Naming good reasons for operating a business in HK to open a bank account (Need help!)

[James2122]

I'll be speaking‌ to a tax accountant for the UK and Spain. My posts here were requesting/seeking information‍ from others and their experience to try to save money in the interim period.

Passive note you don't have to respond, I haven't been enlightened by any dialogue so far.⁠

 

[Martin Everson]

As has been indicated your understanding is incorrect⁤ here. Your on borrowed time sadly. Hopefully there is more to your setup that you⁣ have not mentioned that will change this view.

 

[James2122]

Thanks for your input Martin, can you elaborate?⁠

 

[Martin Everson]

You need‌ to mention more on your setup for example where are all directors based? Where is‍ the place of operation of the company?

 

[James2122]

I am the director of UK Limited Company and also HK Ltd Company, I am‌ legally registered for TAX and residency in the UK, I spend less than 180 days‍ a year in Spain per year, as I spend 3 months of the year in⁠ hong kong and the remaining in the UK.

 

[Martin Everson]

Ok so you are a plain UK tax resident or are you a UK resident‌ non-domicile in UK?

If you are a plain UK resident and not a non-domicile then‍ what tax benefit are you expecting to gain by setting up a HK company? The⁠ tax advantages are non-existent due to UK anti-avoidance legislation. If you are the sole director⁤ of the HK company then the place of effective management and control is in UK⁣ and hence the company will be treated as UK resident. So for tax purposes the⁢ HK company becomes transparent and you are personally taxed on both distributed and non-distributed income︀ of the HK company (DTA conditions may apply reducing your ultimate personal tax liability).︁ Unless you have a substantial management, control and substance to the HK company outside the︂ UK its pointless from a tax perspective but maybe useful from a client proximity perspective.︃ You can ask a tax lawyer to provide this to you in writing if it︄ helps.

P.S If you are a UK non-domicile then its a different story.

 

[JustAnotherNomad]

Even with substance in Hong Kong, there can still be tax in the other countries‌ due to permanent establishment. For example, if he spends every winter in the same apartment‍ in Spain working for the Hong Kong company, Spain can declare there to be a⁠ PE. Granted, that’s not very likely in the case of Spain if there are no⁤ Spanish customers and he’s not a Spanish citizen. But in the case of the UK⁣ it’s extremely likely, even with substance and local directors in Hong Kong. Then CFC rules⁢ would apply on top of that.
Not really a situation you’d want to figure out︀ without professional assistance.