Singapore VCC insights

13O vs 13U for a New SFO Fund: A Decision Guide by AUM, Vehicle and Investors

By VCC Editorial Team · Published 26 October 2026

Short answer: For a new single family office fund approved on or after 1 August 2026, 13O (or 13OA for a limited partnership) needs 2 investment professionals and S$20 million in designated investments; 13U needs 3 and S$50 million. Below S$50 million the choice is made for you. Above it, vehicle form, investor mix and treaty needs decide.

This article is general information only and is not legal, tax or investment advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

The question of 13O vs 13U is usually framed as S$20 million or S$50 million. For a family applying after 1 August 2026 that is only half the answer. For SFO funds the two schemes under the Income Tax Act 1947 now share the same local spending table, capital deployment requirement and banking condition, so the real differences are headcount, vehicle form, investor mix, fund administration and treaty access. This decision piece relies on MAS FDD Circular 05/2026 “Tax Incentive Schemes for Funds” and the IRAS e-Tax Guide “Tax Framework for Variable Capital Companies” (Fourth Edition, 22 April 2026), both checked on 26 October 2026.

Which rulebook applies to a new SFO fund applying today?

Any 13O, 13OA or 13U award for an SFO fund approved on or after 1 August 2026 is subject to the conditions in paragraphs 4.3 to 4.5 of the circular, unless MAS notifies otherwise in writing. Existing awards follow separate transitional tables in Annexes 6B and 7B and are not covered here.

An SFO fund is a vehicle whose assets primarily originate from one family and which is managed by an SFO exempt from licensing under paragraph 5(1)(ba) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations, made under the Securities and Futures Act 2001. Annex 6B paragraph 3 notes that new awards “can be referred to as awards subject to 5Jul23 conditions”; that label in a letter of award does not mean an old rulebook applies.

13O vs 13U: what are the SFO thresholds side by side?

The headline differences are one extra investment professional and S$30 million more AUM in DI for 13U. The lower rows are common to both.

Condition (new SFO awards)	13O / 13OA	13U	Circular reference
Qualifying IPs employed by the SFO	2, at least 1 non-family member	3, at least 1 non-family member	Paras 4.3(a), 4.4(a)
IPs needed at application	1 (family member or otherwise)	2 (family members or otherwise)	Paras 4.3(a), 4.4(a)
Deadline for the full IP count	End of the basis period of the first Year of Assessment (YA), or award revoked from commencement	Same	Paras 4.3(a), 4.4(a)
Minimum AUM in DI	S$20 million at application and at each basis period end	S$50 million at application and at each basis period end	Paras 4.3(b), 4.4(b)
Local spending	S$200,000 / S$500,000 / S$1,000,000 by AUM tier (Table C)		Para 4.5(a)
Capital deployment requirement	Lower of 10% of AUM in DI or S$10 million in specified investments		Para 4.5(b)
Banking	Private banking account with an MAS-licensed financial institution at application and throughout		Para 4.5(c)

A qualifying IP is a portfolio manager, research analyst or trader who is a Singapore tax resident, earns more than S$3,500 a month and is substantially engaged in fund management (footnote 18). The circular’s own example (footnote 19 for 13O, footnote 21 for 13U): an award starting on 1 August 2026 with a 31 December year end must have the second (or third) IP in place by 31 December 2026, failing which the award is revoked from 1 August 2026. The work pass timetable for foreign hires often decides which scheme is realistic in year one; our piece on hiring the investment professionals 13O and 13U require covers the Employment Pass side.

Investments in the family’s own operating businesses do not count towards the minimum AUM in DI, although they count for the other conditions if they qualify as DI (footnotes 20 and 22). The capital deployment requirement is identical under both schemes and is covered in our capital deployment requirement guide; the banking condition is covered in our SFO fund banking account article.

What vehicle can each scheme use, including a VCC?

13O is confined to a Singapore-incorporated company that is tax resident in Singapore, and 13OA to a limited partnership registered under the Limited Partnerships Act 2008. 13U is form-neutral for standalone funds and also accommodates multi-entity structures.

