What Is a Variable Capital Company (VCC)? Singapore's Fund Structure Explained

Singapore's Variable Capital Company (VCC) is a corporate structure designed exclusively for investment funds, governed by the Variable Capital Companies Act 2018 and available since January 2020. A VCC's share capital is always equal to its net asset value (NAV), and it can operate as a single standalone fund or as an umbrella entity housing multiple sub-funds under one roof.

As of March 2025, approximately 1,200 VCCs are registered in Singapore, managed by around 600 Monetary Authority of Singapore (MAS)-regulated financial institutions. The rapid adoption reflects what the industry has recognised since launch: the VCC is one of the most flexible, tax-efficient, and investor-friendly fund structures available in Asia today.

Why Singapore Created the VCC

Before 2020, Singapore fund managers who wanted a corporate fund vehicle had to use foreign structures, typically Irish ICAVs or Luxembourg SICAVs. This was expensive, required overseas legal and administrative infrastructure, and meant economic activity flowed out of Singapore rather than deepening the local ecosystem.

The VCC was designed to change that. By creating a bespoke corporate fund structure that is flexible enough for open-ended and closed-ended strategies alike, compatible with tax treatment familiar to US and European investors, and anchored to a Singapore-based, MAS-regulated fund manager, Singapore signalled its ambition to become Asia's premier fund domicile.

The results speak for themselves. Singapore's asset management industry manages over S$3.4 trillion in total industry AUM, with 75% of that capital sourced from outside the country, more than half from the Asia-Pacific region alone.

How a VCC Is Structured

Standalone or Umbrella

A VCC can take one of two forms:

1. Standalone VCC: A single corporate entity operating as a single fund. Simpler to set up and well-suited to managers launching their first vehicle.
2. Umbrella VCC: A single corporate entity housing multiple sub-funds, each with its own investment mandate, investor base, and asset pool.

The umbrella structure is where the VCC's efficiency advantage is most visible. Despite containing multiple sub-funds, an umbrella VCC operates under a single constitution and a single board of directors. All sub-funds can share service providers including the fund manager, custodian, auditor, and company secretary, reducing operational costs significantly across the structure.

Ring-Fencing of Sub-Funds

A critical protection for investors: the assets and liabilities of each sub-fund are ring-fenced by statute. Creditors of one sub-fund cannot make claims against the assets of another. This statutory segregation provides meaningful investor protection and is a structural advantage over contractual separation approaches used in some other jurisdictions.

Variable Capital

Unlike a conventional Singapore company, a VCC's share capital is always equal to its NAV. This means the VCC can redeem shares and pay dividends freely out of its capital, without satisfying solvency tests or going through formal capital reduction procedures. For a fund that regularly processes investor redemptions, this operational flexibility is significant.

Mandatory MAS-Regulated Manager

A VCC cannot be self-managed. It must appoint a Singapore-based fund management company (FMC) that is either licensed by, registered with, or expressly exempted by MAS. This requirement ensures genuine economic substance remains in Singapore and is central to how MAS positions the VCC as a legitimate, well-governed fund vehicle.

Key Benefits of the VCC Structure

Investor Privacy

A VCC is not required to make its financial statements or register of shareholders publicly available. This level of privacy is greater than that afforded by comparable structures in Luxembourg, where financial statements must be filed with the public register of commerce, and beneficial owner information must be disclosed.

US Tax Compatibility

VCCs can make a US "check-the-box" election, which causes the entity to be treated as a partnership or disregarded entity for US federal income tax purposes. This is highly attractive to US-based taxable investors, as it eliminates the need for complex offshore feeder fund arrangements that would otherwise be required.

Inward Redomiciliation

Overseas corporate funds can transfer their registration to Singapore and become a VCC, preserving their corporate history and track record in the process. Singapore shares this redomiciliation pathway with Ireland and Luxembourg, making it straightforward for established foreign funds to shift their domicile without structural disruption.

Access to Singapore's Tax Treaty Network

As a body corporate, a VCC can apply for a Certificate of Residence (COR) from IRAS, enabling it to access benefits under Singapore's network of over 86 double tax agreements (DTAs). For umbrella VCCs, the COR is issued in the name of the umbrella with the specific sub-fund named on the certificate.

Cost Efficiency at Scale

For managers running multiple strategies, the umbrella VCC delivers meaningful economies of scale. Sharing a single board, single constitution, and single set of service providers across multiple sub-funds means lower per-fund administration costs compared to maintaining separate legal entities for each strategy.

