Singapore Family Office: Tighter 13O and 13U Criteria for 2026

Introduction

Singapore has spent more than a decade building one of the most credible single family office regimes in the world, anchored by two income tax exemptions: Section 13O and Section 13U of the Income Tax Act, administered with the Monetary Authority of Singapore (MAS). Singapore last raised the qualifying criteria for both schemes in July 2023 (higher capital, more professionals, a non-family-member requirement, and local spending), and then, with effect from 1 January 2025, changed how assets are measured: AUM is now tested against the value of Designated Investments and must be met at each financial year-end. Those rules now govern every new application and shape how existing funds maintain their status through 2026 and beyond. The direction of travel is unmistakable: larger committed capital, deeper local substance, and a tighter definition of what actually counts toward the asset threshold.

This article sets out what the updated 13O and 13U criteria require, how the two schemes differ, and what international families and their advisers should plan for. It covers the new method of measuring assets under management against Designated Investments, the minimum thresholds and professional headcount for each scheme, the tiered local business spending obligations, the transitional step-ups that apply to existing funds from 2027, and the 31 December 2029 sunset date that sits over all three fund incentive schemes. Families considering a Singapore single family office setup, advisers comparing Section 13O vs 13U requirements, and structuring teams weighing Singapore against other hubs will find the specifics they need to scope the decision properly.

Why Singapore Tightened the Criteria

The 2025 refinements did not arrive in a vacuum. As family office formation in Singapore accelerated, MAS signalled that it wanted the regime to deliver genuine economic contribution rather than serve as a light-touch residency or tax wrapper. The updated criteria pursue three connected aims.

• Larger, more committed capital. By measuring assets against Designated Investments and requiring the threshold to be met at each financial year-end, MAS ensures that qualifying funds hold meaningful, sustained portfolios rather than a one-off snapshot at application.
• Deeper local substance. Higher professional headcount expectations, tiered local business spending, and minimum Singapore-based investments push family offices to employ people, spend locally, and deploy capital into the domestic economy.
• Sharper fund manager expertise. The professional requirements, including salary and tax residency expectations, are designed to ensure that the people running the money are genuinely based in and contributing to Singapore.

The result is a regime that remains attractive but is harder to qualify for casually. For a family with real assets and a long horizon, the bar is entirely achievable. For a family testing the waters with minimal commitment, the updated rules make the threshold more demanding.

How AUM Is Now Measured: Designated Investments

The single most consequential change is the way assets under management are calculated. Under the updated rules, AUM is computed on the value of the fund's investments in Designated Investments, not on net asset value.

What This Shift Means

Under the previous approach, the headline asset figure could be read broadly. The new approach narrows the lens to a defined category of qualifying assets.

• Designated Investments are a defined list. The Designated Investments framework specifies the categories of assets that qualify for the exemption, spanning a wide range of financial instruments, securities, and certain other holdings. Assets that fall outside this list do not count toward meeting the AUM threshold.
• The threshold must be met at each financial year-end. It is no longer enough to satisfy the asset test only at the moment of application. Funds must continue to hold the required value of Designated Investments at the close of each financial year.
• Valuation is on investments, not net assets. Computing AUM on the value of investments rather than net asset value removes the ability to rely on a net figure that may be inflated by items unrelated to the qualifying portfolio.

Practical Consequences for Portfolio Construction

Because the test now tracks Designated Investments at year-end, portfolio construction and the calendar interact directly with compliance. A family that holds a large allocation in assets outside the Designated Investments list, or that draws down qualifying assets near a financial year-end, can find itself short of the threshold even though its overall wealth is substantial.

Section 13O: The Requirements in Detail

Section 13O is the entry-level scheme for single family offices, designed for funds incorporated in Singapore. The updated criteria raise both the capital and the substance expectations.

1. Minimum AUM

• S$20 million at application. A new Section 13O fund must hold a minimum of S$20 million in assets under management, measured on Designated Investments, at the point of application, with no grace period to build up to that level at application.
• Maintained at each financial year-end. The fund must continue to meet the threshold at the close of each financial year, consistent with the Designated Investments measurement described above.

2. Investment Professionals

• At least two investment professionals. Section 13O requires a minimum of two investment professionals, at least one of whom must not be a member of the beneficial owner's family.
• Substance expectations. Investment professionals are generally expected to be Singapore tax residents, to earn a minimum fixed monthly salary, and to hold genuine investment responsibilities rather than simply appearing on the payroll.

3. Local Investments

• 10% of AUM or S$10 million, whichever is lower. The fund must invest at least 10% of its AUM, or S$10 million, whichever is the lower figure, in Singapore-based investments at all times. This is the local-deployment anchor that ties the exemption to the domestic economy.

