structured: an office that provides services to the family's companies for a fee can often deduct its costs, while one that simply manages private wealth may find that costs attributed to personal investments are not deductible anywhere.

Substance

Tax authorities look at where decisions are really made. An office in one country whose investment decisions are taken by family members sitting in another may create a taxable presence, or even tax residence, in the second country for the entities it manages. The office needs qualified staff making real decisions where it is based, board meetings held there, and records that show it. Incentive regimes that depend on local spending and headcount check this directly.

Investment structure

The office usually sits beside, or above, the family's investment vehicles: a holding company, sometimes owned by a trust or foundation, with separate entities for real estate, private equity and liquid portfolios. Some families use a regulated fund vehicle, such as a Luxembourg partnership or a Singapore variable capital company, for access to treaties and a clear governance framework. Keeping operating businesses, investments and personal assets in separate entities makes reporting, succession and any later sale simpler. Large groups should also check whether the global minimum tax rules apply.

Before you sign

• Decide where the family will live over the next ten years before choosing where the office sits.
• Confirm whether the office will need a licence, now and if its scope grows.
• Budget the running costs, and decide which entity bears them and whether they are deductible.
• Plan real local substance: people, meetings and records.
• Agree a written family governance framework alongside the legal structure.

If you are considering a family office, call us before you incorporate or hire. The first 30-minute consultation is free, your dedicated consultant is available 24/7, and every request is answered within 24 hours.

General information, not advice. Tax rules change and depend on your facts. Greyridge Global coordinates and delivers cross-border tax and corporate work through appropriately licensed professionals in each jurisdiction. Legal, tax, immigration, fiduciary, and regulated services are provided by qualified advisors engaged for your matter. Nothing on this page is tax or legal advice.