Portuguese Taxation of Investments in Hong Kong. Oporto, March 31, 2010

Transcription

1 Portuguese Taxation of Investments in Hong Kong Oporto, March 31, 2010

2 Summary Hong Kong legal environment: main topics Overview on tax aspects: Hong Kong taxation on profits Portuguese taxation on dividends Double Tax Treaties with China Hong Kong Personal Income Tax 2

3 Hong Kong legal environment main topics (i) Special Administrative Region (SAR) of P.R. of China ruled under the formula One Country, two Systems : Sino-British Joint Declaration (1984). Basic Law of Hong Kong SAR issued by the Chinese Congress (1990): separate Constitution for the territory. Hong Kong has its own legal, tax and judicial system. 3

4 Hong Kong legal environment main topics (ii) Direct Foreign Investment: No limits or restrictions to foreign investment, with few exceptions in strategic sectors. Exchange controls: no restrictions or control on direct foreign investment. Trade & capital movements in general free from controls and tariffs 4

5 Hong Kong legal environment main topics (iii) Private limited liability companies and branches are vehicles most commonly used by foreign investors. Main topics on private LLC: Incorporation make take in average from 7 to 10 business days (shelf companies available). No minimum capital requirements. Single shareholder allowed. No bearer shares, but nominee shareholder allowed. Single director allowed, with no nationality or residence requirements (but at least a resident secretary required). 5

6 Overview on Tax Aspects Hong Kong (i) Direct Taxation Profits Tax: pursuant to a Territorial System of Taxation, only profit arising in or derived from Hong Kong is taxable. Tax rate of 16.5% or (15% for non incorporated entities) Exemption on capital gains, interest and dividends (only profit from trade, profession or business is taxed). Tax losses carry forward allowed with no time limit. Tax year: 1st of April to 31st of March of the following year, though different tax period allowed. 6

7 Overview on Tax Aspects Hong Kong (ii) Indirect Taxation No Value Added Tax (VAT) or similar tax. No Stamp Tax on the granting of credit or guarantees. Stamp Tax on transfer of real estate (up to 3.75%), acquisition of shares (0.2%) and equity contributions (0.1% up to HKD 30,000) 7

8 Overview on Tax Aspects Portugal Repatriation of profits Conversely to other European Countries, in general Portugal does not exempt dividends derived from investments outside the EU (or in the PALOPs under more strict conditions): Dividends derived from investments in other countries are subject to Portuguese corporate income tax at a maximum rate of 26.5%. Foreign withholding tax on dividends may be credited against the Portuguese corporate income tax liability, but no credit for underlying income tax. Hong Kong is included in the Portuguese tax blacklist: Portuguese rules on Foreign Controlled Companies ( CFC Rules ). 8

9 DTA Agreements with China Double Taxation Agreements: DTA Portugal-China DTA Hong Kong-China Business Profits State of residence has exclusive taxation rights State of residence has exclusive taxation rights Dividends 1 5% (25% or more) / 1 Interest 1 7% Royalties 1 7% Capital Gains (shares) State of residence has exclusive taxation rights, except if real estate company State of residence has exclusive taxation rights, except if shareholding of 25% or more or real estate company 9

10 Investment Structures Portuguese SGPS Portuguese SGPS EU Company EU Company % TRADER (Hong-Kong) 25% TRADER (Hong-Kong) China 25% CIT Assumption: Business driven structures with adequate functional, material and human structure 10

11 Hong Kong Personal Income Tax Exclusive taxation on income obtained in Hong Kong. Exemption on employment income for work performed abroad of if the employee stays less than 60 days in Hong Kong during the year. Tax rates on employment income: 2% - 17%. Exemption on interest, dividends and capital gains. Tax rate on business or professional income: 15%. 11

12 Gonçalo Bastos Lopes Tel Fax Praça Marquês de Pombal, 2 (e 1, 8.º) Lisboa