Hong Kong

Territoriality, residence, salaries tax and two-tiered standard rate, personal assessment, profits tax at 8.25/16.5%, FSIE, Pillar Two, stamp duties, no VAT and no estate duty, France–Hong Kong agreement.

1 analysisCountry guide available

TAX FACTSHEET · 2026-10-05

In this factsheet

Personal and business taxation in Hong Kong

Documentary position as at 5 October 2026. The reference points below distinguish the calendar year from the Hong Kong year of assessment (year of assessment, “YA”), which runs from 1 April to 31 March: YA 2025/26 covers the period from 1 April 2025 to 31 March 2026. Amounts are expressed in Hong Kong dollars (HK$) unless stated otherwise.

1. Year of assessment, taxpayers and the territoriality principle

1. Hong Kong direct taxation rests on the Inland Revenue Ordinance (IRO, Cap. 112), the consolidated version consulted being dated 22 May 2026. Section 2 defines the year of assessment as the period of twelve months commencing on 1 April in each year, and the “year preceding a year of assessment” as the period of twelve months ending on the 31 March preceding it. A rate, an allowance or a tax reduction must therefore always be linked to a specific YA. S01

2. The IRO establishes three separate taxes: property tax on income from land and buildings (Part 2), salaries tax on employment income and pensions (Part 3) and profits tax on business profits (Part 4). According to the tax authority (Inland Revenue Department, “IRD”), personal assessment is not an additional tax but a relief mechanism. S01 S14

3. The system is territorial. The IRD states that only income and profits sourced in Hong Kong are taxed and that the foreign-sourced income of a resident is, in most cases, not taxed in Hong Kong. The charging provisions confirm this: salaries tax applies to income “arising in or derived from Hong Kong” (section 8) and profits tax to profits from the same source derived from a business carried on in Hong Kong (section 14). S01 S33

4. For profits tax, the IRD stresses that no distinction is made between residents and non-residents: a resident may earn profits abroad without being taxed, and a non-resident may be taxed on profits arising in Hong Kong. The preliminary question is therefore not one of residence, but one of the source of the income and, for profits tax, of the carrying on of a business in Hong Kong. S18

5. The other levies fall under separate legislation, in particular the Estate Duty Ordinance (Cap. 111), the Stamp Duty Ordinance (Cap. 117) and the Hotel Accommodation Tax Ordinance (Cap. 348), administered by the IRD, as well as the Rating Ordinance (Cap. 116) for property “rates”. Since 2025, Part 4AA of the IRO has governed the Pillar Two top-up taxes. S01 S04 S27

2. Individual residence, arrival and departure

6. The IRO contains no general definition of “non-resident” in its interpretation provisions in section 2(1). The IRD specifies that non-resident status is primarily a question of fact and that, according to its established administrative practice, an individual is non-resident if he or she has neither a home nor a place of habitual abode in Hong Kong. Any person rendering services in Hong Kong under an employment or a service contract may nevertheless be taxable there, whether resident or not. S10

7. Residence therefore comes into play only in specific cases. For personal assessment, section 41 requires the individual to be “ordinarily resident” in Hong Kong or a “temporary resident”. The latter is defined as a person who stays in Hong Kong for more than 180 days during the year of assessment concerned, or for more than 300 days in two consecutive years of assessment, one of which is the year concerned. S01

8. The IRD states that being ordinarily resident in Hong Kong means habitually living there, apart from temporary or occasional absences, as an ordinary member of the community. It takes into account objective factors: length and frequency of stays, permanent accommodation in Hong Kong, a residence owned abroad, occupation and the place of residence of the family. Merely holding a Hong Kong identity card is not sufficient. S15

9. For treaty purposes, the IRD issues a certificate of residence (Certificate of Resident Status) to an individual who ordinarily resides in Hong Kong or stays there for more than 180 days during a year of assessment, or for more than 300 days in two consecutive years including the year concerned. Companies, partnerships, trusts and bodies of persons incorporated or constituted in Hong Kong, or incorporated or constituted elsewhere but managed or controlled in Hong Kong, as well as re-domiciled companies, may also obtain one. The IRD points out that the issue of the certificate does not guarantee the granting of treaty benefits, which is a matter for the other State. S41

10. On arrival, an employer who commences to employ in Hong Kong a person likely to be chargeable to salaries tax must notify it within three months (section 52(4)). No inbound expatriate regime has been identified in the legislation consulted; reliefs rest on territoriality, personal allowances and the rules on the source of employment. S01

11. On departure, any person chargeable to salaries tax, profits tax or tax under personal assessment who is about to leave Hong Kong for more than one month must notify the administration not later than one month before the expected date (section 51(7)). The employer must, within the same time limit, give notice of the employee’s departure (section 52(6)) and, where it ceases or is about to cease to employ the employee in Hong Kong, withhold any payment to him or her for one month from that notice, unless the administration consents in writing (section 52(7)). These obligations do not, in principle, apply to persons required to leave Hong Kong frequently for their work. S01 S16