Annex 6 paragraph 1(a) requires a 13O fund to be “a company incorporated in Singapore, where the company is a tax resident of Singapore where the control and management of its business is exercised in Singapore”. Annex 7 paragraph 4 says standalone 13U funds, and master and feeder funds in a master-feeder structure, “are permitted to be constituted in all forms”. Where special purpose vehicles (SPVs) are used, the master fund must be a Singapore company, trust or limited partnership that is Singapore tax resident (paragraph 5(a)), and a limited partnership master qualifies only if all its partners are Singapore tax residents (footnote 110).

A variable capital company (VCC) can sit under either scheme. Paragraph 5.7 of the IRAS e-Tax Guide states that, as VCCs are to be used as investment funds, they are considered for the incentives under sections 13G, 13O and 13U of the Income Tax Act 1947. A VCC incorporated under the Variable Capital Companies Act 2018 fits the 13O form test if its control and management is in Singapore.

Two practical consequences follow. First, a family that wants to keep an existing Cayman or BVI vehicle as the fund, or wants a trust or a foreign limited partnership as the standalone vehicle, can only look to 13U of the two schemes. Second, the fund administrator rule differs: a 13O fund must use a Singapore-based fund administrator (Annex 6 paragraph 1(b)), while 13U imposes that only where the fund, master fund or feeder fund is a Singapore-incorporated, Singapore-resident company (Annex 7 paragraph 1(b)).

Does the 30/50 investor rule change the answer?

It can. The circular applies the 30/50 rule to 13O and 13OA funds but sets out no such rule for 13U, so a family that will hold the fund through a Singapore-resident company or another resident non-individual should test the rule before choosing 13O.

Under Annex 6 paragraph 3, an investor that, alone or with associates, beneficially owns more than 30% of a 13O fund with fewer than 10 investors, or more than 50% of a fund with at least 10 investors, is a non-qualifying investor and must pay a financial penalty to the Comptroller of Income Tax. Paragraph 4 applies it to 13OA partners. The penalty does not apply to qualifying investors listed in paragraph 7, which include individuals, bona fide non-resident entities without a Singapore permanent establishment (other than a fund manager) that do not carry on business in Singapore, another 13O or 13OA fund, a 13U fund and a 13D trust or unit trust that each meet their own conditions for the period. Annex 7, on 13U, contains no 30/50 provision.

Family members investing directly are individuals, and an offshore holding company with no Singapore presence will usually qualify. The risk arises where a Singapore-resident family holding or operating company subscribes for most of the fund. That points to restructuring the subscription chain or to 13U.

How does treaty access through Singapore tax residence differ?

A 13O fund is by definition a Singapore tax resident, so it is positioned to apply to IRAS for a certificate of residence (COR) when claiming treaty benefits. A 13U fund has that position only if its vehicle is itself resident in Singapore.

The IRAS e-Tax Guide states that a VCC is tax resident for a calendar year if the control and management of its business is exercised in Singapore (paragraph 5.2), that a sub-fund’s residence follows its umbrella VCC (paragraph 5.3), and that a VCC can apply for a COR “to support its claims for tax benefits under the Avoidance of Double Taxation Agreements concluded by Singapore with our treaty partners” (paragraph 5.4). A sub-fund cannot be issued a COR in its own right; the COR is issued in the umbrella VCC’s name, with the sub-fund’s name and tax reference number included (paragraph 5.4).

The scheme does not create treaty entitlement; residence does. A 13U standalone fund formed outside Singapore, whose board meets and takes strategic decisions offshore, will generally not be Singapore resident merely because its manager is here, and so has no COR route. If the portfolio holds assets in treaty countries where withholding tax relief matters, a Singapore-resident VCC or company, under either scheme, is the cleaner route. See our note on tax residence for 13O, 13U and VCC funds.

How do you choose between 13O and 13U by AUM band?

Start with the AUM in DI you can evidence at application and expect to hold at every year end, excluding the family’s operating businesses. Then work through these steps.

1. Below S$20 million: neither SFO scheme is available. The fund must grow first or look at other routes outside this piece.
2. S$20 million to below S$50 million: 13O, or 13OA if the family wants a Singapore limited partnership. 13U is not open.
3. S$50 million or more: both are open. Ask whether the vehicle must be foreign, a trust or a multi-entity structure. If yes, 13U.
4. If a Singapore company or VCC is acceptable, test the investor register against the 30/50 rule. A resident corporate investor above the threshold favours 13U or a restructured subscription chain.
5. Check headcount: can the SFO credibly employ 3 qualifying IPs, at least 1 outside the family, by the end of the first basis period? If only 2, 13O.
6. Check the margin over the threshold. Both schemes test AUM at every basis period end, so a 13U fund at S$55 million has much less room for a market fall or a distribution than a 13O fund at the same size.
7. Confirm treaty needs. If treaty relief matters, keep the vehicle Singapore resident under whichever scheme you pick.

