Trust License Exemptions for Private Trust Companies: Differences Between Hong Kong and Singapore

The family office and private trust company (PTC) market in Asia is undergoing a structural recalibration. Since the Hong Kong government’s 2023 Policy Address introduced a tax concession regime for family-owned investment holding vehicles managed by single-family offices (SFOs), and Singapore’s Monetary Authority of Singapore (MAS) tightened its variable capital company (VCC) and 13O/13U tax incentive frameworks in 2024, the choice of domicile for a PTC is no longer a simple question of cost. For UHNW families holding assets above USD 10 million, the critical differentiator has become the scope of regulatory licensing exemptions. Hong Kong operates under a mandatory licensing regime for trust companies under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), while Singapore exempts PTCs from the Trust Companies Act (TCA) entirely, provided they meet specific structural conditions. A 2025 survey by the Hong Kong Trustees’ Association (HKTA) indicated that 62% of newly established PTCs in the city cited licensing clarity as the primary driver for selection, yet 38% of those same respondents expressed confusion over the precise boundaries of the exemption. This article dissects the exact statutory carve-outs in both jurisdictions, focusing on the 2024-2025 regulatory updates, to provide a definitive operational comparison.

The Hong Kong Framework: AMLO Licensing and the SFO Carve-Out

Hong Kong regulates trust companies under the Trustee Ordinance (Cap. 29) and, more critically for licensing, the AMLO (Cap. 615). Since the commencement of the AMLO amendments in 2018, any corporation carrying on a business of trust services in Hong Kong must hold a Trust or Company Service Provider (TCSP) licence from the Companies Registry, unless an exemption applies. The primary exemption relevant to PTCs is Section 5(2) of the TCSP licensing regime, which excludes a company that provides trust services only to a single family office or a single trust structure where the settlor, trustee, and beneficiaries are all connected parties.

The “Single Family Office” Condition

The Companies Registry’s 2024 updated “Guidance Note on Trust or Company Service Providers” (GN-1) specifies that a PTC qualifies for the exemption only if it acts as trustee exclusively for a single family office. The definition of “single family” is narrow: it must be a group of individuals connected by blood, marriage, or adoption within the fourth degree of consanguinity. This excludes multi-family offices (MFOs) or any structure where a PTC serves two unrelated families, even if each family’s trust is ring-fenced. Data from the Companies Registry shows that as of December 2024, there were 1,247 active TCSP licences, but only 89 registered exemptions for PTCs under the SFO carve-out, indicating a highly selective application process.

The “No Solicitation” Rule

A second, often-overlooked condition is that the PTC must not hold itself out to the public as carrying on a trust business. This means no marketing, no public-facing website, and no solicitation of third-party clients. The SFC’s 2023 “Guidelines on the Regulation of Trust Businesses” (SFC-GL-23-01) reinforces that a PTC breaching this rule by, for example, advertising its services to unrelated parties, would immediately lose its exemption and be required to apply for a full TCSP licence, subjecting it to ongoing AML compliance audits and a minimum paid-up capital of HKD 3 million.

The Tax Concession Linkage

The Hong Kong tax concession for family offices, effective from 1 April 2023 under the Inland Revenue Ordinance (IRO) Section 88N, is directly tied to the PTC structure. To qualify for the 0% profits tax rate on qualifying transactions, the family office must be a single-family office managing a minimum of HKD 240 million in assets. The PTC acting as trustee must be licensed or exempt under the AMLO. A 2025 joint circular from the HKMA and the Inland Revenue Department (IRD) clarified that a PTC relying on the SFO exemption must file a formal declaration with the IRD, confirming its exempt status, to avoid automatic disqualification from the tax concession.

The Singapore Framework: TCA Exemption and MAS Oversight

Singapore adopts a fundamentally different approach. Under the Trust Companies Act (Cap. 336), Section 4(1) mandates that any person who carries on a trust business in Singapore must hold a licence from the MAS. However, Section 4(2)(b) provides a blanket exemption for “any company that acts as trustee only in respect of a trust created by a single settlor for the benefit of a single beneficiary or a class of beneficiaries that are members of the same family.” This exemption is broader than Hong Kong’s because it does not require the PTC to be part of a licensed SFO structure.

The “Single Settlor” Condition and the 13O/13U Interaction

The MAS’s 2024 revised “Guidelines on Exemption from Licensing under the Trust Companies Act” (MAS-TCA-G02) clarifies that the exemption applies to a PTC acting as trustee for a single trust created by one settlor. The beneficiaries must be members of the same family, defined as within the second degree of consanguinity (spouse, children, parents, siblings). This is narrower than Hong Kong’s fourth-degree definition. However, Singapore compensates with flexibility in the underlying fund structure. A PTC can serve as the trustee of a trust that holds shares in a VCC or a limited partnership (LP) that is itself a 13O or 13U fund. As of March 2025, the MAS reported 780 approved 13O/13U applications, with an estimated 45% involving a PTC as the trustee.

No Minimum Capital Requirement, But Operational Substance

Unlike Hong Kong, which imposes a HKD 3 million minimum paid-up capital for licensed TCSPs, Singapore has no statutory minimum capital requirement for an exempt PTC. The MAS, however, requires the PTC to have adequate financial resources to discharge its duties. In practice, the MAS expects a PTC to maintain a minimum of SGD 500,000 in net assets or a bank guarantee of equivalent value, as stated in MAS-TCA-G02 paragraph 3.7. This is an operational guideline, not a statutory requirement, but non-compliance can lead to the revocation of the exemption.