12. In practice, the employer files form IR56G and the IRD issues a letter of release once the tax has been paid; if no notification is received in time, an estimated assessment may be raised. No exit tax on individuals’ unrealised gains has been identified in the IRO consulted, this finding being limited to the legislation consulted. S01 S17 S44

3. Salaries tax: tax base and source of employment

13. Section 8(1) charges salaries tax, for each year of assessment, on the income of every person derived from Hong Kong from any office or employment of profit, and from any pension. Chargeable income includes, in particular, salaries, director’s fees, commissions, bonuses, leave pay and end-of-contract payments, benefits in kind and tax paid by the employer. S01 S12

14. The location of the employment is decisive. In its Departmental Interpretation and Practice Notes (“DIPN”) No. 10, the IRD recalls the Goepfert decision of the High Court (1987): the source of the income, that is the employment, must be identified starting from the contract of employment, the administration being able to look beyond appearances. If the employment is located in Hong Kong, all income derived from it falls within section 8(1), wherever the duties are performed, subject to the exclusions discussed below. S11

15. The IRD generally accepts the existence of a non-Hong Kong employment where the contract was negotiated, entered into and is enforceable outside Hong Kong, with an employer resident outside Hong Kong, and the remuneration is paid outside Hong Kong. The income from such an employment is then taxable only under section 8(1A)(a), in respect of services actually rendered in Hong Kong, which leads to an apportionment of the income, in principle on a time basis. S01 S11

16. Section 8(1A)(b) excludes the income of a person who renders outside Hong Kong all the services in connection with his or her employment, except public officers and crew members. In assessing this condition, section 8(1B) disregards services rendered in Hong Kong during visits not exceeding a total of 60 days in the basis period. The IRD infers from this that an employee holding a Hong Kong employment who is posted abroad is exempt if he or she renders no more than 60 days of services in Hong Kong, but is taxed on his or her entire income for the year beyond that. S01 S11

17. Section 8(1A)(c) also excludes income derived from services rendered in a territory outside Hong Kong where that income is chargeable there to tax of substantially the same nature and the person concerned proves that he or she has paid it. Since the 2018 amendment, this exclusion does not apply to services rendered in a territory linked to Hong Kong by an agreement providing for a tax credit (section 8(1C)): the foreign tax is then credited, under the conditions of section 50, instead of the income being excluded. S01

18. Where the employer provides housing, the taxable rental value is in principle equal to 10% of the income derived from that employer, after deduction of outgoings and expenses. Share awards and gains from options obtained by reason of an employment are also reportable. S12

4. Salaries tax: scale, standard rate and allowances

19. Section 13 provides that salaries tax is computed at the progressive rates in Schedule 2 on net chargeable income, that is after deductions and personal allowances. The amount so obtained may not, however, exceed the amount that would result from applying the standard rate to net income before personal allowances. The IRD and the GovHK public portal summarise this rule: the tax is the lower of the two amounts. S01 S06 S07

20. The progressive scale is laid down in Schedule 2 to the IRO for YA 2018/19 and subsequent years; the IRD reproduces it for YA 2024/25 and subsequent years “until amended”. It therefore applies to YA 2025/26 (income from 1 April 2025 to 31 March 2026) as well as to YA 2026/27. S01 S06

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Net chargeable income band (YA 2024/25 onwards)	Marginal rate	Sources
First HK$50,000	2%	S01 S06
Next HK$50,000	6%	S01 S06
Next HK$50,000	10%	S01 S06
Next HK$50,000	14%	S01 S06
Above HK$200,000	17%	S01 S06

21. The standard rate, laid down in Schedule 1, was split into two tiers from YA 2024/25 by Ordinance No. 10 of 2024. For salaries tax, provisional salaries tax and tax charged under personal assessment, it is 15% on the first HK$5,000,000 of net income and 16% above that. For other taxes, including property tax, it remains 15%. S01 S06

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Two-tiered standard rate (YA 2024/25 onwards)	Rate	Sources
First HK$5,000,000 of net income (salaries tax and personal assessment)	15%	S01 S06
Portion of net income exceeding HK$5,000,000	16%	S01 S06

22. Personal allowances are laid down in Schedule 4. For YA 2023/24 to 2025/26, the basic allowance is HK$132,000, the married person’s allowance HK$264,000 and the child allowance HK$130,000. Ordinance No. 2 of 2026, published on 22 May 2026, increased these amounts from YA 2026/27, as summarised in the table below. S01 S06 S08

