Singapore VCC insights
Section 13O Conditions for a VCC Family Office: The 2026 Circular Rules in One Place
Short answer: A family office VCC with a section 13O award approved on or after 1 August 2026 must hold S$20 million in designated investments at application and each year end, have two qualifying investment professionals (one non-family), meet tiered local spending, deploy the lower of 10% or S$10 million in specified investments and keep a Singapore private banking account.
Key facts at a glance
- Governing text: MAS FDD Circular 05/2026 of 31 July 2026 on the schemes under sections 13O, 13OA and 13U of the Income Tax Act 1947.
- New single family office (SFO) fund awards approved on or after 1 August 2026: at least S$20 million of assets under management in designated investments (AUM in DI) at the point of application and at the end of each basis period.
- Investment professionals: 2 qualifying IPs, at least 1 not a family member; an application may be made with 1, and the second must be in place by the end of the basis period of the first year of assessment (YA).
- Local spending: S$200,000, S$500,000 or S$1,000,000 a year, depending on whether year-end AUM in DI is below S$250 million, from S$250 million to below S$2 billion, or S$2 billion and above.
- Capital deployment requirement: the lower of 10% of AUM in DI or S$10 million in three classes of specified investments, first tested at the end of the first full YA after the award starts.
- Sunset: the schemes expire on 31 December 2029, but funds holding an award at that date keep the exemption for the life of the fund if they continue to meet the conditions.
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.
Updated 8 November 2026: rewritten against MAS FDD Circular 05/2026; an earlier version predated the conditions that apply from 1 August 2026.
The section 13O conditions for a family office fund were rewritten by the Monetary Authority of Singapore (MAS) on 31 July 2026, and a variable capital company (VCC) set up by a family now has to be planned against those rules rather than the earlier condition sets. This article sets out every section 13O condition for a Singapore-resident fund company managed by an SFO, flags the VCC and sub-fund questions, and links to our deeper posts on each test. Sources, including the Circular, the MAS FAQs on the schemes for SFOs and the IRAS e-Tax Guide on VCCs, were checked on 8 November 2026.
Which section 13O conditions apply to a family office VCC?
Two layers apply: the general conditions in Annex 6 of the Circular, which every 13O fund must meet, and the SFO economic and banking conditions in Annex 6B. A VCC qualifies as a fund vehicle because the IRAS e-Tax Guide “Tax Framework for Variable Capital Companies” (Fourth Edition, 22 April 2026) treats a VCC as a company for tax purposes and lists section 13O among the incentives it may be considered for.
Under Annex 6 paragraph 1, the fund must be a company incorporated and tax resident in Singapore (“generally” requiring board meetings in Singapore where strategic decisions are made), use a Singapore-based fund administrator, be managed or advised directly throughout each basis period by a fund manager in Singapore, serve only investment purposes, not enjoy another tax incentive at the same time, and meet any further conditions in its letter of award.
The SFO layer turns on footnote 3 of the Circular. An SFO fund is a vehicle whose assets “primarily originated from member(s) of the same 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. The licensing exemption applies from 15 June 2026, and SFOs already operating have until 15 June 2027 to comply and file their notification, according to the MAS licensing FAQs.
What are the section 13O conditions for awards approved from 1 August 2026?
Paragraph 4.2 of the Circular applies revised economic conditions and a banking account condition to new SFO fund awards approved on or after 1 August 2026, “unless otherwise notified by MAS in writing”.
| Condition | What the Circular requires | When it is tested | Deeper analysis |
|---|---|---|---|
| Minimum AUM in DI | S$20 million (13O and 13OA); family operating business investments excluded from this test only | At application and at the end of each basis period | 13O AUM requirement |
| Investment professionals | 2 qualifying IPs employed by the SFO, at least 1 non-family; may apply with 1 | Second IP by the end of the first YA’s basis period, then throughout each basis period | Covered below |
| Local spending | S$200,000 / S$500,000 / S$1,000,000 by AUM tier; donations and grants can fill part of the two upper tiers | Each basis period, tier set by year-end AUM in DI | Local business spending |
| Capital deployment requirement (CDR) | Lower of 10% of AUM in DI or S$10 million in three classes of specified investments, some counted at 2x | End of the first full YA after commencement, then each year end | Capital deployment requirement |
| Banking account | Private banking account with an MAS-licensed financial institution | At application and throughout each basis period | Banking account condition |
Minimum AUM. Paragraph 4.3(b) says the fund “will only be required to report that it meets the minimum AUM in DI threshold at the point of application and at the end of each basis period”. Our AUM post explains why this is a year-end test, not a daily floor.
