On January 8th, 2025, the Hong Kong Companies (Amendment) (No. 2) Bill 2024, which establishes a company re-domiciliation regime allowing non-Hong Kong-incorporated companies to relocate their domicile to Hong Kong, received its first reading in the Legislative Council.
What’s changing soon?
The Bill enables foreign companies to re-domicile in Hong Kong while retaining their existing legal identity as a body corporate.
This ensures business continuity without the need for complex judicial procedures, such as winding up operations in the original domicile and incorporating a new entity in Hong Kong, or undergoing a court-sanctioned scheme of arrangement to become a wholly owned subsidiary of a Hong Kong-incorporated company.
Since the re-domiciliation process does not create a new legal entity, it preserves a company’s assets, intellectual property, contracts, and corporate history.
Scope of the Re-domiciliation Regime
Hong Kong’s proposed inward re-domiciliation regime applies to four types of companies that correspond to structures commonly found in both Hong Kong and overseas jurisdictions:
- Private companies limited by shares
- Public companies limited by shares
- Private unlimited companies with a share capital
- Public unlimited companies with a share capital
To be eligible, the company’s original legal structure must be the same as or substantially similar to the corresponding Hong Kong entity type under the re-domiciliation application.
Once re-domiciled, the company will have the same rights as locally incorporated businesses and must comply with the requirements of the Companies Ordinance (Cap. 622).
Regulatory and Compliance Requirements
To uphold the integrity of the re-domiciliation process, applicants must provide:
- General corporate background information
- Integrity and solvency declarations
- Member and creditor protection details
- A legal opinion confirming that re-domiciliation is permitted under the laws of the original domicile
Additionally, a re-domiciled company must de-register from its original jurisdiction within 120 days of receiving its Hong Kong certificate of re-domiciliation. Evidence of deregistration must be submitted to the Registrar of Companies, and failure to comply will result in the revocation of the re-domiciliation registration.
Additional benefits for international and Belgian companies
Belgium has a quite advantageous bilateral tax agreement with Hong Kong for a very long time now, basically extending the same advantages to Hong Kong structures as to Belgian (or other EU) companies. Under certain conditions, the withholding tax rate on dividends, interest and royalties can be reduced to 0% under the treaty and Belgian resident companies can also benefit from capped tax rates when they receive income through a permanent establishment based in Hong Kong.
A recent (2023) tax reform in Hong Kong also made the local corporate taxation rules more compliant with international standards and got the territory off some lists of “blacklisted” territories, making it basically even more attractive, often combined with the Belgian bilateral treaty as such.
This new upcoming possibility of inward company re-domiciliation will probably offer more interesting possibilities for international business owners and investors.
Keep in touch with Vanbelle Law Boutique for more updates to come soon. A big thanks to Trustconsult Group, our trusted partner in VB Alliance, for introducing this new chapter in Hong Kong tax laws.
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