A digital nomad guide to incorporating a company & opening a bank account in Hong Kong

Hong Kong is a good base to incorporate your business and open a bank account — simpler frameworks and regulation around company taxes, a general ease with dealing with multi-currencies, 0% corporation tax on offshore profits, plus its position in Asia, means for a digital nomad it makes good sense to be the place you setup shop.

Update: I’ve written an updated version of this article at locationindependent.co.uk — the new article goes deeper in-depth about various aspects and deals with some of the issues regarding getting a bank account in Hong Kong.

The banks in Hong Kong include some of the biggest and best brands in the world and all use the latest technology, so e-banking is everywhere (perfect for those who don’t plan to go in any Hong Kong bank branches any time soon).

The regulations around business accounting and auditing are also more lenient — where countries like the UK or Germany may be very strict about what can be classed/taxable as a business expense, you will find that Hong Kong allows for much more to be included, reducing any tax the company may owe, and possibly also reducing the amount of personal income you need to take from the business.

A caveat is that Hong Kong-sourced profits are subject to 16.5% tax, so you will need some care if selling products to Hong Kong customers. At the moment, Hong Kong and mainland China are seen as different, so mainland profits will be tax free, plus Chinese companies, a very fast growing market, will have no issues dealing with a Hong Kong-based business or bank account.

What you need to incorporate in Hong Kong

1. Ability to apply for the company and bank account (in person or through 3rd party)
2. Hong Kong business address
3. Hong Kong-based company secretary
4. Company formation documents correctly filled in (see note 1)
5. Company registration fee (1750 HKD)
6. Business registration certificate fee (2250 HKD) (see note 2)
7. Company kit fee (lots of options but often better to get all the documents you can)
8. Bank opening fee (varies) and opening deposit (sometimes 10,000 HKD)

Note 1: You need to make sure you apply for “off-shore status” to ensure your company is subject to 0% tax rate.

Note 2: The business registration certificate fee is set by the government and changes wildly from year to year, so best to check what it is currently — waiting or hurrying a few weeks may save you some money (2,000 HKD). For 2016/2017, the business registration fee is 0.

Types of company and bank account you can open

You need a residents permit to open a sole trader business and bank account, so as a nomad, you will need to focus on opening a Limited Company. If you don’t have a business partner, don’t worry, you do not need to have multiple people in the company — one person can be both director and unique shareholder.

Setting up shop (or at least getting an office address)

Unless you are actually moving to Hong Kong and setting up an office, chances are you will not have a Hong Kong business address or a Hong Kong-based company secretary.

So for nomads, you need to find an agency that can provide those things for you, and very often, they can setup everything for you, and even save you from visiting the country.

The going rate for an agency to provide an office address and a person acting as a company secretary is around 6,000 HKD per year (£500 / $750).

How I set up my business and bank account in Hong Kong

I used an agency to do everything for me; it was a painless process, and got my bank account and business up and running in 3 weeks. I didn’t even need to visit Hong Kong.

I used CompanySec, which was based on a recommendation from someone who has been using them for 4 years. They are upfront about fees, as well as upfront about subsequent year fees. They are not the cheapest, but offer a good service. Note: This is not financial advice, things change, so always be careful, and seek advice from others if something does not feel or sound right!

Each agency is slightly different as to what they need from you — some ask for a full written business plan and lots of other information. No idea why, it will be up to you if you want to proceed with them if they start asking for lots of things.

Alternative agencies to help incorporate

As well as CompanySec, these other companies have been recommended to help companies get started in HK. I do not have any experiences of dealing with these companies, so their inclusion here is not an endorsement.

http://startitup.hk/rates/
http://www.amplusbs.com
http://www.stringbc.com
http://www.jumpstartoffices.com

The costs of being a Hong Kong company

First year formation and business setup, secretary and address
Approx. 14,000 HKD (£1250 / $1800)
You may also need an opening deposit for your bank account, approx. 10,000 HKD (£900 / $1300)

Subsequent years registration renewal plus secretary and address
Approx. 7,000 HKD (£625 / $900)

After 18 months, and yearly after — accounting and auditing fees (depending on transactions and how much work you do on your accounts!)
Expect 5,000 HKD upwards (£450 / $650)

If you are just setting up, these costs may seem quite scary and large, so you may need to evaluate at what point you make this move, or even if in the long run if it’s worth it.

As a comparison, using an agency to setup a UK company costs around £100 ($130). Of course, in the UK, corporation tax is 20% of profits — so any profit approaching £6,000+ for the year and the costs in Hong Kong start to not seem so bad.

It may be easier to incorporate in Hong Kong if you are already a business in UK, so formation in UK first may be something to contemplate if you are unsure or run in to any issues in Hong Kong.

Paying yourself a wage

Welcome to the Grey Area! If you want to spend the money you are earning (i.e. take a salary) you need to pay personal income tax depending on the country you are living in.

However, the company tax regulations in Hong Kong are a lot more adaptable than a lot of other countries, so once incorporated you may find that more of your day-to-day living expenses can now be classed as a business expense. And that means you need to withdraw less salary, which means you will pay less tax regardless of where you are…

As this is a minefield of legislation, I am not going to dwell on it much here, but Bare Foot Journal gives it a go, but a lot of the info will depend on where you are from.

Other things to note about Hong Kong companies and bank accounts

1. There are a limited number of online payment providers that seem to be compatible with Hong Kong banks or willing to deal with Hong Kong-based companies. Stripe is not compatible. Braintree is now compatible, and PayPal is fine. But double check your systems work. Have a backup by having business accounts in other countries just in case. More Info.
2. There are plenty of other countries that offer 0% tax — Isle of Man / Guernsey / Jersey / Bahamas / Bermuda / Cayman Islands. I haven’t looked in to them. Wanting to be based in SEA and wanting to do more business in mainland China meant that Hong Kong was a perfect choice for me and my projects, it hasn’t been done to avoid tax. See more offshore bank options.
3. Having a Hong Kong company does not give you rights to stay and work in mainland China. You will need to get a visa to work in the mainland, or if you want to be there often, you may want to look at incorporating in China too.

(I’ve written an updated version of this article for 2018 on my blog — go read it.)

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James is a location independent entrepreneur — you can find him online at https://www.locationindependent.co.uk. If you want to know more or have questions, follow me on Twitter.