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Allowance (Schedule 4)	YA 2025/26	YA 2026/27 onwards	Sources
Basic allowance	HK$132,000	HK$145,000	S01 S06
Married person’s allowance	HK$264,000	HK$290,000	S01 S06
Child allowance (1st to 9th child)	HK$130,000	HK$140,000	S01 S06
Single parent allowance	HK$132,000	HK$145,000	S01 S06
Dependent parent or grandparent aged 60 or over	HK$50,000	HK$55,000	S01 S06

23. Deductions are capped. For YA 2025/26, the IRD table sets in particular at HK$18,000 mandatory retirement contributions (MPF), at HK$100,000 each home loan interest on the principal residence and domestic rents, increased by HK$20,000 in certain cases, and at HK$100,000 self-education expenses; approved charitable donations are deductible up to 35% of income. The cap on elderly residential care expenses rises to HK$110,000 from YA 2026/27. S06 S08

24. Section 100 and Schedule 43 also provide for a one-off tax reduction. For YA 2025/26, salaries tax, profits tax and tax charged under personal assessment are reduced by 100%, subject to a ceiling of HK$3,000 per case; for a married couple assessed jointly, the ceiling applies to the couple. The reduction applies neither to property tax nor to provisional tax, and the legislation was passed on 13 May 2026 and published on 22 May 2026. S01 S08

25. The Policy Address of 16 September 2026 proposes to increase the child allowance from HK$140,000 to HK$160,000 for the second and each subsequent child born on or after that date, with effect from YA 2026/27. The IRD specifies that this measure requires a legislative amendment and that its details may change; it is therefore not in force at the date of this factsheet. S09

5. Personal assessment, joint assessment and non-residents

26. Spouses who both derive employment income are taxed separately for salaries tax. Section 10 allows them to elect for joint assessment where this reduces the overall tax burden, in particular if the income of one of them is lower than his or her allowances. The election is annual and requires both returns to be signed. S01 S13

27. Personal assessment (Part 7) allows an eligible individual to aggregate his or her net income from property, employment income and business profits (section 42), and then to apply the progressive scale to them subject to the standard-rate ceiling (section 43(1A)), with deduction of interest on loans financing a let property, business losses and personal allowances. Property tax, salaries tax and profits tax already paid are set off against the tax so computed, any excess being refundable (section 43(2) and (3)). S01 S14

28. The election is open to individuals aged at least 18, or younger if both their parents are deceased, who are ordinarily resident or temporary residents in Hong Kong. It is made in writing not later than two years after the end of the year of assessment concerned or one month after an assessment included in the total income has become final, whichever is the later, unless the administration allows further time; it may be withdrawn within six months of the assessment made or within such other period as the administration considers reasonable. Booklet PAM 37 mentions, instead of the one-month period, a period of two months after the notice of assessment; the text of section 41(3) is followed here. The IRD specifies that a person whose only income is chargeable to salaries tax derives no benefit from the election. S01 S14

29. The example published by the IRD for YA 2025/26 illustrates the benefit of the election: for a monthly rent of HK$40,000, property tax amounts to HK$57,600, whereas tax under personal assessment, after deduction of HK$42,000 of loan interest, the basic allowance and the HK$3,000 reduction, comes to HK$14,700. S14

30. A non-resident who renders services in Hong Kong is subject to salaries tax under the same source rules. For non-resident entertainers and sportspersons, section 20B makes the tax chargeable in the name of the person in Hong Kong who pays the sums, that person being required to deduct the necessary amount. Not being eligible for personal assessment, a non-resident owner of a property in Hong Kong remains subject to property tax at the standard rate. S01 S10 S15

6. Investment income, capital gains and levies on outbound payments

31. The dividends, interest and capital gains of an individual not carrying on a business fall under none of the three taxes of the IRO, his or her income from property remaining subject to property tax. A Hong Kong public portal (Hong Kong Talent Engage) presents the system as having no sales tax, no VAT, no tax on capital gains or dividends, no estate duty and no withholding tax on dividends and interest. This promotional presentation has no normative value; it is consistent with the charging provisions consulted. S01 S25

32. For profits tax, section 26 excludes from the assessable profits of another person dividends paid by a corporation itself chargeable to profits tax. The IRD also mentions the exemption of interest on deposits placed in Hong Kong with an authorized institution, except where received by a financial institution, as well as various exclusions concerning government securities and certain debt instruments. S01 S18

33. Section 14 excludes from profits tax profits arising from the sale of capital assets. The boundary with trading profit results from an analysis of the badges of trade: frequency of transactions, length of ownership and percentage held, reasons for the acquisition and the sale. The speculative resale of a dwelling is treated as a taxable trade. S01 S18 S22

