{"id":106,"date":"2026-10-20T02:00:00","date_gmt":"2026-10-20T02:00:00","guid":{"rendered":"https:\/\/vivosgroup.com\/hk\/?p=106"},"modified":"2026-10-05T08:13:05","modified_gmt":"2026-10-05T08:13:05","slug":"hong-kong-family-office-tax-concession","status":"publish","type":"post","link":"https:\/\/vivosgroup.com\/hk\/insights\/hong-kong-family-office-tax-concession\/","title":{"rendered":"Hong Kong Family Office Tax Concession in 2026: How the 0% FIHV Regime Works"},"content":{"rendered":"\n
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Insights \u00b7 Hong Kong Tax<\/p>\n\n\n\n

Hong Kong Family Office Tax Concession in 2026: How the 0% FIHV Regime Works<\/h1>\n\n\n\n

Hong Kong charges 0% profits tax on a family-owned investment holding vehicle\u2019s (FIHV) profits from qualifying transactions, for years of assessment from 1 April 2022. According to the Inland Revenue Department, an eligible single family office must manage at least HK$240 million of specified assets for the family, and the FIHV needs at least two full-time qualified employees and HK$2 million of operating expenditure in Hong Kong. A Bill widening the qualifying investments had not been passed at 2 October 2026.<\/p>\n\n\n\n

For families, trustees and advisers deciding where to base a single family office. This guide covers who counts as family, the family office and vehicle conditions, the HK$240 million and substance tests, qualifying transactions, and what the 2026 Bill would change.<\/p>\n<\/div>\n\n\n\n

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Point<\/th>Position at 2 October 2026<\/th><\/tr>
Concession<\/td>0% profits tax on FIHV profits from qualifying and incidental transactions<\/td><\/tr>
In force<\/td>Years of assessment from 1 April 2022 (law in operation 19 May 2023)<\/td><\/tr>
Asset minimum<\/td>HK$240 million of Schedule 16C assets managed for the family\u2019s FIHVs<\/td><\/tr>
Substance<\/td>At least 2 full-time qualified employees and HK$2 million operating expenditure in Hong Kong<\/td><\/tr>
Family ownership<\/td>At least 95% of the FIHV held by family members, or 75% where a charity holds up to 25%<\/td><\/tr>
Single family office<\/td>Private company managed or controlled in Hong Kong; 75% of assessable profits from serving the family<\/td><\/tr>
Incidental transactions<\/td>Covered up to 5% of trading receipts; removal proposed in the 2026 Bill<\/td><\/tr>
Election and reporting<\/td>Irrevocable written election; supplementary form S20 with the profits tax return<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n\n\n\n
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Who qualifies: the family, the family office and the FIHV<\/h2>\n\n\n\n

The concession sits in Schedule 16E to the Inland Revenue Ordinance, in operation since 19 May 2023 and backdated to the 2022\/23 year of assessment. The Inland Revenue Department (IRD) defines the family widely: a founder and spouse, their ancestors, the founder\u2019s descendants (including adopted and step children), siblings of the founder, spouse or ancestors, those siblings\u2019 descendants, and the spouses of descendants and siblings. Family members must hold at least 95% of the FIHV\u2019s beneficial interest, or 75% where a charity holds up to 25%.<\/p>\n\n\n\n

The FIHV must be managed by an eligible single family office (SFO): a private company, incorporated anywhere, that is normally managed or controlled in Hong Kong and serves the family and its vehicles. Under a safe harbour, at least 75% of the SFO\u2019s assessable profits must come from those services. The SFO gets no concession itself: its fees are chargeable to profits tax at the ordinary rates.<\/p>\n\n\n\n

The FIHV can be a company, partnership or trust, set up anywhere, but it must be normally managed or controlled in Hong Kong and must not be a general commercial or industrial business. Family-owned special purpose entities (FSPEs) beneath it share the concession in proportion to its interest. The written election is irrevocable. New Capital Investment Entrant Scheme investors may hold their portfolio through an FIHV, but the scheme\u2019s office stresses that the two regimes are separate.<\/p>\n<\/div>\n\n\n\n

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The HK$240 million threshold, substance and qualifying transactions<\/h2>\n\n\n\n

The SFO must manage assets listed in Schedule 16C worth at least HK$240 million in aggregate for the family\u2019s FIHV or FIHVs, measured as net asset value at the end of the basis period. If the value falls short in a year, the test is still met if the threshold was reached at the end of either of the two preceding basis periods.<\/p>\n\n\n\n

The FIHV must also carry out its core income-generating activities in Hong Kong, with at least two full-time qualified employees and at least HK$2 million of operating expenditure in Hong Kong in the basis period. These are minimums: the IRD expects headcount and spending to be commensurate with the level of activity. The work may be outsourced to the SFO, provided outsourcing is not used to get round the requirement.<\/p>\n\n\n\n

Qualifying transactions are those in Schedule 16C assets, including securities, private company shares and debentures, futures, foreign exchange contracts, deposits, exchange-traded commodities and over-the-counter derivatives. Private company gains must also pass an immovable property test (investees with over 10% of assets in Hong Kong property, excluding infrastructure, fail), a two-year holding period test and, failing that, control and short-term asset tests. Incidental transactions are covered only up to 5% of trading receipts. An anti-round-tripping rule taxes Hong Kong-resident companies holding an FIHV on their share of its profits; resident individuals, the SFO and interposed passive holding entities are exempt.<\/p>\n<\/div>\n\n\n\n

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What the 2026 Bill would change, and where it stands<\/h2>\n\n\n\n

The wider qualifying transactions promised in the 2025\u201326 Budget are in the Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026, gazetted on 12 June 2026. For FIHVs it would add loans including private credit, interests in partnerships and other non-corporate entities, property outside Hong Kong, digital assets, insurance-linked securities, precious metals (up to 20% of the portfolio), certain commodities, emission allowances and carbon credits.<\/p>\n\n\n\n

The Bill would also remove the 5% cap on incidental transactions, so that holding of and transactions in Schedule 16C assets are covered. The HK$240 million test would no longer deduct loans from the family owners, though bank borrowing would still count against it, and FSPEs would get the full concession whatever the FIHV\u2019s holding. The substance minimums are unchanged.<\/p>\n\n\n\n

Once enacted, the changes apply retrospectively from the 2025\/26 year of assessment. At 2 October 2026 the Bill had not been passed: the Bills Committee had finished its scrutiny by 12 August 2026, and the Government aimed to resume the second reading debate in the second half of 2026. Meanwhile, the IRD lets eligible taxpayers file 2025\/26 profits tax returns on the basis of the Bill, stating this in the tax computation. Check the Bill\u2019s status before relying on it.<\/p>\n<\/div>\n\n\n\n

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Checklist: setting up and keeping the concession<\/h2>\n\n\n\n