Our team specializing in company formation in Hong Kong assists investors interested in structuring a holding company.
Table of Contents
What is a holding company in Hong Kong?
| Quick Facts | |
|---|---|
| Legal entities used | Limited Company |
Incorporation method | Registration with the Companies Registry |
Incorporation time | Can take several working days, less for electronic submissions. |
| Types of assets owned by the holding | Intellectual property, trading stock, real estate, and other assets. |
| Requirement for local bank account (Yes/No) | Yes |
| Residency requirements for the founder(s) | No |
| Advantages | Straightforward registration method, a welcoming business climate for foreign investors, a well-established and recognized business centre. |
| Precautions | Company Law matters regarding the manner in which the holding controls the composition of its subsidiaries, and lawfully appoints/dismisses company directors. Our team can offer guidance as needed. |
| Shareholding structure | The holding company is a parent company that controls one or more subsidiaries which can be based in Hong Kong or abroad. |
| Minimum Capital | No prescribed minimum |
| Taxation | 8.25% on the first HKD 2 million and 16.5% in the remaining assessable profits. |
| Control | Usually foreign |
| Registered agent requirements | When the majority of partners/principal officer are not residents, a resident agent is appointed. |
| Accounting and reporting | Audited annual financial statements are submitted with the IRD. |
| Number of double taxation treaties | Approximately 50 |
A holding company is a type of company created for the purpose of purchasing and owning shares in other companies, which are thus controlled by it. It is not used to engage in economic activities or offer products or services to clients.
What are the main characteristics of Hong Kong holding companies?
As previously mentioned, the holding company is not used for trading, but for holding assets.
The following key traits define this type of company:
- The holding is an ordinarily structured company in Hong Kong, such as an LLC, that is used for non-trading and non-commercial activities;
- The holding can own the majority stock in other companies (based in Hong Kong or in other jurisdictions), effectively controlling these subsidiaries;
- The holding controls other companies through stock ownership, however, it is not involved in their daily management;
- The Hong Kong holding can be structured to meet different requirements, for example, act as a pure holding company, an intermediate holding company, or in other ways suitable to the general business interests.
Why is Hong Kong a suitable location to base a holding company?
Investors who open a holding company in Hong Kong enjoy a low-tax regime. This is a sufficient advantage; however, Hong Kong also offers other benefits to foreign investors, among which we can mention an international business environment open towards foreign investment.
Some of the reasons why entrepreneurs choose to start a company in Hong Kongas a holding include:
- Low corporate income tax starting at 8.25% on the first HKD 2 million of assessable profits;
- A straightforward procedure for company incorporation in Hong Kong;
- No dividend withholding tax;
- Full foreign ownership;
- More than 50 tax agreements have been concluded with various other jurisdictions.
What are the incorporation steps for those opening a holding company in Hong Kong?
The same steps that apply to other types of companies that offer general services or products and are not used solely for owning shares will also apply when opening a company intended specifically for this particular use.
Investors can open a Hong Kong company by following the following steps:
- Choose a business form: this can be a private limited liability company, as it has low incorporation requirements and it is easily incorporated.
- Draw up the incorporation documents: these are the company’s constitutive documents, its Articles of Association; additional documents are to be presented for registration.
- Register: the formal company registration is performed with the Hong Kong Companies Registry; a form will also need to be filled in and submitted, along with a registration fee.
- Commence business: once registered, the company may start its activities; in this case, it will be related to the specific activities of the holding.
Can foreign investors open holding companies in Hong Kong?
Yes, as previously mentioned, Hong Kong allows full foreign ownership for companies incorporated by foreign nationals.
There is no requirement to reside in the HKSAR in order to be able to open a company in Hong Kong.
Investors who cannot be present in the city throughout the entire company formation process can request our assistance and have one of our agents represent their interests via a power of attorney.
Does Hong Kong have a special holding company regime?
No, there is no holding company regime.
A tax exemption does, however, apply to family-owned investment holding companies managed by a single-family office.
Our agents invite you to watch a short video about Hong Kong holding companies:
Are there any special tax requirements for holding companies in Hong Kong?
One important issue to take into consideration when doing business in Hong Kong, through a holding company or through a non-resident legal entity, is that there is a need to apply for a Tax Residence Certificate with the Inland Revenue Department.
Some of the issues that may be relevant for this purpose can include whether or not the company has a local bank account, the fixed place of business (if applicable), the number of employees (if any, in addition to the administrative officers), and whether the Board meetings were held in Hong Kong.
Please remember that the Tax Registration Certificate is relevant for those companies that want to take advantage of the provisions included in the double taxation agreements signed between Hong Kong and other jurisdictions.
How long does it take to open a holding company in Hong Kong?
It can take several working days, usually between 8 and 10, to open a company in Hong Kong.
Please keep in mind that the company registration application can last longer if the applicant does not deliver all the required documents or if these are presented in a non-compliant copy.
The registration timeline can also last longer if there are company name conflicts (i.e., the first proposed company name is not available for use).
Contact us for more information about holding companies and how we can assist during the setup process.