What is a family office and why should it employ a tax lawyer proficient in international taxation?

A "family office" is a private management structure that handles the wealth of one or more high net worth families (HNW families). These structures provide a range of services such as: investment management, tax and estate planning, philanthropic services, and in some cases, management of daily family affairs.

There are two types of family offices: "single-family offices" (SFO), which serve a single family, and "multi-family offices" (MFO), which serve multiple families. They take care of investment management, financial planning, but can also manage travel organization, or even coordinate domestic services.

The main reason why a family office may need the services of a tax lawyer proficient in international taxation is due to the complexity and diversity of the assets managed:

  • Tax Regime Complexity: Family offices often manage portfolios of assets spread across several jurisdictions, each with its own tax laws and rules. Navigating this landscape can be difficult and require specialized expertise.
  • Tax Optimization: A tax lawyer can help structure assets and investments to minimize tax liability while complying with the law. In the context of a family office, this may involve investment strategies, decisions on asset holding, and gift and inheritance strategies.
  • Tax Compliance: Family offices must ensure that they comply with all tax obligations in all jurisdictions where they hold assets. Non-compliance can lead to financial penalties and potentially damage the reputation of the family office and the family.
  • Estate Planning: Family offices often play a key role in planning the transfer of assets to future generations. A tax lawyer can help navigate the complexities of estate planning, including international tax issues.

Given the complexity of the assets managed by family offices, the expertise of a tax lawyer specializing in international taxation is often necessary to ensure optimal tax management while being compliant with the law of different asset location jurisdictions.