The fund domicile question used to have a near-automatic answer. For three decades, the Cayman Islands sat at the centre of cross-border fund formation, and the Segregated Portfolio Company (SPC) became the workhorse vehicle for multi-strategy hedge funds, private equity sleeves and bespoke managed accounts. Singapore’s Variable Capital Company (VCC), launched in January 2020 under the Variable Capital Companies Act, started slowly but has reached a turning point: by early 2025, more than 1,200 VCCs had been registered with ACRA, and managers based in Hong Kong, London and New York are now redomiciling Asia-focused funds onshore.
This guide is for fund sponsors, family offices, asset managers and entrepreneurs comparing the two structures. It explains the legal and commercial differences, when each domicile makes sense, and what the redomiciliation pathway looks like for a Cayman SPC moving to Singapore.
A quick refresher on both structures
The Cayman SPC is a single legal entity with multiple statutorily ring-fenced cells. Each segregated portfolio holds its own assets and liabilities, but all sit under the umbrella of the same SPC. It is registered with the Cayman Islands Registrar of Companies and supervised, where regulated, by the Cayman Islands Monetary Authority (CIMA). Cayman levies no corporate income tax, capital gains tax or withholding tax, and the SPC files no full tax return.
The Singapore VCC is similarly a corporate fund structure that allows multiple sub-funds with statutory segregation of assets and liabilities. It is incorporated under the Variable Capital Companies Act 2018, and where it carries on regulated fund management it falls under MAS oversight. Crucially, a VCC is a Singapore tax resident: it can claim tax treaty benefits and sits inside the wider Singapore tax framework, including the Section 13O and Section 13U fund tax incentives administered by IRAS.
Six factors that move the decision
1. Tax treaty access
This is the headline difference. Cayman has no double-tax treaty network — by design, there is no domestic tax to allocate against. A Cayman SPC investing into India, Indonesia, China or Korea will typically suffer the full statutory withholding tax rate on outbound flows. Singapore has more than 90 comprehensive double-tax agreements, including with most major Asian and European economies. A Singapore VCC, as a tax resident, can claim treaty benefits on dividends, interest and royalties received from portfolio companies. For a fund running a long-only equity strategy in Asia, the difference in net returns can be 100–250 basis points per annum once treaty rates flow through.
For background on how Singapore taxes outbound and inbound payments, see our practical guide to Withholding Tax in Singapore.
2. Tax exemption regimes
Both jurisdictions can deliver effective tax neutrality, but in different ways. Cayman delivers neutrality by having no tax to begin with. Singapore delivers neutrality through its Section 13O (formerly 13R, onshore) and Section 13U (formerly 13X, enhanced tier) regimes, which exempt qualifying investment income earned by approved fund vehicles. Section 13U has no minimum fund-size cap and is the natural fit for institutional-scale VCCs; Section 13O is the cleaner route for smaller, family-office-style structures with at least S$20 million committed.
The mechanics matter because the Singapore exemptions come bundled with substance requirements: a minimum local AUM, a minimum number of investment professionals, a minimum business spend in Singapore, and the appointment of a MAS-licensed or registered fund manager. We compare the two regimes side by side in our piece on Section 13O vs 13U.
3. Substance and the OECD direction of travel
Cayman’s economic substance regime, in force since 2019, requires “relevant entities” carrying on certain activities to demonstrate adequate substance in the islands. For most fund vehicles, the substance burden has been manageable, but the global tide is moving against pure offshore: the OECD’s BEPS 2.0 Pillar Two framework, growing enforcement of beneficial-ownership transparency, and the EU and UK list-management of “non-cooperative” jurisdictions have all slowly raised the friction of Cayman residence with European, Middle Eastern and Asian institutional allocators.
Singapore was an early adopter of BEPS standards and is widely seen as a mainstream onshore domicile. For LPs writing investment-committee memos, ticking “Singapore” is materially easier than defending “Cayman” in 2026.
4. Investor base and capital sources
Despite the regulatory direction, the Cayman SPC is still the path of least resistance for funds raising primarily from US allocators, family offices and tax-exempt US institutions. Decades of case law, sophisticated local service providers and established fund-of-funds plumbing make Cayman frictionless on the US side.
