The following case studies represent real companies in Hong Kong:
Alternatives to Hong Kong
Subsidiary of a Group
Joint Venture Investors
Local Activities in Hong Kong
Buying a Property
Patents and Royalties
Representative Office in China People
Stock Market Investments and FOREX from Hong Kong
E-Commerce Company in Hong Kong
Equity Investments (Holding) for a Company in Hong Kong
Services
Import-Export Company
Alternatives to Hong Kong
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | A company registered in Hong Kong looking to use a 3rd jurisdiction to invoice its customers. The jurisdiction should be similar in benefits to Hong Kong: no tax on profits, good international image (not considered a “tax haven” or offshore). |
Customer Profile: | Companies based in the European Union. |
Supplier Profile: | Suppliers based in Asia. |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owners (UBO) |
Solution: | The best solution is to: 1. Create a company in another jurisdiction that has the same benefits as Hong Kong and can- a. act as an intermediary between Chinese suppliers and European customers b. bill its consulting services directly to European customers. 2. Open a company bank account in the name of the company with a leading bank in this jurisdiction to receive payments from European customers and to settle suppliers. |
Subsidiary of a Group
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective..
Company Activity: | The company is a group headquartered in France. It wishes to optimize the dividend taxation of its subsidiaries outside the European Union. |
Customer Profile: | Customers of the local subsidiaries. |
Supplier Profile: | Suppliers of the local subsidiaries. |
Legal And Tax Expectations: | Tax optimization of dividends distributed by subsidiaries. |
Solution: | The best solution is to: 1. Create a subsidiary company in Hong Kong of the foreign parent company. As dividends are not taxed in Hong Kong, dividends from all non-EU and non-UFA affiliates will be re-grouped into the Hong Kong company. 2. Open a company bank account in the name of the company with HSBC Hong Kong in order to receive funds from subsidiaries and distribute them as dividends to partners. |
Joint Venture Investors
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | Group of investors in a joint venture. |
Customer Profile: | – |
Supplier Profile: | – |
Legal And Tax Expectations: | • Tax optimization; • Discretion concerning the Ultimate Beneficiary Owners (UBO) |
Solution: | The best solution is to: 1. create a company in Hong Kong in which each investor will have shares. In accordance with local regulations, the number of investors must be less than 50 (individuals and / or legal entities), and the company cannot make a public offering. Depending on the company’s activity in Europe, subsidiaries will be created to benefit from Hong Kong’s tax treaty benefits. 2. Open company bank accounts in Hong Kong and Switzerland according to its needs (investment, trading, etc.) 3. Use a nominee so that the identity of Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. |
Local Activities in Hong Kong
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | A company registered in Hong Kong with customers and suppliers located in Hong Kong, and exports products abroad. |
Customer Profile: | Companies located in Hong Kong. |
Supplier Profile: | Companies located in Hong Kong. |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owners (UBO) |
Solution: | The best solution is to 1. create a company in a jurisdiction other than Hong Kong that: a. buys products from Hong Kong suppliers; b. bills directly to Hong Kong customers. In this way, the activity will not be taxed in Hong Kong. 2. Open a company bank account in the name of the Hong Kong Company with HSBC Hong Kong in order to receive payment from customers. 3. To facilitate bank transfers, the bank account of the offshore company will be opened in the same HSBC bank as the Hong Kong company to pay Hong Kong suppliers. |
Buying Property
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | An individual with funds in Hong Kong looking to buy real estate located in France and the US for either renting, or personal use. |
Customer Profile: | Tenants (individuals and companies) |
Supplier Profile: | – |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owners (UBO). |
Solution: | The best solution is to: 1. create a company in Hong Kong that will bring the owner’s funds into subsidiaries in France and the US, in a process called “capitalization of funds”: a. In France, a real-estate investment company, or “SCI”, will be created and structured to optimize the taxation related to the “3% tax” (Article 990D of the French General Tax Code). b. In the US, a subsidiary owned by the Hong Kong company will be created. 2. By the use of a nominee, the identity of the beneficiaries of the assembly will not be indicated in the Hong Kong Company Registers. 3. Open a company bank account with HSBC Hong Kong can receive dividends from subsidiaries and provide funds to subsidiaries. |
Patents and Royalties
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | A company wants to file a patent related to health. |
Customer Profile: | The company wants to license a patent to European and American companies. |
Supplier Profile: | – |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owner (UBO). |
Solution: | The best solution is to: 1. create a company in Hong Kong that can: a. file the patent in several countries in the world (with the support of our law firm located in Hong Kong and specialized in intellectual property law); b. sign concession agreements (drafted by our law firm) with its clients (directly or via a subsidiary located in Belgium). 2. Use a nominee so that the identity of the Ultimate Beneficiary Owner (UBO) will not be indicated in the Hong Kong Company Registers. 3. Open a company bank account with HSBC Hong Kong to receive customer royalty payments. CAUTION: Many tax administrations across the world now apply anti-abuse rules more vigorously and are more vigilant against any lack of “economic substance” in a company that claims tax exempt status. In most cases, “mail box companies” can no longer claim a tax exempt status. Therefore, a holding company in Hong Kong is not adequate for claiming tax exempt status if the company does not have staff or offices (owned or leased) physically in Hong Kong. Please contact us in this case so we can advise you about another jurisdiction. |
Representative Office in Mainland China
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | The company wants to: • present its products and know-how in Shanghai, China in order to eventually create a subsidiary. • oversee production in China and direct delivery to customers in Europe. |
