Hong Kong – The Art of Taking Money Out

[Overtrade]

My question may be a bit naive, but what is the best way in Hong‌ Kong to withdraw money from a company – the classic way as a dividend, or‍ as “due from director / loan to director”?

How do these loans work? Can you⁠ repay them in the year 2152?

From a tax perspective, as I understand it, it⁤ comes out the same since they are not considered a company expense?

 

[daniels27]

Of course dividends would be the best choice.

Director loans are prohibited in most countries‌ and limited or chargable in many more. I personally would generally abstain from any such‍ agreements. (Note that lending money from the director or shareholder to the company generally is⁠ not a problem as long as it is done without interest or with interests not⁤ higher than the percentage alloed by the government.)

For Hong Kong, check Cap. 622 Companies⁣ Ordinance: "Company must not make loan etc. to director or body corporate controlled by director"⁢
https://www.elegislation.gov.hk/hk/cap622?xpid=ID_1438403545968_003

 

[Sols]

Unless you have a strong reason otherwise, stick to dividends. They create the cleanest source‌ of wealth for when you take your money and want to use them for something.‍