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Hong Kong – Spain Double Tax Treaty

Hong Kong – Spain Double Tax Treaty

A Convention for the avoidance of double taxation in Hong Kong and Spain

The aim of the double tax treaty between Hong Kong and Spain is to eliminate or reduce the negative effects of double taxation. This agreement establishes the manner in which each country may tax individuals and/or legal entities that derive income from the country.

Spain and Hong Kong have signed the double taxation agreement (DTA) in 2011. It applies to companies and individuals who are residents of one or both countries. Our company registration representatives in Hong Kong can give you detailed information about how this bilateral treaty influences your business in the city.

The taxes covered by the Hong Kong treaty

The DTA applies to all taxes on income imposed by one country or the other. In case of the Hong Kong Special Administrative Region the taxes covered by the agreement are:

– the profits tax;

– the personal income tax;

– the property tax.

In case of Spain the double taxation agreement covers the following taxes on income: 

– the individual income tax;

– the corporate tax;

– the income tax for non-residents; and

local income taxes.

Hong Kong imposes a simple and low tax regime. If you are a foreign investor from Spain one of our experts can give you additional data about all of the applicable taxes for companies and individuals.

Important provisions for foreign investors

The DTA is very useful for foreign investors from Spain in Hong Kong and vice versa. It allows for a simpler and reduced taxation regime. Cross-border economic activities are taxed at preferential rates:

– the withholding tax on dividends is 0% in some cases or 10%;

– the withholding tax on interest is 0% or 5% under the DTA;

– the withholding tax on royalties is 5% under the DTA.

The 0% rate for dividend payments applies for companies that own at least 25% of the capital of the company that is paying the dividends.

Other types of income like that from immovable property, business profits, income derived from shipping and air transport as well as that from employment or pensions is covered by the treaty. Individuals working in Hong Kong can benefit from a unilateral taxation of their profits made in the city.

For a complete list of the double tax treaties concluded by Hong Kong and their provisions you can contact our company registration consultants in Hong Kong