34. For disposals of equity interests sourced in Hong Kong, the 2023 ordinance created an optional tax certainty regime (Tax Certainty Enhancement Scheme, Part 6F and Schedule 17K). The gains of an investor entity are treated as non-taxable capital gains if it held at least 15% of the shares of the company for the 24 months preceding the disposal. The regime covers disposals made on or after 1 January 2024, accruing in a YA beginning on or after 1 April 2023, and excludes in particular shares held as trading stock and certain unlisted shares in property companies. S01 S22

35. There is no general withholding tax on outbound payments, but certain sums paid to non-residents are deemed to be sourced in Hong Kong. Section 15(1)(a) and (b) covers in particular royalties for the use in Hong Kong of films, patents, trade marks, designs or copyright, and section 15(1)(ba) royalties for use outside Hong Kong where they are deductible in computing the payer’s assessable profits. Section 21A sets the assessable profits at 30% of the sum, or at 100% if it is received from an associate, unless the administration accepts that no person carrying on a business in Hong Kong has ever owned the property concerned. S01 S21

36. For these royalties, section 20B makes the non-resident chargeable in the name of the person in Hong Kong who pays or credits them, and requires that person to deduct on payment a sum sufficient to pay the tax. The IRD also states that a resident agent selling goods on behalf of a non-resident pays quarterly 1% of the gross sale proceeds, or a lower agreed amount. S01 S18 S21

7. Profits tax: scope, rates and source of profits

37. Section 14(1) charges profits tax on every person (corporations, partnerships, trustees, bodies of persons) carrying on a trade, profession or business in Hong Kong, in respect of assessable profits arising in or derived from Hong Kong, excluding profits arising from the sale of capital assets. The basis period is in principle the accounting year ending in the year of assessment. S01 S18

38. The source of profits is a question of fact. In its DIPN No. 21, the IRD adopts the guiding principle laid down by the Privy Council in CIR v. Hang Seng Bank Ltd (1991), refined in HK-TVB International Ltd v. CIR (1992): one must ascertain what the taxpayer has done to earn the profits in question and where the taxpayer has done it. The DIPN sets out the administrative practice on this question and specifies that it does not affect the taxpayer’s rights of objection and appeal. S20

39. Since YA 2018/19, profits tax has followed a two-tiered scale laid down in Schedules 8A and 8B. The normal rates remain 16.5% for corporations (Schedule 8) and 15% for unincorporated businesses. S01 S18

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Profits tax (YA beginning on or after 1 April 2018)	Rate	Sources
Corporation: assessable profits up to HK$2,000,000	8.25%	S01 S18
Corporation: portion exceeding HK$2,000,000	16.5%	S01 S18
Unincorporated business: up to HK$2,000,000	7.5%	S01 S18
Unincorporated business: portion exceeding HK$2,000,000	15%	S01 S18

40. The first tier is granted to only one entity per group of connected entities: the others are taxed at the normal rate on the whole of their profits. The election is made in the return and is irrevocable for the year. The two-tiered scale is also excluded for corporations that have elected for certain sectoral regimes with a reduced rate. S01 S19

41. Preferential rates exist for specified activities: 50% of the normal rate in particular for corporate treasury centres, aircraft leasing and certain insurance activities, 0% or 50% for certain shipping activities, and 5% for the concessionary portion of eligible intellectual property income (patent box) for YAs beginning on or after 1 April 2023. These regimes are not detailed here. S18

42. Expenses incurred in the production of assessable profits are deductible, excluding in particular personal expenses and capital expenditure, subject to specific tax depreciation allowances. Losses of a year are carried forward against future profits of the same business, although a corporation carrying on several businesses may set off the losses of one against the profits of another. A corporation carrying on a business in Hong Kong may apply for exemption from property tax on the buildings it owns where that tax would be creditable against its profits tax (section 5(2)). S01 S18

43. Ordinance No. 21 of 2025 on minimum tax inserted in section 2(11) of the IRO a general definition of a Hong Kong resident entity, applicable unless the ordinance provides otherwise: a company incorporated in Hong Kong or, if incorporated elsewhere, normally managed or controlled in Hong Kong, and any other entity established under the law of Hong Kong or, failing that, normally managed or controlled in Hong Kong. This provision is deemed to have been in force since 1 January 2024; the IRD specifies that the definition is aligned with that of tax treaties and applies for the general purposes of the IRO. S01 S24

8. Foreign passive income (FSIE) and Pillar Two

44. The foreign-sourced income exemption (“FSIE”) regime was reformed by an ordinance of 23 December 2022, and then by an ordinance of 8 December 2023, to meet the guidelines of the European Union. Sections 15H to 15S of the IRO deem certain foreign income received in Hong Kong by an entity that is a member of a multinational group (MNE entity) carrying on a business in Hong Kong to be sourced in Hong Kong. Individuals and entities outside a multinational group are not covered. S01 S23

