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Tax exemption for foreign income in Hong Kong

Zero taxation of ex-territorial income

In many countries around the world, global income is used as the basis for tax assessment. In contrast, Hong Kong — like Singapore — distinguishes between territorial income, taxed as a flat tax at 16.5% (real estate transactions 15%), and ex-territorial income, which is not subject to taxation in Hong Kong.

However, in some cases, the company’s management is required to prove the source of income. This means proving to management that the income was also earned ex-territorially.

We are on-site with our partner tax and law firm and can advise you in German.

Interesting facts about Liechtenstein and general conditions for Company Formations in Liechtenstein

What makes Liechtenstein an ideal location for setting up a company and why company formations in Liechtenstein are advantageous? Liechtenstein is located in Central Europe and became EFTA-member in 1991. Since then, and after some tax and money-laundering scandals, the tax framework has been altered to a modern tax system. Today, a very competitive profit tax rate (CIT – Corporate Income tax) of just 12,5% applies. Since 2017, Liechtenstein asks for an annual minimum tax of Fr. 1,800, offset with any profit taxes due.

Since the adoption of the new tax regime in 2011, Liechtenstein is fully compliant (EU, EFTA, OECD). Liechtenstein does not impose any WHT (Witholding Taxes) on  Dividends, Royalties and Interest  if certain conditions are met. 

In 1923, Liechtenstein entered into a Customs and Duty agreement with Switzerland. Since then, the Swiss Franc is the official currency of the country and Liechtenstein companies will use Swiss VAT numbers. This really unique setup creates ample opportunites as Liechtenstein is considered a part of the Swiss trading zone but also enjoys through its EFTA membership a wide range of EU benefits. 

The labour market is good and the price tag of workforce is comparable to Switzerland. It is not a problem to hire workforce from Germany, Austria or Switzerland (Grenzgänger) but they are not allowed to live in Liechtenstein.

The banking sector is stable with a good choice of local and international banks, so banking is not an issue. 

Our experienced and highly qualified international tax and legal advisors will review your company structure, existing management or mandate contracts. We also offer review of your contractual arrangements at home and abroad. In addition, our tax and accounting department will be pleased to take care of your bookkeeping and tax returns.

Why not working with us – we offer company formations in Liechtenstein at a fixed price of 4.900,00 € net all-in. Enjoy our fast, reliable and competent approach in your native language (German, English, French, Czech, Slovak, Greek, Russian)!

Ideal Tax Framework for Holding Companies, Trusts and Foundations

Before implementing the new tax regime in 2011, Liechtenstein was troubled by EU legislation and international tax laws, and OECD standards. Thus, Liechtenstein introduced a modern tax framework. The new Liechtenstein tax legislation today fulfills all relevant EFTA/EU standards, EU regulations, the OECD- standards, the FATF and the FSF. 

Liechtenstein companies are recognized throughout the European Union as EFTA companies with an extensive Tax Treaty Network. This circumstance is used particularly by holding companies. Liechtenstein nowadays has one of the most favourable Tax Regimes in Central-Europe and competes within the EFTA/EU with Ireland, Luxemburg, Malta and Cyprus as well as Switzerland (neither EU nor EFTA). Like Switzerland, the costs for incorporation and ongoing management are much higher than in the afrorementioned countries.

Why not speaking to us to about the advantages of a holding structure, a structure for asset protection (Foundations, Trusts) or simply a company for an active business.

What you need to consider if relocating to Singapore

The free movement of EU citizens does not apply to Liechtenstein and it’s extremly difficult to obtain a residency there. However, Liechtenstein organizes each year a tombola, whereas a total of 36 visa application will be granted. This raffle takes place each year in Spring and Autumn.

A long-term stay in a country for more than 183 days will usually (and automatically lead)  to an unlimited tax liability for your world income. Some countries go even further and already assign this tax liability if you can permanently use your own apartment (this can even be the room in your parents’ house or a regularly visited hotel) which you can access with your own keys – knows as “Schlüsselgewalt” in German speaking countries. This rule establishes or maintains an unlimited Tax liability for your world income. If this subject is of interest, you may find out more on our dedicated website for Taxation.

The often cited and in general used “183-Days-Rule” is not entirely correct. It can be only used to a limited extend as few countries (Germany) deem a personal tax liability if one spends in total more than 183 days within the country in two consecutive years, spanning two tax periods.

One can therefore only advise that people interested in relocating their place of residence not to rely on start-up agencies and other jokers – the pitfalls are simply too great and sound advice is required. A few advisors (specialized lawyers, accountants) study tax law for years, others do a weekend seminar or attend the Google University – where do you feel better off?

It’s amazing what’s on offer on the internet. Believe us – there is no point in having no tax residency/residence anywhere. If in doubt, you never gave up your original tax liability (in your country of birth) or you are automatically subject to tax through your passport. 

If you have plans for company formations in Liechtenstein, it make sense to speak about your relocation in detail. 

TOP Jurisdiction for EFTA-Residence in Central-Europe

As mentioned before, there’s no easy path to a personal residendy in Liechtenstein. However, once obtained, Liechtenstein offers ideal conditions for a tax residence. To obtain a tax residence, one need to stay more than 183 days in Liechtenstein. With close links to other European countries, good flight connections and travel times of roughly two hours into the center of Europe, is this an ideal place to conduct business of any kind.

Of course, you are not allowed to stay in any other country for more than 183 days which would trigger an unlimited tax liability there. This concept is therefore ideal for everyone who can live and work flexibly (e.g. digital nomads).

If you come to us, you can rely on well-founded and legally sound advice. Together we will find your ideal life concept.

To receive a detailed offer or placing an order, please fill out the form down below for Company Formations and we will get back to you shortly!


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