Imagine transferring your family’s wealth to the next generation without losing 40-55% to inheritance taxes. For Hong Kong’s ultra-high-net-worth families, this isn’t a fantasy – it’s the reality of one of the world’s most favorable succession planning environments. With no estate duty, no capital gains tax, and specialized family office tax concessions, Hong Kong has positioned itself as Asia’s premier destination for intergenerational wealth preservation. But how do you navigate this landscape to create a lasting legacy that spans generations?

Hong Kong’s Unmatched Tax Advantages for Wealth Transfer

The Triple Tax-Free Advantage

Hong Kong’s tax framework creates a perfect storm of advantages for family succession planning. Unlike jurisdictions like the United States (estate tax up to 40%), United Kingdom (inheritance tax at 40%), or Japan (inheritance tax up to 55%), Hong Kong families face zero direct taxes on wealth transfer through three key pillars:

• No Estate Duty: Since February 2006, assets passing from one generation to the next face no inheritance tax, regardless of value
• No Capital Gains Tax: Asset appreciation and sales are tax-free, allowing families to restructure holdings without tax friction
• No Gift Tax: Lifetime transfers are tax-free, enabling proactive, gradual wealth transfer strategies

Current Stamp Duty Rates for Asset Transfers

When transferring assets between generations, these are the current stamp duty rates you need to know:

The Family Investment Holding Vehicle (FIHV) Regime: 0% Tax on Investments

Hong Kong’s most powerful tool for family offices arrived in 2023 with the FIHV regime. This isn’t just a tax break – it’s a comprehensive framework designed to attract substantial family wealth to Hong Kong while ensuring genuine economic substance in the jurisdiction.

Who Qualifies for FIHV Tax Concessions?

To access the 0% profits tax rate on qualifying transactions, your family investment vehicle must meet these criteria:

• Minimum AUM: HK$240 million (approximately US$30.7 million)
• Family Ownership: At least 95% beneficial interest held by a single family
• Hong Kong Substance: Normally managed or controlled in Hong Kong
• Non-Commercial Purpose: Established for wealth preservation, not general commercial operations
• Eligible SFO Management: Managed by a qualifying Single Family Office
• Substantial Activities: At least 2 qualified full-time employees in Hong Kong with minimum HK$2 million annual operating expenditure

What Investments Qualify for 0% Tax?

The FIHV tax exemption covers profits from these qualifying transactions:

• Shares, stocks, and equity securities
• Debentures, bonds, notes, and loan stocks
• Investment funds and collective investment schemes
• Foreign exchange contracts and transactions
• Commodities and futures contracts
• Deposits with authorized financial institutions

Trust Structures: Beyond Tax Efficiency

Even with Hong Kong’s favorable tax environment, trusts remain essential for sophisticated succession planning. Why? Because they offer benefits that go far beyond tax savings:

Private Trust Companies (PTCs): The Ultimate Control Structure

For ultra-high-net-worth families, a Private Trust Company offers the perfect balance of control and protection. A PTC serves as a dedicated trustee for family trusts, with family members serving as directors. This model provides:

• Direct Family Oversight: Family directors guide trust administration while maintaining legal protection
• Institutional Continuity: Survives beyond individual family members’ involvement
• Custom Governance: Tailored investment policies and distribution frameworks
• Cost Efficiency: Can reduce trustee fees for families with multiple trusts

Succession Planning for Family Businesses

Transferring a family business involves unique challenges beyond asset transfer. Hong Kong’s flexible corporate structures provide multiple solutions:

Effective Business Succession Structures

1. Holding Company Model: Separate ownership (holding company level, often in trusts) from management (operating companies) to facilitate gradual transfer while maintaining operational stability
2. Dual-Class Share Structures: Issue shares with different voting and economic rights – transfer economic value to successors while retaining voting control during transition
3. Trust Ownership with Family Governance: A discretionary trust owns business interests, with governance exercised through a PTC, family council, or protector
4. Family Limited Partnerships: Senior generations as general partners (control) with limited partnership interests (economic value) transferred to younger generations

The New Capital Investment Entrant Scheme (New CIES)

Launched in March 2024, the New CIES provides a residence pathway for family office principals, strengthening Hong Kong’s appeal as a family office hub. The requirements are straightforward:

• Investment Threshold: HK$30 million total investment
• Portfolio Allocation: HK$27 million in qualifying assets + HK$3 million in New CIES Investment Portfolio
• Qualifying Assets: Financial assets, non-residential real estate, or investments in Hong Kong innovation/technology companies
• Residence Pathway: Successful applicants and their dependents can obtain Hong Kong residence

International Considerations for Global Families

Hong Kong’s domestic tax advantages are clear, but global families must consider international exposure. Children studying or working abroad can expose family wealth to foreign tax regimes. Key strategies include:

Navigating Cross-Border Tax Exposure

• Common Law Receiver Trusts: For beneficiaries in high-tax jurisdictions, a secondary “receiver” trust in Hong Kong can receive distributions from primary offshore trusts with greater tax efficiency
• Treaty Network: Hong Kong has comprehensive tax treaties with 45+ jurisdictions, providing reduced withholding taxes and double taxation relief
• Jurisdiction-Specific Planning: U.S. grantor trust rules, UK resident beneficiary rules, and other jurisdiction-specific regulations require specialized advice

A 4-Phase Succession Planning Process

1. Phase 1: Assessment & Goal Definition
   Inventory all assets, map family members and locations, clarify objectives (preservation, continuity, philanthropy), and identify risks (family disputes, creditor exposure, international tax exposure)
2. Phase 2: Structure Design
   Design trust architecture, FIHV structure (if HK$240+ million AUM), business holding layers, and ensure all structures work harmoniously across jurisdictions
3. Phase 3: Implementation
   Establish entities, transfer assets (managing stamp duty costs), prepare comprehensive documentation, and ensure regulatory compliance
4. Phase 4: Governance & Ongoing Management
   Annual reviews, clear family communication, next-generation development, and maintaining professional advisor relationships

Hong Kong’s succession planning landscape represents a unique convergence of favorable tax policies, robust legal frameworks, and government initiatives designed to attract and retain family wealth. While the absence of estate duty, capital gains tax, and gift tax provides an exceptional foundation, the real power lies in combining these advantages with sophisticated structures like FIHVs, trusts, and strategic business succession planning. As Hong Kong continues to enhance its family office regime through initiatives like the expanded FIHV concessions and New CIES, families have unprecedented opportunities to create lasting legacies that span generations while benefiting from one of the world’s most favorable wealth preservation environments.