45. The income covered is interest, dividends, intellectual property income and gains from the disposal of equity interests accruing on or after 1 January 2023, and other disposal gains accruing on or after 1 January 2024. Income is deemed received in Hong Kong where it is remitted to Hong Kong, used to satisfy a debt relating to a business carried on in Hong Kong, or used to buy movable property brought into Hong Kong. S01 S23

46. The income covered escapes taxation if one of the exceptions is met. The economic substance requirement (section 15K) covers interest, dividends and disposal gains other than from intellectual property: the entity must carry on, or have carried on, in Hong Kong the specified economic activities, with qualified employees and expenditure considered adequate by the administration, a reduced requirement applying to pure equity-holding entities. Intellectual property income falls under a nexus requirement (section 15L). S01 S23

47. The participation requirement (section 15M) exempts dividends and gains from the disposal of equity interests received by a resident entity, or by the Hong Kong permanent establishment of a non-resident entity, holding at least 5% of the capital for at least 12 months. A switch-over clause requires foreign taxation of at least 15% of the income or of the underlying profits, assessed in principle on the headline rate. Income taxed in Hong Kong may give entitlement to a unilateral credit for foreign tax (section 50AAA and Schedule 54). S01 S23

48. Pillar Two was implemented by the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025, passed on 6 June 2025, which adds Part 4AA and Schedules 61 to 64 to the IRO. Section 26AE covers multinational groups whose consolidated revenue reaches at least EUR 750 million in at least two of the four preceding fiscal years, so that they bear a minimum tax of 15% in each jurisdiction. S01 S24

49. Top-up tax under the income inclusion rule (IIR) and the domestic minimum top-up tax (Hong Kong minimum top-up tax, “HKMTT”) are payable for fiscal years beginning on or after 1 January 2025 (section 26AE(6) and (8)). The undertaxed profits rule (UTPR) will apply only from a date to be appointed by notice published in the Gazette (section 26AE(7)); no date has been identified in the sources consulted. S01 S24

50. According to the IRD, the HKMTT applies in priority over the IIR and the UTPR, excludes investment entities and insurance investment entities, and is designed to be recognised as a qualified domestic minimum top-up tax. A dedicated portal for filing notifications was opened on 19 January 2026. GloBE computations, safe harbours and reporting obligations are not detailed. S24

9. No VAT and the hotel accommodation tax

51. No general value added tax or sales tax has been identified in the list of ordinances administered by the IRD or in the legislation consulted. The Hong Kong Talent Engage public portal presents the absence of sales tax and VAT as a feature of the system. This negative finding is limited to the sources consulted; excise duties on certain products (falling under other administrations) have not been examined. S25 S27

52. Hotel accommodation tax (Hotel Accommodation Tax, Cap. 348) is charged on sums received by hotels and guesthouses for accommodation. Its rate, reduced to 0% from 1 July 2008, was restored to 3% from 1 January 2025 by a resolution passed by the Legislative Council on 23 October 2024 and published on 25 October 2024. Operators pay it over quarterly. S26

10. Real estate: property tax, rates and stamp duties

53. Property tax is payable by the owner of land or buildings situated in Hong Kong and computed at the standard rate on the net assessable value (section 5). The latter corresponds to the assessable value, that is the consideration payable to the owner for the right of use of the property (section 5B), less rates where the owner bears them, and then less a statutory allowance for repairs and outgoings of 20%. The standard rate applicable to property tax is 15% (Schedule 1). S01 S32

54. Where rental income is included in profits chargeable to profits tax, or the property is occupied for the owner’s business, the property tax paid is set off against profits tax. An eligible individual may also elect for personal assessment. S32 S14

55. Regardless of the use of the property, rates are payable annually on the rateable value of tenements entered in the valuation list (Rating Ordinance, section 18). Since Ordinance No. 26 of 2024, for periods after 31 December 2024, domestic tenements are subject to a progressive scale, excluding in particular public rental housing and certain dormitories, other tenements remaining subject to the 5% rate. S04

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Rates on domestic tenements (periods after 31 December 2024)	Rate	Sources
Rateable value up to HK$550,000	5%	S04
Portion from HK$550,000 to HK$800,000	8%	S04
Portion exceeding HK$800,000	12%	S04

56. Transfers of immovable property are subject to the ad valorem stamp duty (“AVD”) under the Stamp Duty Ordinance, computed on the higher of the price and the value. Scale 1 (Scale 1, Part 1) applied to residential property at a flat rate of 15% for instruments executed from 5 November 2016 to 24 October 2023, and then at 7.5% until 27 February 2024. For instruments executed since 28 February 2024, its rates are identical to those of Scale 2. S02 S28

57. On 28 February 2024, the government withdrew with immediate effect the demand-side management measures for residential property. The Stamp Duty (Amendment) Ordinance 2024, published on 19 April 2024, abolished the Special Stamp Duty (“SSD”) and the Buyer’s Stamp Duty (“BSD”) for instruments executed on or after 28 February 2024, and aligned the 7.5% rate with Scale 2. A buyer who is not a permanent resident therefore bears the same duty as a permanent resident. S29