Customer Profile: | The purpose of the office is not to sell but to represent the corporation. Sales will be made from the Hong Kong subsidiary. |
Supplier Profile: | Chinese companies. |
Legal And Tax Expectations: | • Tax optimization on sales • Discretion concerning the Ultimate Beneficiary Owners (UBO). |
Solution: | The best solution is to: 1. Create a company in Hong Kong that will act as an intermediary between Chinese suppliers and European customers. As the activity is carried out outside Hong Kong, the company will not be subject to any taxes in Hong Kong. 2. A representative office of the Hong Kong company will be established in Shanghai with 3 employees (including 1 foreigner with visa). This office will be responsible for representing the Hong Kong company and tracking the proper manufacture and shipments of goods manufactured in China. 3. Use a nominee so that the identity of the Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. 4. Open a company bank account with HSBC Hong Kong in the name of the company that can receive payments from customers and settle with Chinese suppliers. |
Stock Market and FOREX Trading from Hong Kong
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | A group of 5 investors want to buy stock market securities (equities, SICAV / FCP and trackers listed in Paris and London) and forex currencies. |
Customer Profile: | – |
Supplier Profile: | – |
Legal And Tax Expectations: | • Tax optimization on sales • Discretion concerning the Ultimate Beneficiary Owners (UBO). |
Solution: | The best solution is to: 1. Create a company in Hong Kong that will buy the securities and currencies directly through a broker in Switzerland. 2. Open trading accounts with a leading Swiss bank to purchase securities, and a FOREX broker to trade currencies. All operations can be done over the Internet. 3. Use a nominee so that the identity of the Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. |
E-commerce Company in Hong Kong
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | An important company in Mainland China reselling clothes in Europe. |
Customer Profile: | The company does not sell directly to retail consumers but to wholesalers. |
Supplier Profile: | The suppliers are companies based in Mainland China. |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owners (UBO) • Do not show on the invoices issued the name of the suppliers |
Solution: | The best solution is to: 1. create a company in Hong Kong that will act as an intermediary between Chinese suppliers and European customers. As the activity is carried out outside Hong Kong, the company will not be subject to any taxes in Hong Kong. 2. Use of nominee so that the identity of the Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. 3. Open professional bank account in the name of the company with HSBC Hong Kong to receive payments from European customers and to settle Chinese suppliers. 4. ?? |
Holding Equity Investments for a Hong Kong Company
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | Equity investments in companies located in France and Belgium. This is not a “speculative” activity but a medium-to-long term investment in subsidiaries located in France and Belgium. |
Customer Profile: | Billing of headquarters costs (communication, administrative follow-up, etc.) to the company’s subsidiaries and much needed fund lending to the subsidiaries. |
Supplier Profile: | No suppliers. |
Legal And Tax Expectations: | • Tax optimization, especially regarding dividends • Discretion concerning the Ultimate Beneficiary Owners (UBO) |
Solution: | The best solution is to: 1. Create a company in Hong Kong with subsidiaries located in France and Belgium that will benefit from the non-double taxation treaty signed with those countries. The company will not be subject to any taxes in Hong Kong or withholding tax on dividends paid to its beneficiaries, and the dividend taxes will be optimized between Hong Kong and France & Belgium respectively. 2. Use a nominee so that the identity of the Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. 3. Open a company bank account in the name of the company with HSBC Hong Kong in order to receive dividends or funds from a shareholder account. CAUTION: Many tax administrations across the world now apply anti-abuse rules more vigorously and are more vigilant against any lack of “economic substance” in a company that claims tax exempt status. In most cases, “mail box companies” can no longer claim a tax exempt status. Therefore, a holding company in Hong Kong is not adequate for claiming tax exempt status if the company does not have staff or offices (owned or leased) physically in Hong Kong. Please contact us in this case so we can advise you about another jurisdiction. |
Services
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | A consultant in the computer field (creation of Internet sites, programming, referencing, etc.) This consultant is often traveling and his work does not need to be physically present in the same location as his clients. |
Customer Profile: | Small and medium enterprises located in France. |
Supplier Profile: | No direct provider. Clients do pay third party companies by bank transfer for web hosting. |
Legal And Tax Expectations: | • Tax optimization • Discretion concerning the Ultimate Beneficiary Owners (UBO) |
Solution: | The best solution is to: 1. Create a company in Hong Kong that directly invoices its French customers. As the activity is carried out outside Hong Kong, the company will not be subject to any taxes in Hong Kong. 2. Use a nominee so that the identity of Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. 3. Open a company bank account in the name of the company will be opened with HSBC Hong Kong to receive payments from customers and to settle suppliers. |
Import-Export Company
This case has been deliberately simplified in order to explain a solution. Please keep in mind that solutions must be tailored to be effective.
Company Activity: | An important company in mainland China reselling clothing in Europe. |
Customer Profile: | The company does not sell directly to retail consumers but to wholesalers. |
Supplier Profile: | The suppliers are companies based in Mainland China. |
Legal And Tax Expectations: | • Discretion concerning the Ultimate Beneficiary Owners (UBO) • Do not show supplier names on the invoices. |
Solution: | The best solution is to: • Create an in Hong Kong. As the activity is carried out outside Hong Kong, the company will not be subject to any taxes in Hong Kong. • Use a nominee so that the identity of the Ultimate Beneficiary Owners (UBO) will not be indicated in the Hong Kong Company Registers. • No suppliers in invoice? • A professional bank account in the name of the company will be opened with HSBC Hong Kong to receive payments from European customers and to settle Chinese suppliers. |