Failing an economic condition costs the exemption for that basis period only (paragraph 2.4), but missing the full IP count in the first year revokes the award from commencement. Our minimum AUM guide sets the S$20 million and S$50 million figures against the other MAS and Global Investor Programme thresholds.

What do the numbers look like at three fund sizes?

The arithmetic below applies the circular’s tables to three hypothetical funds with a 31 December year end. It is illustrative only.

AUM in DI at year end	Schemes open	Minimum local spending	Capital deployment target
S$35 million	13O / 13OA only	S$200,000	Lower of S$3.5 million (10%) and S$10 million, so S$3.5 million
S$120 million	13O / 13OA or 13U	S$200,000	Lower of S$12 million and S$10 million, so S$10 million
S$400 million	13O / 13OA or 13U	S$500,000 (at least S$300,000 must be local business spending)	S$10 million

For the two larger funds the figures are identical under either scheme, so the decision rests on the points above. For the S$400 million fund, paragraph 4.5(a) and Annex 6B allow part of the S$500,000 to be met through eligible donations to Singapore registered charities, exempt charities or Institutions of Public Character, and grants to blended finance instruments distributed by licensed financial institutions in Singapore (counted at twice their value), provided local business spending is at least S$300,000.

Can a fund move between 13O and 13U later?

The circular does not provide a conversion route between the schemes. It provides for withdrawal and a fresh, prospective application, judged against the conditions in force at that time.

Annex 6 paragraphs 10 and 11 require advance notice to MAS before a 13O or 13OA fund withdraws, and allow a withdrawn fund to avail itself of another fund scheme “on a prospective basis, subject to it meeting the conditions of the scheme”. Annex 7 paragraphs 8 and 9 mirror this for 13U. Within 13U, adding a feeder fund or SPV after approval requires MAS approval, and the structure must meet the S$50 million AUM in DI condition at the point of that application (Annex 7 paragraph 6). Headroom above S$50 million is therefore a design point, not a one-off entry test.

Frequently asked questions

Is 13U always better for a fund above S$50 million?

No. Above S$50 million the other conditions are the same; 13U adds a third IP and a higher AUM floor. It is preferable mainly where the vehicle must be foreign, a trust or a multi-entity structure, or where the 30/50 rule would bite under 13O.

Can a family member count as one of the investment professionals?

Yes, but at least 1 qualifying IP under either scheme must be a non-family member of the fund’s beneficial owners by the end of the first basis period. At application, the single IP for 13O or the two IPs for 13U may be family members (paragraphs 4.3(a) and 4.4(a)).

Can an umbrella VCC sub-fund obtain a certificate of residence?

Not in its own name. IRAS issues the COR to the umbrella VCC, with the sub-fund’s name and tax reference number included, and the sub-fund’s residence follows the umbrella’s (IRAS e-Tax Guide, paragraphs 5.3 and 5.4).

Do the family’s operating company shares count towards the S$20 million or S$50 million?

No. Investment in the family’s operating businesses, in any form, is excluded from the minimum AUM in DI test, though it counts for other conditions if it is a designated investment (footnotes 20 and 22).

Does a 13O fund need a Singapore fund administrator?

Yes. Annex 6 paragraph 1(b) requires a Singapore-based fund administrator for 13O and 13OA. Under 13U the requirement applies only where the fund, master fund or feeder fund is a Singapore-incorporated, Singapore-resident company.

Sources

• MAS FDD Circular 05/2026, Tax Incentive Schemes for Funds (31 July 2026)
• IRAS e-Tax Guide, Tax Framework for Variable Capital Companies (Fourth Edition, 22 April 2026)
• IRAS, Tax Residency of a Company / Certificate of Residence

Raffles Corporate Services helps family offices choose between 13O and 13U, set up the VCC or company that will hold the award, and run the annual compliance that keeps it. Our team also coordinates Employment Pass applications for investment professionals through Singapore Employment Agency. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.

Last reviewed: 26 October 2026. The Editorial Team, Variable Capital Companies Act.