Investment professionals. Footnote 18 defines a qualifying IP as a portfolio manager, research analyst or trader who is a Singapore tax resident earning more than S$3,500 a month; the MAS FAQs (last updated 14 September 2026) exclude roles “primarily relating to operations, administration, or finance / accounting”. Under footnote 19, an award starting on 1 August 2026 with a 31 December year end needs the second IP by 31 December 2026, “failing which the SFO fund’s award will be revoked with effect from 1 August 2026”.
Local spending. In the two upper tiers, eligible donations and grants to blended finance instruments (grants counted at twice their value) can fill part of the total, but local business spending must still reach S$300,000 or S$500,000. Our spending post works through the arithmetic.
Capital deployment. The three options are investments listed on Approved Exchanges, investments distributed by MAS-licensed financial institutions in Singapore, and non-listed Singapore-incorporated operating companies with substantive presence in Singapore; four categories count at 2x. Our CDR post covers the ratio test.
Banking. MAS “reserves the right to revoke the award if the banking account condition is breached”. The three-month grace period from 1 August 2026 in Annex 6B applies only to existing awards whose letters contained no banking condition, not to new applications.
Does the date of your award change which conditions apply?
Yes. The Circular sorts SFO funds into condition sets by the date the family first made a submission to MAS, and from the YA whose basis period ends on or after 1 August 2026 each set carries revised annual conditions under paragraph 4.6 and Annex 6B paragraph 4.
| Annual condition | Pre-18Apr22 conditions (submission before 18 April 2022) | 18Apr22 conditions (18 April 2022 to 4 July 2023) | 5Jul23 conditions (from 5 July 2023, approved before 1 August 2026) | New awards (approved from 1 August 2026) |
|---|---|---|---|---|
| Minimum AUM in DI | Not applicable | Not applicable | S$20 million at year end | S$20 million at application and year end |
| Qualifying IPs | Not applicable | 2, throughout the basis period | 2, at least 1 non-family | 2, at least 1 non-family |
| Annual spending | Total business spending of S$200,000 | Tiered local spending | Tiered local spending | Tiered local spending |
| CDR | Not applicable | Applies | Applies | Applies |
“Submission” in footnotes 32 to 34 means a preliminary submission, an eligibility form or a formal application. Annex 6B paragraph 3 notes that new awards “can be referred to as ‘awards subject to 5Jul23 conditions'” because the annual conditions are substantively similar. Paragraph 8.2 adds that, from 1 August 2026, the standard terms in Annex 13 apply to new and existing awards and, where an older letter of award differs, supersede it to the extent of any inconsistency.
How does section 13O work for an umbrella VCC and its sub-funds?
The Circular does not say whether an umbrella VCC holds one 13O award or whether conditions are tested sub-fund by sub-fund, so this point needs to be confirmed with MAS before the structure is fixed. We found no reference to umbrella VCCs or sub-funds in the parts we could extract on 8 November 2026 (main body and Annexes 1 to 7A).
Under the IRAS VCC e-Tax Guide, an umbrella VCC “will be recognised as a single entity for income tax purpose, unless stated otherwise” (paragraph 2.1); “the tax residence of a sub-fund follows that of its umbrella VCC” (paragraph 5.3); and “the tax rules are applied at the sub-fund level” when computing income (paragraph 5.9). On incentives, footnote 15 says: “For more information on how VCCs may avail themselves of tax incentives under sections 13O and 13U, please approach MAS.”
On our reading, several planning points follow, none of which is a stated MAS position:
- The residence, administrator and banking conditions sit naturally at umbrella VCC level, where the board, the account and the administration agreement are.
- If MAS tests at umbrella level, a sub-fund holding family operating businesses can sit beside a portfolio sub-fund; that stake does not count towards the S$20 million test (footnote 20) but may count for other conditions if it is a designated investment.
- Where a family wants a master-feeder or special purpose vehicle (SPV) structure, section 13U is built for it (paragraph 2.5), testing the structure “as though the structure is a single standalone fund entity”, at higher thresholds of S$50 million and 3 IPs.
What must the family office file and report each year?
The fund and the SFO report on separate tracks, alongside the VCC’s own corporate and tax filings.
- Annual declaration. The Circular refers throughout to the fund’s “annual declaration regarding the fund’s compliance with the conditions of the scheme” (footnote 10). The Circular text we could read does not state the filing deadline, so take it from the letter of award and Annex 13.
- SFO annual return. Under the licensing exemption FAQs, the first annual return is due “within four months from the end of the SFO’s current financial year”, and MAS states that “there will not be any further extension granted”.