58. Since 26 February 2026, Schedule 1 to the Stamp Duty Ordinance, as amended by Ordinance No. 3 of 2026, has raised from 4.25% to 6.5% the rate applicable to residential property worth more than HK$100 million. A separate Scale 3 applies to non-residential property for instruments executed on or after the same date, with a maximum rate of 4.25%. The following table reproduces the scale applicable to residential property; the intermediate bands with a high marginal rate smooth out threshold effects. S02 S08 S28

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Price or value of the residential property (instruments on or after 26 February 2026)	Duty (Scale 1 Part 1 and Scale 2)	Sources
Up to HK$4,000,000	HK$100	S02 S28
From HK$4,000,000 to HK$4,323,780	HK$100 plus 20% of the excess over HK$4,000,000	S02 S28
From HK$4,323,780 to HK$4,500,000	1.5%	S02 S28
From HK$4,500,000 to HK$4,935,480	HK$67,500 plus 10% of the excess over HK$4,500,000	S02 S28
From HK$4,935,480 to HK$6,000,000	2.25%	S02 S28
From HK$6,000,000 to HK$6,642,860	HK$135,000 plus 10% of the excess over HK$6,000,000	S02 S28
From HK$6,642,860 to HK$9,000,000	3%	S02 S28
From HK$9,000,000 to HK$10,080,000	HK$270,000 plus 10% of the excess over HK$9,000,000	S02 S28
From HK$10,080,000 to HK$20,000,000	3.75%	S02 S28
From HK$20,000,000 to HK$21,739,120	HK$750,000 plus 10% of the excess over HK$20,000,000	S02 S28
From HK$21,739,120 to HK$100,000,000	4.25%	S02 S28
From HK$100,000,000 to HK$109,574,470	HK$4,250,000 plus 30% of the excess over HK$100,000,000	S02 S28
Above HK$109,574,470	6.5%	S02 S28

59. Leases of immovable property are subject to a duty that depends on their term: 0.25% of the total rent for a lease of not more than one year, 0.5% of the average annual rent for a lease of more than one year and up to three years, and 1% beyond that. Since 17 November 2023, transfers of Hong Kong stock have borne a duty of 0.1% of the consideration on each bought note and on each sold note. S02 S28

60. Several announced measures are not yet in force. The 2026-27 Budget proposes to lower from 90% to 75% the threshold for intra-group relief (section 45), for instruments executed on or after 25 February 2026 subject to the passage of the legislation, and to exempt from duty, subject to conditions, the acquisition of non-residential property by real estate investment trusts (REITs) seeking a listing in Hong Kong. The 2026 Policy Address proposes a relief capped at HK$20,000 for certain families with a child born on or after 16 September 2026. S08 S09 S30

11. Wealth, inheritances and gifts

61. No annual wealth tax has been identified in the list of ordinances administered by the IRD or in the legislation consulted; this negative finding is limited to those sources. The holding of property is reached indirectly through property tax, rates and stamp duties. S01 S04 S27

62. Estate duty was abolished by the Revenue (Abolition of Estate Duty) Ordinance 2005, which came into force on 11 February 2006; section 2 of the Estate Duty Ordinance now limits its application to earlier deaths. For deaths occurring on or after 15 July 2005 and before 11 February 2006, the duty on estates of more than HK$7.5 million is reduced to HK$100. No estate duty return is required for deaths occurring on or after 11 February 2006. S03 S31

63. No specific gift tax has been identified in the legislation consulted. Gratuitous transfers inter vivos nevertheless remain subject to stamp duty where they concern immovable property or Hong Kong stock: a gift of immovable property is taxed as a sale, on the value of the property (section 27 of the Stamp Duty Ordinance), and the gratuitous transfer of Hong Kong stock bears a duty of HK$5 plus 0.2% of the value of the shares. S02 S28

64. The absence of Hong Kong taxation of inheritances and gifts does not prejudge French taxation. The France–Hong Kong agreement presented below concerns taxes on income and on capital and does not cover gift and inheritance duties (droits de mutation à titre gratuit), whose French rules are not analysed. S37

12. France–Hong Kong agreement and exchange of information

65. A comprehensive agreement exists between France and Hong Kong. The agreement between the Government of the French Republic and the Government of the Hong Kong Special Administrative Region for the avoidance of double taxation with respect to taxes on income and on capital and the prevention of tax evasion and fraud was signed in Paris on 21 October 2010. Law No. 2011-1283 of 13 October 2011 authorised its approval; it was published by Decree No. 2011-1766 of 5 December 2011 and entered into force on 1 December 2011. The DGFiP publishes it in its list of international tax treaties and the BOFiP devotes the sheet BOI-INT-CVB-HKG to it. S37 S39 S40

