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

[James2122]

JustAnotherNomad said:
I actually tried to not come off as aggressive, sorry for that.
But you should really talk to a Spanish tax lawyer.
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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]

James2122 said:
Hmmm if I have a UK co=operate in the UK then that company is liable for tax in the UK, same as HK. Its only money I draw as personal earnings/dividend that I have to declare in my country of residency as far as I am aware.
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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.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[James2122]

Martin Everson said:
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
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Thanks for your input Martin, can you elaborate?

 

[Martin Everson]

James2122 said:
Thanks for your input Martin, can you elaborate?
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You need to mention more on your setup for example where are all directors based? Where is the place of operation of the company?

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[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.

Last edited: Oct 12, 2020

 

[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 income 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 the 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 it helps.

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

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[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 out without professional assistance.