4. Local Business Spending

• Tiered from S$200,000 per annum. Section 13O local business spending is tiered by fund size: S$200,000 per year for funds below S$50 million, S$500,000 for funds from S$50 million to below S$100 million, and S$1 million for funds of S$100 million or more. Local business spending captures genuine operating expenditure incurred in Singapore, including professional fees, management costs, and salaries.

Section 13U: The Requirements in Detail

Section 13U is the larger-scale scheme and is available to funds whether constituted in Singapore or, in certain cases, offshore. It demands more capital and more people than 13O.

1. Minimum AUM

• S$50 million in Designated Investments. A Section 13U fund must hold a minimum of S$50 million in assets under management, measured on the value of Designated Investments, both at application and at each financial year-end. Unlike 13O, there is no lower entry tier.

2. Investment Professionals

• At least three investment professionals. Section 13U requires a minimum of three investment professionals.
• One non-family professional. At least one of the three must not be a member of the beneficial owner's family. The same non-family requirement also applies to 13O (one of its two professionals), so the difference between the schemes is headcount and scale, not the independence condition itself.

3. Local Business Spending

• Tiered up to S$1 million per annum. Local business spending rises with fund size: S$500,000 per annum for funds below S$100 million, increasing to S$1 million per annum for funds of S$100 million or more.

The table below summarises how the two schemes compare under the updated criteria.

The 2027 Step-Ups for Existing Funds

Recognising that funds approved before the refined criteria took full effect could not instantly re-engineer their portfolios and teams, MAS built in transitional grace periods. The most important dates land in 2027.

How the Transition Works

• Existing Section 13O funds. A minimum of S$5 million in Designated Investments applies from financial years ending in 2027, alongside step-ups in professional headcount and the tiered local business spending criteria.
• Existing Section 13U funds. A minimum of S$50 million in Designated Investments applies from the financial year ending 2027, with the tiered local business spending criteria also beginning to apply from that point.

The practical message is that 2026 is the planning year and 2027 is the year the elevated requirements take hold for funds already in the regime. A family office that commenced under earlier rules should be using the current period to confirm that its Designated Investments, headcount, and local spending will all clear the 2027 bar.

The 2029 Sunset and Long-Horizon Planning

A second date sits above the entire framework. The Section 13D, Section 13O and Section 13U fund tax incentive schemes are legislated to sunset on 31 December 2029 unless they are extended.

This does not mean the schemes are ending. Singapore has a long record of extending and refining these incentives rather than withdrawing them, and the 2025 refinement itself accompanied an extension of the framework. But the sunset date is a formal review point, and families building multi-decade structures should treat it as a known checkpoint rather than an afterthought.

• Funds approved before the sunset generally continue to enjoy the incentive for their approved life, subject to ongoing compliance with the conditions.
• New applications depend on the scheme being in force, so timing an application well ahead of the review date provides certainty.
• Long-horizon planning should assume the framework may be refined again at the review, just as it was in 2025. Build flexibility into governance so that future criteria adjustments can be absorbed.

Choosing Between 13O and 13U

The choice between the two schemes is driven mainly by capital scale, but several other factors shape the decision.

When Section 13O Fits

Section 13O typically suits a single family office that:

• Can commit at least S$20 million in Designated Investments at application and maintain it at each year-end.
• Prefers a leaner team of two investment professionals.
• Wants a Singapore-incorporated fund vehicle within the scope of the scheme.

When Section 13U Fits

Section 13U typically suits a family office that:

• Has S$50 million or more to commit to Designated Investments.
• Is comfortable with a larger team, including at least one non-family investment professional.
• May benefit from the broader vehicle flexibility that 13U can offer at scale.

Substance, Governance, and the Operating Reality

Qualifying for 13O or 13U is the beginning, not the end. The schemes are conditional exemptions, which means the conditions must hold every year. The tightening of the criteria has pushed substance from a formality to an operating reality.

Building Genuine Substance

• People. Investment professionals must be genuinely engaged, tax resident, and properly remunerated. The headcount requirement is meaningless without real roles behind it.
• Spending. Tiered local business spending is a recurring budget line, not a one-off. Plan for the relevant tier based on fund size and document the qualifying expenditure.
• Local deployment. The minimum Singapore-based investment requirement under 13O must hold at all times, which has implications for portfolio rebalancing and liquidity management.