Tax Treatment of VCCs in Singapore

Corporate Income Tax: One Return for the Whole Structure

For income tax purposes, an umbrella VCC is treated as a single corporate entity. This means the umbrella files one set of income tax returns for all its sub-funds, regardless of how many sub-funds it contains.

One important nuance: losses, capital allowances, and donations are quarantined at the sub-fund level. A loss in one sub-fund cannot be used to offset taxable income in another.

Tax Exemptions: Section 13O and Section 13U

The primary tax incentive for Singapore-domiciled funds is income tax exemption on "Specified Income" derived from "Designated Investments." VCCs can access two schemes under the Income Tax Act:

Section 13O (Singapore Resident Fund Scheme)

• Available to Singapore-tax-resident funds managed by Singapore-based FMCs
• Minimum AUM: SGD 5 million in Designated Investments (from 1 January 2025)
• Tiered local business spending requirements apply (see below)

Section 13U (Enhanced-Tier Fund Tax Incentive Scheme)

• Open to all fund types, not restricted to Singapore tax residents
• Minimum AUM: SGD 50 million in Designated Investments (from 1 January 2025)
• Tiered local business spending requirements apply

Under both schemes, qualifying funds pay no Singapore income tax on capital gains, dividends, interest, and other specified income from designated asset classes. Singapore also levies no capital gains tax generally, reinforcing the overall tax efficiency of the structure.

GST Remission

VCCs can benefit from GST remission on qualifying fund expenses, reducing the cost of running the vehicle locally. For GST purposes, however, each sub-fund within an umbrella is treated as a separate taxable person and must independently assess its GST registration obligation and file its own GST returns.

Stamp Duty

Sub-funds within an umbrella VCC are treated as separate persons for stamp duty purposes. Stamp duties are therefore payable on dutiable instruments executed between the umbrella and a sub-fund, or between two sub-funds within the same umbrella.

2025 Regulatory Updates: What Fund Managers Need to Know

Two significant regulatory updates took effect in 2025, raising the bar for VCC governance and tax incentive eligibility.

New AUM Requirements (Effective 1 January 2025)

Prior to 2025, AUM thresholds for Section 13O/13U eligibility were calculated based on the fund's NAV. From 1 January 2025, AUM is measured against the value of Designated Investments recognised as assets in the fund's financial statements. This is a more precise and conservative measure.

The minimum thresholds must be met from day one and maintained throughout the life of the fund:

Scheme	Minimum AUM in Designated Investments
Section 13O	SGD 5 million
Section 13U	SGD 50 million

Tiered Local Business Spending (Effective 1 January 2025)

The previous flat SGD 200,000 local business spending requirement has been replaced with a tiered structure tied to fund size:

AUM in Designated Investments	Minimum Local Business Spending
Less than SGD 250 million	SGD 200,000
SGD 250 million to less than SGD 2 billion	SGD 300,000
SGD 2 billion or more	SGD 500,000

Local business spending includes fees paid to Singapore-based service providers: fund management fees, legal fees, accounting fees, audit fees, and custody fees, among others.

Investment Professional Requirements

For non-Single Family Office (non-SFO) funds seeking 13O or 13U status, MAS now requires the managing FMC to employ at least two Investment Professionals directly involved in the fund's management. This reinforces that VCCs must represent genuine active fund management, not passive holding structures.

Board Composition

At least one director of the VCC must also be a director or qualified representative of its MAS-regulated manager. This aligns governance oversight with day-to-day management responsibility and is consistent with MAS's broader emphasis on substance over form.

AML/CFT Controls

VCCs must appoint an Eligible Financial Institution to conduct AML/CFT checks. MAS expects rigorous oversight of these institutions, timely beneficial ownership reporting, and regular AML/TF risk management training for directors.

Transition Period for Existing VCCs

VCCs granted 13O or 13U awards before 1 January 2025 are not required to comply with the new AUM, local business spending, and Investment Professional requirements until their financial year ending in 2027 (applicable for Year of Assessment 2028).

Closed-End Fund Election

Private equity and venture capital funds can make an irrevocable election to be treated as a "closed-end fund." This election provides two specific reliefs:

1. The minimum AUM requirement is waived from the sixth incentive year onward.
2. The local business spending requirement is waived entirely from the eleventh year onward, with cumulative spending permitted across the first ten years.

