Imagine building a wealth management structure where your investment returns fuel your philanthropic mission, all while enjoying significant tax benefits. Hong Kong has emerged as the premier jurisdiction for family offices seeking exactly this integration. With the groundbreaking Family-owned Investment Holding Vehicle (FIHV) regime and Hong Kong’s robust charitable framework, ultra-high-net-worth families can now seamlessly combine wealth preservation with meaningful social impact.

Hong Kong’s Philanthropic Advantage: Why Family Offices Choose This Jurisdiction

Hong Kong has strategically positioned itself as Asia’s leading philanthropy hub, offering a unique combination of tax efficiency, regulatory sophistication, and geographic advantage. The government’s “Wealth for Good” initiative actively promotes Hong Kong as a destination where family offices can achieve both financial and social returns. With over 9,700 tax-exempt charities and approximately 2,700 single family offices managing more than HK$31 trillion in assets, the ecosystem is both mature and dynamic.

The FIHV Regime: Revolutionizing Family Office Philanthropy

What is the FIHV Tax Concession Scheme?

The Family-owned Investment Holding Vehicle (FIHV) regime, effective from May 19, 2023 (retroactive to April 1, 2022), represents a watershed moment for Hong Kong’s wealth management industry. This innovative framework allows eligible FIHVs managed by Single Family Offices (SFOs) to enjoy 0% profits tax on qualifying transactions, including foreign-sourced interest, dividends, and disposal gains.

The 25% Charitable Ownership Innovation

One of Hong Kong’s most distinctive features is the explicit accommodation of philanthropic objectives within the FIHV framework. While the regime requires that at least 95% of beneficial interest be held by family members, it permits up to 25% of that interest to be held by one or more charitable entities approved under Section 88 of the Inland Revenue Ordinance.

This means a family can reduce their direct ownership to 75% while allocating 25% to their private charitable foundation. The foundation then participates directly in the investment returns of the family’s wealth vehicle, creating a self-sustaining philanthropic engine that grows alongside family wealth.

Section 88: The Foundation of Hong Kong’s Charitable Tax Framework

Understanding Section 88 Tax Exemption

Section 88 of the Inland Revenue Ordinance provides the legal backbone for charitable tax exemption in Hong Kong. Organizations granted this status enjoy dual benefits: exemption from profits tax on their income and the ability to issue tax-deductible donation receipts to donors. To qualify, an organization must be established exclusively for charitable purposes and operate for public benefit, with any surplus reinvested in the charity’s mission rather than distributed to members.

The 35% Charitable Donation Deduction

Hong Kong offers one of the world’s most generous charitable donation deductions. Both individuals and corporations can claim deductions up to 35% of their assessable income or profits for cash donations to Section 88 approved charities. The minimum donation to qualify is HK$100, making even modest giving tax-efficient.

Structuring Your Philanthropic Family Office

Private Foundations vs. Public Charities

Family offices typically choose between two primary structures, both eligible for Section 88 status:

• Private Foundations: Funded by a single family, offering maximum control over grant-making decisions. Usually structured as companies limited by guarantee or trusts. Ideal for families prioritizing control and privacy.
• Public Charities: Engage in broader public fundraising with more diverse governance. Often undertake direct charitable activities rather than solely making grants. Better for families seeking public engagement and coalition-building.

Integrated FIHV-Philanthropy Structure

The most sophisticated approach integrates FIHV benefits with charitable giving:

1. Establish Section 88 Foundation: Create a private foundation with clear charitable objectives and apply for Section 88 status
2. Structure FIHV Ownership: Allocate 75% ownership to family members and 25% to the Section 88 foundation
3. Set Up Single Family Office: Establish an SFO meeting economic substance requirements (2+ employees, HK$2M+ annual expenditure)
4. Create Virtuous Cycle: Family receives tax deductions for donations to foundation → Foundation participates in FIHV investment returns → FIHV enjoys 0% tax on qualifying income

Critical Compliance Considerations

Geographic Restrictions on Charitable Activities

A crucial limitation for globally-minded philanthropists: Section 88 charities cannot expend funds “substantially outside Hong Kong.” While the Inland Revenue Department hasn’t defined a specific percentage, conservative advisors recommend at least 50% of expenditure remain in Hong Kong. For cross-border philanthropy, consider:

• Separate Hong Kong and offshore charitable entities
• Hong Kong-based programs benefiting cross-border populations
• Careful monitoring of international grant proportions

Ongoing Compliance Requirements

Section 88 charities face regular Inland Revenue Department reviews:

• First review: Two years after recognition
• Subsequent reviews: At least once every three years
• Document retention: Maintain records for at least 6 years
• Annual submissions: Financial statements and audit reports

Recent Developments and Future Outlook

The Hong Kong government continues to enhance its family office ecosystem. The November 2024 consultation proposed expanding “Specified Assets” eligible for FIHV tax concessions to include virtual assets, recognizing digital assets’ growing importance in family portfolios. The second “Wealth for Good in Hong Kong Summit” in March 2025 will further showcase Hong Kong’s philanthropic advantages to global family offices.

Hong Kong has created a compelling proposition where doing good and doing well are structurally integrated. For family offices considering Hong Kong as a base, the philanthropic dimension offers more than just tax advantages—it provides access to a growing ecosystem of purpose-driven capital, high-quality charitable opportunities across the Greater Bay Area, and a government actively promoting philanthropy as a core element of family office value. The integration of wealth management with meaningful social impact has never been more achievable or advantageous.