HK company incorporation
2023 HK company incorporation: full guide
In the past, it was possible to open a VAT number (trader company only) in Hong Kong without having to live there.
Today, unless you have a residency permit, you can only open an LLC (limited company). It is possible to travel to Hong Kong and open a company yourself. The problem is that the government requires a residential address and a secretary who has a Hong Kong residency permit.
The pros of opening a company in Hong Kong
Hong Kong is, along with Singapore, the most liberal economy on the planet. Opening a company there is simple, fast and affordable (the government requires only HKD 1,730 for company registration and HKD 250 per year for a business certificate). Anyone can open a company in Hong Kong without having to live there or be a citizen (as long as they use an agency).
The registered capital required for HK company incorporation is less than that required in most countries (normally 10,000 HKD, or about 1,000 euros at current exchange rates).
You can run your business from anywhere in the world (in fact, if you do not live in Hong Kong, you can use an agency that will provide you with a secretary and a registration address for the price of 5-6,000 HKD per year).
Hong Kong is one of the most important banking centers in the world, and once you have registered your company, you will have the option of opening a multi-currency business bank account (with e-banking) in a globally recognized bank such as DBS or Hang Seng Bank. This last point is very important, especially if you plan to operate in several countries.
Hong Kong is the best place to do business with China, and the Closer Economic Partnership Arrangement (CEPA) provides Hong Kong-based companies with exclusive access to the Chinese market. If you are considering doing business with a Chinese partner a company in Hong Kong could make things much easier for you, especially when receiving payments from China.
Hong Kong has a very simple taxation system: starting April 1, 2018, your company will have to pay 8.25% tax on profits up to 2,000,000 HKD in profits, and 16.5% on the portion of profit above 2,000,000 HKD (previously the profit tax was higher, as it was 16.5% on all profits, but the government decided to cut it). Click here to learn more about this point.
If the Director(s) of the company does not reside in Hong Kong, then you can apply for "offshore company" status (note that depending on the case you also have to meet some additional conditions). In this case, your company will only have to pay tax on profits generated in Hong Kong territory (and no tax on profits generated outside).
Be careful because this does not mean that you, as a (full or partial) shareholder of the company, will not have to pay taxes in the country where you reside. In fact, to access your company's earnings you will have to pay yourself a salary or annual dividends. On that amount you will then have to pay a person tax in the country where you reside, Italy for example. To repeat: spending your company money for personal use without declaring it to the IRS is a crime.
Also, note that many countries have laws to determine whether a foreign corporation is actually run by the country where one or more of the company's Directors reside (Controlled foreign corporation (CFC) rules). In this case, the country where the Directors reside may require payment of the difference in the company's profits tax between the country where the Directors reside and Hong Kong. For this reason, it is important to discuss with an accountant in your country of residence before opening a company in Hong Kong.
The Hong Kong government often gives tax reductions to companies. One of the most common situations is that the first 20,000 HKD is deducted from the profit tax. However, this may change as it is decided on an annual basis.
The cons of opening a company in Hong Kong
If you have never done it before, juggling the maze of Hong Kong bureaucracy may not be an easy task. Also, if you want to do everything yourself, you will have to travel to Hong Kong and stay there for a few weeks. The problem can be solved by relying on an agency to prepare all the necessary documents. The price is about 2,000 HKD (3,000 if you want the agency to also help you open the bank account).
If you are planning to live in mainland China your company will not be able to provide you with a visa since, legally, it is not in China. In this case you will need a Chinese company, to open which requires an initial capital of at least 250,000 HKD (however, this is not a deposit since, once you open the company, you will be free to re-invest that capital in your business).