66. According to the BOFiP, the agreement applies in France to amounts taxable by way of withholding at source on or after 1 January 2012, to income of calendar years or financial years beginning on or after that date and to other taxes whose chargeable event occurs on or after that date; in Hong Kong, it applies to any year of assessment beginning on or after 1 April 2012. The IRD mentions it in its list of agreements concluded, with effect from YA 2012/13, and the subsidiary legislation Cap. 112BT gives it effect in Hong Kong law. S05 S34 S40

67. The taxes covered are, in France, income tax (impôt sur le revenu), corporate income tax (impôt sur les sociétés) and its contributions, payroll tax (taxe sur les salaires), the generalised social contribution (CSG) and the social debt repayment contribution (CRDS) and the wealth solidarity tax (impôt de solidarité sur la fortune, ISF); in Hong Kong, profits tax, salaries tax and property tax. The IRD states that the agreement has applied to the real estate wealth tax (impôt sur la fortune immobilière, IFI) since 1 January 2018, as a tax identical in nature to the ISF, by virtue of the clause on future taxes (Article 2, paragraph 4). S34 S37

68. For Hong Kong, the Protocol (paragraph 5) defines a resident as an individual who ordinarily resides there during the year of assessment, or who stays there for more than 180 days during a year of assessment or for more than 300 days in two consecutive years of assessment, one of which is the year concerned, as well as a company incorporated in Hong Kong or normally managed or controlled there. The territoriality principle does not prevent resident status. In the event of dual residence of an individual, Article 4 applies successively the permanent home, the centre of vital interests and the habitual abode, then French nationality or the right of abode in Hong Kong, and failing that the agreement of the competent authorities. S37

69. The Protocol (paragraph 1) excludes from the benefit of the agreement a resident who carries on activities in a free zone of its State or benefits from an extraterritorial (offshore) tax regime, it being understood that the territoriality principle of taxation alone does not stand in the way. Paragraph 11 limits the benefit granted in one State to the portion of the income taxed in the other where the latter taxes only the sums remitted to or received in its territory. Paragraph 12 reserves the right to tax in the event of double non-taxation resulting from a divergent characterisation of income. S37

70. Passive income may be taxed in the State of source within the following limits. As Hong Kong levies no withholding tax on dividends and interest, these caps operate mainly for French-source income; the rate of the French domestic withholding tax is not analysed. S25 S35 S37

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Income (agreement of 21 October 2010)	Cap on taxation in the State of source	Sources
Dividends (Article 10)	10% of the gross amount	S35 S37
Interest (Article 11), excluding exempt interest paid to States, central banks and designated bodies	10% of the gross amount	S35 S37
Royalties (Article 12)	10% of the gross amount	S35 S37

71. The Protocol (paragraph 8) excludes from royalties payments for technical, engineering or consultancy services, as well as the right to distribute software without the right to reproduce it; these sums fall under Article 7. A permanent establishment includes in particular building sites lasting more than six months and services, including consultancy services, furnished for more than six months in the other Party (Article 5). S37

72. Gains from immovable property are taxable in the State where the property is situated, as are gains from the disposal of shares in companies deriving more than 50% of their value from immovable property situated in that State, except for shares listed on an agreed stock exchange, reorganisation transactions and companies that themselves operate that immovable property. Gains from the disposal of a substantial participation, of at least 25% of the profits of the company, are taxable in the State of residence of the company (Article 13(3)). Gains from the disposal of movable property forming part of the business property of a permanent establishment, including of that establishment, are taxable in the State where it is situated (Article 13(2)); other gains, apart from ships and aircraft operated in international traffic (Article 13(4)), are taxable only in the State of residence of the alienator (Article 13(5)). S37

73. Salaries are taxable in the State where the employment is exercised, unless the stay does not exceed 183 days in any twelve-month period, the remuneration is not paid by an employer resident in that State nor borne by a permanent establishment situated there, and the remuneration is taxable in the State of residence in accordance with its legislation (Article 14(2)(d)). Directors’ fees are taxable in the State of the company (Article 15). Private pensions are taxable in the State where they arise, that is where the pension fund or institution is recognised (Article 17). Article 20(3) also allows the State of source to tax income not dealt with in the other Articles. S37

74. In France, Article 22 eliminates double taxation by means of a tax credit where the income is not exempt from corporate income tax under French legislation. For, in particular, dividends, interest, royalties, gains under Article 13(1) and (3), directors’ fees and profits subject to corporate income tax, the credit is equal to the tax paid in Hong Kong, up to the amount of the corresponding French tax. For other income, it is equal to the corresponding French tax, provided that the resident of France is subject to tax in Hong Kong in respect of that income. Hong Kong grants a credit for French tax up to the amount of Hong Kong tax. S37