How Singapore Compares to Ireland and Luxembourg

For fund managers choosing a domicile, the decision typically comes down to target investor base and distribution strategy. Here is how the three leading jurisdictions compare:

Feature	Singapore (VCC)	Ireland (ICAV)	Luxembourg (SICAV/RAIF)
Primary investor base	Asia-Pacific	Global (EU focus)	Global (EU focus)
Tax on fund income	Exempt (13O/13U)	Exempt	Exempt
Capital gains tax	None	None	None
Public financial disclosure	Not required	Not required (ICAV)	Required (filed publicly)
US "check-the-box" election	Yes	Yes	Yes
Fund manager location	Must be Singapore-based	Must be EU-based	Must be EU/equivalent
Minimum resident directors	1	2	No strict residency rule
Inward redomiciliation	Yes	Yes	Yes
DTA network	86+ agreements	EU access via UCITS	EU access via UCITS/AIFMD

A notable trend has emerged in global fund management: Asian managers use Luxembourg or Irish vehicles to distribute into Europe, while European managers use Singapore VCCs to access Asian capital. The two ecosystems are increasingly complementary, functioning together as a "virtual power jurisdiction" for managers seeking truly global reach.

Who Should Consider a VCC?

The VCC framework supports a wide range of fund strategies and investor types:

• Hedge funds and liquid alternative strategies seeking open-ended redemption flexibility
• Private equity and venture capital funds using the closed-end fund election for long-hold strategies
• Real estate funds leveraging Singapore's DTA network for cross-border asset holding
• Family offices and multi-family offices wanting privacy, structural flexibility, and Singapore domicile
• Foreign fund managers seeking to redomicile an existing overseas fund into Singapore
• US-connected managers or investors who benefit from the "check-the-box" pass-through election

The VCC is not appropriate for businesses that simply want a holding company or operating company structure. It is a regulated fund vehicle requiring a licensed Singapore FMC as its manager and ongoing MAS compliance obligations.

Frequently Asked Questions

What is a Variable Capital Company (VCC) in Singapore?
A Variable Capital Company is a Singapore corporate fund structure governed by the Variable Capital Companies Act 2018. Its share capital always equals its net asset value, it can house multiple sub-funds under a single umbrella, and it must be managed by a MAS-licensed or MAS-registered fund manager.

When was the VCC introduced in Singapore?
The VCC framework was introduced in January 2020. By March 2025, approximately 1,200 VCCs had been incorporated, managed by around 600 regulated financial institutions.

What are the tax exemptions available to VCCs?
VCCs can apply for income tax exemption under Section 13O (minimum SGD 5 million AUM) or Section 13U (minimum SGD 50 million AUM) of the Income Tax Act. These exemptions cover specified income from designated investments, including capital gains, dividends, and interest.

Can a VCC hold multiple sub-funds?
Yes. An umbrella VCC can house any number of sub-funds, each with its own investment mandate and investor base. The assets and liabilities of each sub-fund are ring-fenced by statute from those of every other sub-fund in the same umbrella.

Is a VCC suitable for US investors?
Yes. A VCC can make a US "check-the-box" election to be treated as a pass-through entity for US federal tax purposes. This removes the need for a separate offshore feeder fund structure for US taxable investors.

Can a foreign fund redomicile to Singapore as a VCC?
Yes. Foreign corporate funds can transfer their registration to Singapore and become a VCC without losing their corporate history or track record. This is known as inward redomiciliation.

What changed for VCC tax incentives in 2025?
From 1 January 2025, VCCs must meet minimum AUM thresholds of SGD 5 million (13O) or SGD 50 million (13U) from day one, measured against Designated Investments. Local business spending requirements are now tiered based on fund size. Non-SFO managers must employ at least two Investment Professionals. VCCs awarded incentives before 1 January 2025 have until FY2027 to transition to the new requirements.

Does a VCC need to publish its financial statements?
No. Unlike some Luxembourg fund structures, a VCC is not required to make its financial statements or register of shareholders publicly available, offering a higher degree of investor privacy.

How Harvest Accounting Supports VCC Managers

Running a VCC comes with real accounting and compliance obligations. Each sub-fund files its own GST returns. The umbrella submits a consolidated income tax return. Local business spending must be tracked and documented for tax incentive purposes. AML/CFT requirements demand diligent record-keeping. And MAS governance standards mean fund managers need audit-ready books at all times.

Harvest Accounting works with Singapore fund managers and family offices to keep these obligations running smoothly. As a Xero Platinum Partner and 2025 Xero Partner of the Year in Singapore, we bring cloud-based accounting infrastructure to fund operations, giving managers real-time financial visibility without the administrative burden.

If you are establishing a VCC, managing an existing fund structure, or preparing for the 2025 regulatory transition, we can help.

Get in touch with the Harvest Accounting team to discuss how we support VCC accounting, compliance, and reporting.

The information in this article is general in nature and does not constitute tax, legal, or financial advice. Regulatory requirements are subject to change. Consult a qualified adviser for guidance specific to your fund structure.