Do you want to do business in Asia and plan to set up a company in Hong Kong to achieve this? You probably have questions about the type of company that can be established and the activities that can be carried out in this small Asian territory.
Today, we are going to focus on the holding company.
But before getting to the heart of the matter, let’s take a moment to revisit the definition of a holding company. It is a company that holds interests in several companies. In entrepreneurial jargon, a holding company is a parent company. The companies grouped under it are subsidiaries, also known as daughter companies.
Is it possible to establish a holding company in Hong Kong?
Good news: yes, you can set up a holding company in Hong Kong. With this structure, you can legally establish a parent company.
Several options are available to you:
You can set up a holding company in Hong Kong in order to…
You can set up a holding company in Hong Kong to consolidate holdings in subsidiaries located around the world.
You can also launch a subsidiary (daughter company) there…
You can also establish a subsidiary there to consolidate the group's foreign operations.
Every day, entrepreneurs decide to set up a holding company in Hong Kong. This is hardly surprising: Hong Kong does not tax capital gains or dividends. In addition, numerous tax treaties have been signed between the small Asian territory and OECD countries. For example, as a French entrepreneur, double taxation does not apply (to dividends, interest, and royalties).
Is this legal?
Yes, a holding company is completely legal in Hong Kong. However, there are conditions.
For example, the tax authorities take a dim view of holding companies that lack “economic substance.” Therefore, having a holding company in Hong Kong without employees or an office is still risky. If, by setting up a holding company in Hong Kong, you are primarily seeking to benefit from the territory’s tax advantages, you will quickly realize that this is not such a wise decision. Do not hesitate to contact us if you see yourself in these few lines. Indeed, we may be able to recommend another jurisdiction.
A question about setting up a holding company in Hong Kong?
Would you like to set up a holding company structure in Hong Kong? If you have any questions or simply need assistance, please do not hesitate to contact our firm. We have been supporting business owners in Hong Kong for over 20 years: discover our various packages.