75. The agreement is modified by the BEPS multilateral convention (MLI), which entered into force on 1 January 2019 for France and on 1 September 2022 for Hong Kong. The consolidated versions published by the DGFiP and by the IRD insert an anti-abuse preamble and a principal purpose clause: a benefit is denied where it is reasonable to conclude that obtaining it was one of the principal purposes of an arrangement, unless it is in accordance with the object of the agreement. This clause replaces the anti-abuse clauses specific to Articles 10, 11, 12 and 13, and the mutual agreement procedure may now be initiated with the competent authority of either State. These consolidated versions are not authentic texts. S36 S38

76. The dates on which the MLI takes effect differ according to the sources. For France, both versions refer to taxes withheld at source where the chargeable event occurs on or after 1 January 2024 and to other taxes for periods beginning on or after 23 September 2023. For Hong Kong, the IRD version refers to 1 April 2023 for withholding taxes and to years of assessment beginning on or after 1 April 2024, whereas the note to the DGFiP version mentions 23 March 2023 and 23 September 2023; this discrepancy warrants case-by-case verification. S36 S38

77. Article 25 provides for the exchange of information foreseeably relevant to the application of the agreement or of domestic legislation concerning taxes of every kind, without bank secrecy being a ground for refusal. The Protocol (paragraph 10) specifies, however, that Article 25 does not require any spontaneous or automatic exchange and that information may not be transmitted to a third jurisdiction. The IRD states that requests for exchange may also be based on the Convention on Mutual Administrative Assistance in Tax Matters, in force in Hong Kong since 1 September 2018. S37 S42 S43

78. Automatic exchange of financial account information rests on Part 8A of the IRO; Schedule 17E lists the French Republic among the reportable jurisdictions, from 2018. The IRD refers to a 2026 ordinance applicable from 1 January 2027 and to a bill implementing the crypto-asset reporting framework (CARF), which is under consideration. S01 S43

13. Illustrative cases and limits of application

79. Case 1 — a French executive is recruited by a Hong Kong company and moves to Hong Kong on 1 July 2025 with a local contract. As the employment is located in Hong Kong, his or her remuneration for YA 2025/26 falls within salaries tax at the progressive rates, subject to the standard-rate ceiling, after MPF contributions and the basic allowance, and then the reduction capped at HK$3,000. His or her French dividends are not taxed in Hong Kong; if he or she becomes a resident of Hong Kong within the meaning of Article 4 of the agreement, France may tax them up to 10%. Paragraph 11 of the Protocol, which concerns a State that taxes only sums remitted or received, does not appear to cover this situation, a point that remains to be verified. S01 S06 S11 S37

80. Case 2 — an employee of a French company, under a French contract and paid in France, carries out assignments in Hong Kong totalling 50 days during the YA. As the employment is in principle a non-Hong Kong employment, only the services rendered in Hong Kong could be taxed under section 8(1A)(a), but section 8(1B) disregards visits not exceeding 60 days. Article 14 of the agreement would lead to the same result if the conditions of the 183-day rule are met, subject to a permanent establishment of the employer in Hong Kong. S01 S11 S37

81. Case 3 — a Hong Kong holding company of an international group receives in Hong Kong a dividend from a French subsidiary 30% held for several years. As the dividend is foreign income received in Hong Kong by an MNE entity, it escapes profits tax if the participation requirement and the switch-over clause are satisfied, or if the substance requirement is met. In France, any withholding tax is capped at 10% by Article 10 of the agreement, subject to the principal purpose clause and paragraph 1 of the Protocol. If the group reaches EUR 750 million of revenue, the IIR and the HKMTT must also be examined. S01 S23 S24 S37 S38

82. Case 4 — a French expatriate who is not a permanent resident buys in 2026 a flat for HK$12 million to live in. Since 28 February 2024, he or she has borne neither BSD nor an increased rate: the ad valorem duty is that of Scale 2, namely 3.75% of the price for this band. Rates are payable on the rateable value under the progressive scale for domestic tenements. If he or she subsequently lets the property, property tax at the standard rate of 15% is charged on the net value after the 20% allowance, unless he or she elects for personal assessment where the conditions are met, and Article 6 of the agreement allows the rents to be taxed in Hong Kong, France retaining, if he or she is a resident of France, a right to tax together with the tax credit under Article 22. S01 S02 S04 S29 S32 S37

83. Limits of application: the factsheet does not reconstruct all deductions, sectoral regimes (funds, family offices, carried interest, shipping and aviation activities, patent box), transfer pricing or GloBE computations. Measures announced but not passed are flagged without being incorporated. French law (residence, exit tax, non-residents, inheritance tax) is not analysed; each rule must be verified against the official texts at the date of the transaction. S08 S09 S18 S24 S37