If your LP register is shifting toward Asian sovereign wealth funds, Middle Eastern allocators, European pension funds or a domestic Singapore investor base, the VCC’s onshore narrative becomes a real fundraising asset. The MAS VCC Grant Scheme, which co-funds up to 70% of qualifying setup expenses paid to Singapore service providers (capped at S$150,000 per VCC and three VCCs per manager), further sweetens the cost-of-launch comparison.
5. Structural flexibility
Both vehicles permit segregated cells. Both permit open-ended and closed-ended structures. Both permit issuance and redemption of shares at NAV without the rigidities of standard company law. Where they diverge is on day-to-day operational flexibility. The VCC explicitly allows the use of either Singapore Financial Reporting Standards, IFRS or US GAAP for its financial statements — useful for funds reporting to a global LP base. The VCC also requires a Singapore-resident director who is a director or qualified representative of the fund manager, which embeds governance onshore in a way the SPC does not.
If your structuring needs include a holding company sitting above the fund, our notes on incorporating a Singapore holding company explain how the parent layer fits with a VCC sub-fund stack.
6. Cost of formation and ongoing maintenance
Headline incorporation costs are similar — both fall in the low five figures USD when professional fees, government fees and licensing are added together. Where Singapore can come out ahead is in maintenance: a VCC files audited accounts with ACRA, but only at the umbrella level for shared services and at the sub-fund level for segregated assets. The MAS VCC Grant Scheme can effectively reduce launch cost for first-time managers by 50–70%. Cayman’s annual government fees, audit, AEoI/CRS reporting and registered office fees are typically priced in USD and have ticked up year on year.
When the Cayman SPC is still the right call
Cayman remains the default, and rationally so, when (a) the fund’s LP base is dominated by US allocators that will resist a Singapore vehicle, (b) the strategy is short-cycle and the fund will wind up in three to five years with no ongoing onshore footprint, (c) the manager already has a Cayman fund administrator, audit firm and law firm relationship that they are unwilling to rebuild, or (d) the underlying portfolio is in jurisdictions where a Singapore tax treaty does not deliver any meaningful withholding-tax saving.
When the VCC is the better answer
The VCC tends to win on the merits when the underlying portfolio has a meaningful Asian footprint, when the LP base includes Asian, European or Middle Eastern allocators that prefer onshore vehicles, when the strategy is long-dated and the manager wants to build a permanent regional platform, and when the manager qualifies for Section 13O or 13U and can demonstrate the required substance in Singapore.
Family offices considering the VCC alongside a private investment company should also read our note on setting up a family investment company in Singapore, which sets out where the VCC fits relative to traditional Pte Ltd holding structures.
Redomiciling a Cayman SPC into a Singapore VCC
A Cayman SPC cannot directly “convert” into a VCC, but Singapore’s inward redomiciliation regime under the Companies Act allows a foreign corporate fund to transfer its registration to Singapore, retaining its legal identity, contracts and asset ownership. The mechanics are similar to redomiciling any foreign company: confirm Cayman law permits continuation-out, pass the necessary shareholder resolutions, file the application with ACRA, and complete the corresponding Cayman strike-off once Singapore registration is confirmed. Our redomiciliation guide walks through the process and the documents you will need.
A redomiciled fund can then either operate as a standard Singapore corporate vehicle or apply for re-registration as a VCC where the fund mandate and management structure permit.
Decision framework
A simple rule of thumb works for most managers: count how many of the following apply — Asian portfolio, Asian or European LPs, long-term regional platform, qualification for 13O or 13U, treaty-rate savings worth more than the additional onshore cost, and reputational preference for an onshore domicile. If three or more apply, the VCC is almost certainly the better answer. If fewer than three apply, the Cayman SPC will usually still be the path of least resistance.
How Raffles Corporate Services helps
Picking a fund domicile is rarely a clean technical exercise — it is a structuring decision that has to clear LP investment committees, regulatory questions and tax-residence tests at the same time. Raffles Corporate Services advises on VCC formation, MAS substance requirements, Section 13O and 13U applications, and end-to-end redomiciliation of foreign fund vehicles into Singapore. Speak to our team to scope a structure that matches your LP base and strategy.
For the full text of Singapore’s Variable Capital Companies Act and detailed legal resources, visit Variable Capital Companies Act Singapore.
— The Editorial Team, Raffles Corporate Services