Advantages to Having an Offshore Company in Hong Kong
- It’s the Gateway to Asia: Hong Kong’s central location provides close access to the vast and growing markets of mainland China and Southeast Asia.
- The Simple Tax System: The low and territorial tax system is significantly efficient and straightforward.
- Doing Business is Easy: Hong Kong offers a well-regulated and stable environment, consistently placing among the top 10 places to do business according to the World Bank.
- International Financial Hub: Gain access to a wide range of banking and financial services designed to cater to international businesses.
- Second Largest French Hub in Asia: With over 25,000 French citizens, Hong Kong boasts the fastest growing French expat community at 5% annually.
A Note on Profits Tax
France operates a territorial tax system for corporations but taxes individuals on worldwide income. French corporations owning >50% of a Hong Kong subsidiary may trigger CFC rules, making 100% of undistributed profits subject to 25% French corporate tax. However, when Hong Kong subsidiaries actually distribute dividends, French corporations benefit from 95% participation exemption where only 5% of dividends is taxable.
Individuals owning ≥10% of Hong Kong companies face CFC rules on undistributed profits at personal tax rates of up to 66.2%, but when dividends are actually received, they’re taxed at 30% flat rate or progressive rates.
Corporate CFC tax = 25% × 100% of undistributed profits
Corporate dividend tax = 25% × 5% of actual dividends = 1.25% effective rate
Individual dividend tax = 30% (or progressive rate) × 100% of actual dividends
Meanwhile, Hong Kong only taxes profits generated within the territory at a rate of 8.25% on assessable profits of the first HK$2,000,000, and 16.5% on any remaining assessable profits over the first HK$2,000,000.
The France-Hong Kong Double Tax Treaty provides exemptions from CFC rules for companies with genuine commercial substance, protecting corporate and individual-owned businesses from being taxed by both sides.
| Aspect | Hong Kong | France |
| Corporate Tax Base | Profits arising in or derived from Hong Kong | Profits arising in or derived from France |
| Corporate Tax Rates | 8.25% on first HKD 2 million of profits, 16.5% on profits above HKD 2 million | 25% standard, 15% for small companies on first €42,500 of profits |
| Territorial Taxation | Yes, only profits generated in Hong Kong are taxed | Yes, only profits generated in France are taxed |
Required Information to Incorporate
An Appropriate Company Name
Applicants must select a unique English and/or Chinese name for their company to register into the Companies Registry. To assist, The Companies Registry offers an online search for availability on their website.
Directors and Shareholders ID and Address Proof
Applicants must submit the Articles of Association detailing the company’s directors and shareholders, complete with passport identification and address proof. Unlike in France where you must hire legal assistance to draft it, Hong Kong offers templates that streamline the process.
Registered Office Address
Every Hong Kong company must have a registered office address in Hong Kong. Virtual office services are commonly used by companies with foreign owners, and often come packaged with company secretarial and annual return services.
Capital Requirements
Like France, Hong Kong has no minimum share capital requirements for private limited companies, making it highly accessible and cost-effective to start a business in the city.
Incorporation Procedures
Hong Kong’s incorporation process is quick, typically taking between 1-3 business days, and can be completed remotely, forgoing the need for applicants to travel to Hong Kong. Documents can be submitted online on the Company Registry’s website or by courier.
Documents to be Submitted
Applicants need to fill in the Form NNC1 (application for incorporation) and the company’s Articles of Association along with passport information and address proof of the directors and shareholders for KYC compliance. Templates for the article of association are available on the Hong Kong government’s website.
Parent companies may also need to provide certified copies of their parent company’s incorporation documents to establish their offshore company in Hong Kong.
Companies Registry Submission and Approval
On submission, the Companies Registry will review the application. If the documents are compliant, they will then issue a Certificate of Incorporation.
Business Registration Certificate
Following incorporation, a Business Registration Certificate is automatically issued by the Inland Revenue Department, allowing the offshore company to begin conducting business.
Appointing a Company Secretary
Unlike in France, Hong Kong mandates a company secretary, who must be a Hong Kong resident or a registered corporate service provider, but cannot also be a director. This company secretary will be the liaison between the company and the government, forwarding any government correspondence to the parent company or owner anywhere in the world.
Minimum Cost to Incorporate
Hong Kong in general has a higher bare minimum cost to incorporate compared to France. The comparison however is oversimplified, as it leaves out costs unique to either jurisdiction, such as legal assistance fees for drafting the articles of association in France, or the mandatory company secretary fees in Hong Kong.
| Hong Kong ($ USD) | France ($ USD) | |
| Business Registration Fee | $199 (1-year) | $100 |
| Legal Journal Publication | – | $165 |
| Legal Assistance | – | $330 |
| Company Registration Fee | $283 | – |
| Company Secretary Service | $260 (1-year) | – |
| Registered Address | $130 | – |
| Total | $872 (First year) | $595 |
Renewal rates listed here only include the Annual Return fee, as the fees of services such as accounting, legal and office address can have a large variance.
| Hong Kong (USD) | France (USD) | |
| Renewal Fee | $283 (Annual Return NAR1) | $50 (Annual Accounts Filing) |
Note that the values listed here may be outdated, so be sure to check with an incorporation service for the latest figures.
The costs to incorporate a new company are higher in Hong Kong, but is compensated for with a straightforward and predictable process that minimises headaches year after year.
Opening a Business Bank Account
Opening a corporate bank account in Hong Kong will require the applicant company to submit incorporation documents, a proof of business address, identification of directors and shareholders, and details about their nature of the business when opening a bank account.
The bank will also implement stringent Know Your Customer (KYC) and anti-money laundering checks to ensure new businesses are in compliance with international standards, and may ask for a detailed business plan, details about the source of funds and ultimate beneficial owners for newly incorporated offshore companies. These measures can take traditional banks a minimum of two weeks to open an account.
However, with the rise of digital banks also comes fully digital onboarding procedures, including video call interviews, to save applicants in remote places the time and effort to open an account. Digital banks in Hong Kong can also significantly cut down the time needed to ready an account to 1-3 business days, and could serve as a quick alternative for new offshore companies
Annual Returns
Similar to France, every Hong Kong company must file an Annual Return with the Companies Registry, including audited financial statements and profits tax returns to the Inland Revenue Department. Company secretarial services will often also offer accounting services and referrals for auditors, saving foreign owners the hassle of finding help in this regard.
Conclusion
Establishing an offshore company in Hong Kong offers a compelling strategic advantage for expanding into the Asian market. Hong Kong’s business-friendly environment, straightforward incorporation, and attractive tax rates, provides a solid platform for international growth. If you have more questions not answered here, drop us a message, and help you decide if starting an offshore company in Hong Kong is right for you.