Governance That Keeps Pace

Because the AUM test now applies at each financial year-end and the substance conditions are continuous, governance has to keep pace. A family office should maintain a compliance calendar that tracks the year-end AUM position, professional headcount and remuneration, local business spending against the applicable tier, and the local investment minimum. The cost of losing the exemption for a lapse far exceeds the cost of disciplined monitoring.

How This Fits a Broader International Structure

For internationally mobile families, a Singapore family office rarely sits in isolation. It is usually one node in a structure that may include holding companies, trusts, and operating entities across several jurisdictions. The Singapore vehicle handles investment management and benefits from the 13O or 13U exemption, while other layers address holding, succession, and operating activities.

This is where comparative jurisdiction planning matters. Depending on the family's footprint and objectives, advisers often weigh Singapore alongside holding and fund domiciles such as a Cayman Islands company or a BVI company, and may pair the structure with substance in jurisdictions like Mauritius or, for families with Gulf interests, Saudi Arabia. The right combination depends on tax residence, treaty access, reporting obligations, and the family's long-term plans.

• The Singapore family office provides regulated, substance-backed investment management with a recognised tax incentive.
• Complementary holding and fund vehicles can address asset protection, succession, and consolidation across the family's interests.
• Coordinated advice ensures the layers reinforce rather than undermine one another, particularly on substance and reporting.

AURNE supports families across these decisions through worldwide company formation and integrated advisory services, aligning the Singapore family office with the wider structure rather than treating it as a standalone application.

A Practical Readiness Plan

Whether you are forming a new family office or maintaining an existing one through the 2027 step-ups, a phased plan keeps the work manageable.

Action Timeline

1. Define scope and scheme. Confirm whether 13O or 13U fits your capital scale, team, and vehicle preferences, and quantify the AUM you can commit in Designated Investments.
2. Build the substance plan. Identify your investment professionals, confirm tax residency and remuneration, and budget the tiered local business spending for your fund size.
3. Construct the qualifying portfolio. Ensure the required value sits in Designated Investments, and for 13O confirm the 10% or S$10 million local investment minimum is met and maintainable.
4. Apply and document. Prepare the application against the updated criteria, and put in place a compliance calendar for the at-each-financial-year-end testing.
5. Monitor and review. Track the year-end AUM position, headcount, spending, and local investment minimum every year, and plan ahead of the 2027 step-ups (for existing funds) and the 2029 review.

Readiness Checklist

• Scheme selected (13O or 13U) with the rationale documented.
• Minimum AUM confirmed in Designated Investments and maintainable at year-end.
• Investment professionals identified, tax resident, and properly remunerated (at least one non-family professional, required for both 13O and 13U).
• Local business spending budgeted against the applicable tier.
• Local investment minimum satisfied and monitored (13O).
• Compliance calendar built around the financial year-end testing.
• Transitional step-up plan in place for funds approaching the 2027 thresholds.

Common Pitfalls

• Pitfall one: Counting assets that fall outside the Designated Investments list toward the AUM threshold. Only Designated Investments count under the updated rules.
• Pitfall two: Satisfying the AUM test at application then drifting below it at year-end. The test now applies at each financial year-end.
• Pitfall three: Treating investment professional headcount as a formality. Residency, remuneration, and genuine responsibility are expected.
• Pitfall four: For existing funds, leaving the 2027 step-up adjustments to the final quarter of the grace period, with no time to reposition the portfolio.

Conclusion

Singapore's Section 13O and Section 13U criteria, with assets now measured on the value of Designated Investments and tested at each financial year-end from 1 January 2025 (and the underlying thresholds last raised in July 2023), raise the bar in a deliberate way. The minimum thresholds and professional headcount are clearly set (S$20 million and two professionals for 13O, S$50 million and three professionals for 13U, each scheme requiring at least one non-family member), local business spending is tiered up to S$1 million per annum, and 13O carries a local investment minimum. The regime remains highly attractive, but it asks for genuine commitment.

For families already in the schemes, 2026 is the runway to the 2027 step-ups, when existing funds must meet elevated Designated Investments minimums and tiered local business spending. For everyone, the 31 December 2029 sunset is a formal review point that should sit on the long-horizon plan, even though Singapore has consistently chosen to extend and refine rather than withdraw these incentives.

Professional guidance adds the most value where the Singapore family office meets the rest of the family's structure: selecting the right scheme, building substance that holds year after year, aligning the qualifying portfolio with the Designated Investments rules, and coordinating the Singapore vehicle with holding and fund layers in other jurisdictions. AURNE works with international families on exactly these intersections, from scheme selection through to worldwide company formation and integrated advisory services. Handled well, the tighter criteria are not an obstacle; they are the foundation of a durable, credible structure built to last well beyond the next review.