- Change notifications. The MAS FAQs ask SFO funds to notify FO_13OU@mas.gov.sg of changes in beneficial owners, SFO shareholders, directors, key employees and IPs, and new intermediate holding entities.
- Investor penalty declarations. If a resident non-individual investor holds more than 30% (fewer than 10 investors) or 50% (10 or more), the 30/50 rule in Annex 6 imposes a financial penalty unless the investor is a qualifying investor. See our 13O financial penalty post.
For the full sequence of MAS, IRAS and ACRA dates after year end, see our 13O annual compliance calendar. Singapore Secretary Services can keep the VCC’s registers and annual return on that timetable.
What happens if a section 13O condition is missed?
Missing an economic condition costs the exemption for that basis period only; missing a non-economic condition can cost the award. Paragraph 2.4 states that funds failing an economic condition “will not be able to avail themselves of the tax exemption for that basis period”, but regain it in a later basis period in which all economic conditions are met.
Some failures go further. Missing the second IP by the end of the first YA’s basis period revokes the award “with effect from the award commencement date”. A breach of the banking condition allows MAS to revoke the award. MAS “reserves the right to revoke the award permanently” for failure to meet non-economic conditions, “such as failure to provide supporting documents upon request”, or where a serious offence has been committed (Annex 6 paragraph 12). A fund leaving the scheme must give MAS advance notice and may reapply only “on a prospective basis” (paragraphs 10 and 11).
How long will section 13O be available?
The schemes run until 31 December 2029, and paragraph 2.3 states that the Government will review them before then to decide whether they “will be extended and/or refined”. The same paragraph protects existing awards: “All funds which had been awarded tax exemptions … as at 31 December 2029 will continue to enjoy the tax exemption for the life of the fund, provided they continue to fulfil the conditions of the respective schemes in each basis period.” On that wording, approval before the end of 2029 is the milestone that matters.
How should a family sequence a section 13O application through a VCC?
Several conditions bite from the day the award starts, so order matters. A practical sequence is:
- Confirm the SFO meets the licensing exemption conditions and file its notification with MAS within 14 days of starting operations, as the licensing FAQs require.
- Incorporate the VCC, appoint a Singapore-based fund administrator and choose a year end with the IP and CDR deadlines in mind.
- Open the private banking account with an MAS-licensed financial institution before applying, since the condition applies at the point of application.
- Seed the VCC with at least S$20 million of designated investments, excluding family operating business stakes from that count.
- Hire at least one qualifying IP before applying, and a non-family second IP before the end of the first basis period.
- Raise the umbrella and sub-fund question with MAS at the application stage and keep the answer on file.
- Keep a year-end evidence pack (AUM in DI, spending ledger, CDR schedule, bank statements) for the annual declaration and any MAS request.
Frequently asked questions
Is the section 13O minimum AUM a lifetime floor?
No. For new SFO awards the S$20 million test applies at application and at each year end. A year-end shortfall costs that year’s exemption, not the award.
Does a non-SFO 13O fund face the same conditions?
No. Funds managed by licensed fund managers lost the annual minimum AUM condition retroactively from 1 January 2025; awards from that date face a S$5 million entry test, lower spending tiers for the upper bands, and no CDR or private banking condition under Annex 6A.
Do the new conditions apply to an award approved in 2024?
Yes, in revised form. Existing awards move to the annual conditions in Annex 6B paragraph 4 from the YA whose basis period ends on or after 1 August 2026, unless MAS has notified otherwise in writing.
Can a VCC hold both a section 13O award and another incentive?
No. Annex 6 paragraph 1(e) states that a 13O fund “cannot concurrently enjoy other tax incentive schemes”.
Sources
- MAS FDD Circular 05/2026, Tax Incentive Schemes for Funds (31 July 2026)
- MAS, FAQs on the Schemes for Single Family Offices (last updated 14 September 2026)
- MAS, FAQs on Licensing Exemption Framework for Single Family Offices (issued 12 June 2026, updated 31 July 2026)
- IRAS e-Tax Guide, Tax Framework for Variable Capital Companies (Fourth Edition, 22 April 2026)
Raffles Corporate Services helps family offices set up and run section 13O fund vehicles, including umbrella VCCs, alongside VCC incorporation, family office set-up and ongoing compliance. Email hello@rafflescorporateservices.com or Call/SMS/WhatsApp +65 8501 7133, or visit Raffles Corporate Services.
Last reviewed: 8 November 2026. The Editorial Team, Variable Capital Companies Act.
