The agreement on double taxation and the prevention of fiscal evasion was signed by Hong Kong and Ireland on 22 June 2010; it had come into effect on 10 February 2011 and it enforced in Hong Kong from 1 April 2012. The Hong Kong – Ireland double taxation agreement (DTA) offers advantageous tax regimes for both countries.
Taxes covered under the Hong Kong – Ireland agreement
When opening a company in Hong Kong, you should know that the agreement covers the following taxes in Hong Kong Special Administrative Region:
• profit tax;
• salaries tax;
• property tax.
The following taxes will be covered by the agreement in the case of Ireland:
• income tax;
• income levy;
• corporation tax;
• capital gains tax.
Provisions of the Hong Kong – Ireland DTA
The agreement offers provisions for companies in Hong Kong and Ireland, which are related to the following: permanent establishment of a business, income from immovable property, business profits, shipping/air transport, taxes on dividends, interest, royalties and capital gains.
• Interest withholding tax will not exceed 10% of the gross amount of the interest; if it arises in a contracting state (Hong Kong) and is paid to a resident of the other state (Ireland), it may be taxed in the other state; interest can also be taxed in the country where it arises, if the beneficial owner of the interest is a resident of the other contracting state.
• Royalties arising in Hong Kong, that have to be paid to a resident of Ireland can be taxed in Ireland; royalties can also be subjected to tax where they arise (Hong Kong), only if the owner of the royalties is a resident in the other contracting country (Ireland). In this latter situation, the withholding tax on royalties will not exceed 3% of the gross amount of the royalties. Our consultants in company formation can provide further details on the taxes imposed by the new Hong Kong – Ireland DTA.
If you want to open a company in Hong Kong you should know that the furnishing of services are also included in the definition of a permanent establishment, even if the company it is represented in Hong Kong only by the employees. If the activity (including consultancy services) continues for more than 183 days in a year, according to the new DTA, it is considered to be a permanent establishement.
If you need information about company registration in Hong Kong or further presentation on the Hong Kong – Ireland double taxation agreement, please contact our specialists in company formation.