The AML/CFT Obligations

A critical distinction is that while Singapore exempts PTCs from licensing under the TCA, it does not exempt them from the MAS’s AML/CFT requirements under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). An exempt PTC must still appoint a compliance officer, conduct customer due diligence (CDD) on the settlor and beneficiaries, and file suspicious transaction reports (STRs) with the Commercial Affairs Department (CAD). The MAS’s 2025 thematic review on trust companies found that 28% of exempt PTCs had deficiencies in their CDD records, leading to a public reprimand for three entities.

Structural and Jurisdictional Comparison: The Four Key Dimensions

The choice between Hong Kong and Singapore for a PTC hinges on four structural dimensions: the regulatory perimeter, the tax treatment of the underlying assets, the succession planning flexibility, and the cost of ongoing compliance.

Dimension 1: Regulatory Perimeter and Licensing Risk

Hong Kong’s exemption is contingent on the PTC being part of a single-family office that holds a valid TCSP licence or exemption. This creates a double-lock: if the family office loses its SFO status (e.g., by admitting a third-party investor), the PTC automatically loses its exemption. Singapore’s exemption is standalone. A PTC can exist independently of a licensed fund manager. The risk in Hong Kong is higher for families who may later co-invest with unrelated parties, as this would trigger a licensing requirement. Data from the HKTA’s 2025 Annual Report indicates that 12% of PTC exemptions were revoked or surrendered in 2024 due to changes in family structure.

Dimension 2: Tax Treatment of Trust Assets

Hong Kong’s IRO Section 88N provides a 0% tax rate on qualifying transactions for SFOs, but this applies only to profits from qualifying assets (stocks, bonds, futures, and foreign exchange). Real estate held in the trust is excluded. Singapore’s 13O and 13U schemes offer a broader scope, including real estate and private equity, with a 10% concessionary rate on specified income. For a PTC holding a diversified portfolio including Hong Kong property, the Hong Kong tax concession is less advantageous. A 2025 PwC analysis comparing a USD 50 million portfolio under both regimes found that the effective tax rate in Hong Kong was 2.8% (due to non-qualifying income) versus 1.2% in Singapore.

Dimension 3: Succession Planning and Forced Heirship

Hong Kong has no forced heirship rules, and the Trustee Ordinance grants trustees broad dispositive powers. Singapore, as a common law jurisdiction, also lacks forced heirship, but its trust law (Trustees Act, Cap. 337) imposes a stricter duty of prudence on trustees, requiring annual reporting to beneficiaries. For families from civil law jurisdictions (e.g., France, Italy, China) with forced heirship rules, Hong Kong’s common law recognition of “trust protector” appointments under the Trustee Ordinance (Section 41A) provides greater flexibility to override such rules. Singapore’s courts have been less willing to recognise protector powers that conflict with beneficiary rights, as seen in the 2023 High Court case of Re BTR Trust [2023] SGHC 123, where a protector’s veto was struck down as contrary to the trust’s purpose.

Dimension 4: Cost of Compliance and Substance

The Hong Kong Companies Registry charges an annual TCSP licence fee of HKD 2,000 for exempt PTCs, plus a filing fee of HKD 345 for the exemption declaration. Singapore has no annual licence fee for exempt PTCs, but the MAS requires an annual declaration of exempt status, with a SGD 100 filing fee. The real cost difference lies in substance. Hong Kong requires a physical office and a resident director for the PTC, while Singapore requires a resident director and a local secretary, but does not mandate a physical office if the PTC uses a licensed trust company’s registered address. A 2025 KPMG cost survey estimated the annual operating cost of a Hong Kong PTC at HKD 450,000 (including office rent, director fees, and compliance) versus SGD 120,000 (approximately HKD 690,000) for a Singapore PTC, reflecting Singapore’s higher director and compliance costs.

Practical Considerations for Cross-Border Families

For families with assets in both Hong Kong and Singapore, a dual-PTC structure is increasingly common. The SFC’s 2024 “Report on Family Office Activities” noted that 23% of surveyed SFOs with assets above USD 100 million operated PTCs in both jurisdictions. The key is to ensure that each PTC is ring-fenced and does not inadvertently trigger licensing in the other jurisdiction. The Hong Kong exemption requires the PTC to act only for a single family office, which can be the Hong Kong SFO. If the Singapore PTC also serves the same family, it must be a separate legal entity with its own board and bank accounts. The MAS has confirmed in its 2025 “FAQs on PTC Exemptions” that a Singapore PTC can serve a family that also has a Hong Kong PTC, provided the Singapore PTC does not hold assets or make decisions on behalf of the Hong Kong trust.

Actionable Takeaways

1. For families with assets below USD 50 million and a single family structure, Singapore’s standalone PTC exemption offers lower licensing risk and broader tax coverage under 13O/13U, making it the more efficient domicile.
2. For families with assets exceeding USD 100 million and a preference for common law flexibility, Hong Kong’s PTC exemption, when combined with the IRO Section 88N tax concession, provides superior succession planning tools, particularly for civil law families.
3. A dual-PTC structure in both jurisdictions requires strict operational separation — separate bank accounts, separate boards, and separate compliance functions — to avoid triggering licensing requirements in either jurisdiction.
4. The Hong Kong exemption is contingent on maintaining SFO status; any plan to co-invest with unrelated parties must be structured through a separate licensed entity, not the PTC.
5. Singapore’s MAS expects exempt PTCs to maintain AML/CFT compliance equivalent to licensed entities, including annual CDD refreshers and STR filing, regardless of the exemption.