The regulatory status of family offices

Single family offices outside the Financial Institutions Act

The Financial Institutions Act of 15 June 2018 (FinIA), in force since 1 January 2020, subjects portfolio managers and trustees to a licensing requirement with the Swiss Financial Market Supervisory Authority (FINMA) and to ongoing supervision by a supervisory organisation. The previous chapter described that regime in its application to independent asset managers. For family offices the decisive provision is the exemption in Article 2(2)(a) FinIA, which excludes from the scope of the Act persons who manage exclusively assets of persons with whom they have economic or family ties. The Financial Institutions Ordinance (FinIO) defines these ties. Family ties include relatives in direct line, relatives up to the fourth degree in the collateral line, spouses, registered partners and persons living in a de facto partnership, together with their relatives. Legal entities controlled by such persons are included, as are trusts whose beneficiaries are such persons.¹ Economic ties exist between companies of the same group.

The consequence is that a genuine single family office, owned and controlled by the family it serves, does not need a FINMA licence. This follows the policy of the Act, which aims to protect clients who entrust their assets to an independent professional. A family managing its own wealth through its own company is not such a client. The exemption is broad enough to cover the typical structure in which the family office is a company owned by a family holding or by a trust, and in which the assets managed are held by further companies, foundations or trusts belonging to the same family. Difficulties arise at the margins. An office that accepts a few friends of the family, a business partner or the family of a former spouse may lose the exemption, because such persons fall outside the circle defined by the ordinance. Practitioners therefore examine every addition to the client base of a single family office against the ordinance before it is accepted.

Multi family offices as portfolio managers

A multi family office that manages the assets of unrelated families on a commercial basis falls within the definition of a portfolio manager under Article 17(1) FinIA as soon as it has power to dispose of client assets. It then requires a FINMA licence, must be affiliated to a supervisory organisation and becomes subject to the rules of conduct of the Financial Services Act (FinSA). The Schellenberg Wittmer newsletter cited above stated the point without qualification: multi family offices are covered by FinIA and FinSA.² Many multi family offices in Zurich had operated for decades as independent asset managers under the self-regulatory regime for money laundering alone. For them, the transitional period that ended on 31 December 2022 marked a profound change in organisation, because it required a board, a management distinct from it, risk management and compliance functions, minimum capital and professional indemnity cover.

The scale of this licensing exercise can be measured. By 28 February 2025 FINMA had received 1,864 applications from portfolio managers and trustees since January 2020 and had granted 1,532 licences, of which 1,428 went to institutions that had applied during the transitional period. Another 131 applications had been withdrawn. FINMA reported that in more than 40 per cent of cases it had asked the applicants at least five times for amendments, and that about half of the remaining pending cases involved criminal proceedings concerning the institutions or their members.³ FINMA does not publish separate figures for multi family offices, which are licensed as portfolio managers like any other. A considerable number of Zurich offices that describe themselves as multi family offices are among these licensees.

Between the two poles lies a grey zone that occupies much advisory time. A single family office may wish to share its investment team with a second family, or a family may wish to buy services from another family’s office in order to spread costs. Such arrangements typically turn the providing office into a portfolio manager, with all that follows. Some families respond by separating the functions: the family office retains accounting, reporting and administration, which do not require a licence, while discretionary investment decisions for the second family are delegated to a licensed portfolio manager or a bank. Others accept the licence as the price of a larger platform. The choice depends on cost, on the value placed on privacy and on whether the family intends to open the office to further clients in the future.

The anti-money laundering dimension

The Anti-Money Laundering Act (AMLA) follows its own definitions, and its application to family offices is not identical to that of FinIA. A family office that holds or manages assets belonging to others, or that helps to transfer them, performs financial intermediation within the meaning of Article 2(3) AMLA. Whether it is subject to the Act then depends on whether the activity is carried on professionally. Under the Anti-Money Laundering Ordinance, services provided for the benefit of closely related persons, including spouses and relatives up to the third degree, are excluded when the gross profit from those services remains below CHF 50,000 a year. The Bär & Karrer study concluded from this that single family offices controlled by the principal should be assumed to fall under the AMLA whenever the thresholds for professional activity are met.⁴ In practice, therefore, a single family office that escapes FinIA may still have to join a self-regulatory organisation and to maintain the due diligence records required of any financial intermediary.

The practical burden is moderate for an office that serves one well-documented family. It becomes heavier when the office also administers structures for relatives by marriage, for employees of the family business or for philanthropic ventures that receive funds from third parties. Part I of this book deals with the Swiss anti-money laundering regime in detail. For present purposes it suffices to note the asymmetry between the two statutes. FinIA asks whether the client is independent of the manager, while the AMLA asks whether the manager handles assets belonging to another person. A single family office may pass the first test and fail the second.

Legal form and tax treatment of the office

Most Swiss family offices are organised as companies limited by shares or as limited liability companies. The Bär & Karrer study noted that these forms are preferred for their simplicity.⁵ The office company usually charges the family entities for its services, which raises transfer pricing questions whenever the recipients are located abroad. The standard solution is a cost-plus remuneration agreed with the cantonal tax administration in advance ruling, typically a mark-up on the office’s operating costs, which gives the office a modest taxable profit in Switzerland and a predictable tax charge. The same study recommended that fees be agreed with the tax authorities as part of a cost-plus ruling and that services be provided on an arm’s length basis. The chapter on taxation in the canton of Zurich that follows this one discusses corporate taxation and the OECD minimum tax. Family offices rarely reach the revenue threshold of that regime in their own right, although the groups they control often do.

A separate tax issue concerns the principals themselves. When a foreign family moves to Zurich and the family office manages its wealth from the city, the question arises whether foreign companies of the family are effectively managed in Switzerland and therefore taxable there. A family office that takes all investment decisions for a foreign holding company in Zurich can create exactly that risk. Swiss practice addresses it through careful allocation of decision-making powers, board meetings held abroad and documentation that shows where the substantive decisions are made. The problem is familiar in every financial centre that hosts family offices. It is sharpened in Switzerland because the cantons tax the worldwide profit of a company whose place of effective management lies within their territory.

Notes

1. Schellenberg Wittmer, “Neue Pflichten für Trustees und Family Offices”, newsletter January 2020, https://www.swlegal.com/media/filer_public/41/09/4109b4ef-bceb-4b86-bd0a-9a97d3b05fc4/sw_nl_january_2020_german_website.pdf. The newsletter concludes that single family offices “damit regelmässig vom Anwendungsbereich des FINIG und der FINIV ausgeschlossen sein dürften”. ↩
2. Schellenberg Wittmer, “Neue Pflichten für Trustees und Family Offices”, January 2020, URL as above. ↩
3. FINMA, “FINMA provides information on the status of licences issued to portfolio managers and trustees”, press release of 11 March 2025, https://www.finma.ch/en/news/2025/03/20250311-mm-abschluss-uvv/. ↩
4. Bader, Bär and Leu, Single Family Offices in Switzerland (2017), URL as above. The authors quote the exclusion for close associates and conclude that “single family offices controlled by the principal are subject to the AMLA if the above criteria regarding the professional basis are met”. ↩
5. Bader, Bär and Leu, Single Family Offices in Switzerland (2017), URL as above. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.