Chambers and Partners High Net Worth | Hong Kong: Private Wealth Global Practice Guide 2026
 

The Private Wealth 2026 guide, now in its tenth edition, covers nearly 50 jurisdictions worldwide. It provides up-to-date legal analysis on a broad range of private wealth matters, including tax regimes, succession planning, trusts and foundations, family business planning, wealth disputes, fiduciary services, citizenship and residency, planning for minors, adults with disabilities and older individuals, same-sex marriages and domestic partnerships, and charitable giving.

1 Tax

1.1 Tax Regimes

Hong Kong operates one of the world՚s most straightforward and competitive tax regimes, a feature that is central to its enduring appeal as a private wealth management hub. The system is built on a strictly territorial basis: only income arising in or derived from Hong Kong is subject to tax. This foundational principle means that offshore income, capital gains, and foreign-sourced investment returns are generally outside the scope of Hong Kong taxation, creating a highly favourable environment for high net worth individuals and their wealth structures.

Critically, Hong Kong levies no estate duty, inheritance tax, wealth tax, or gift tax. Estate duty was formally abolished in February 2006 under the Estate Duty (Amendment) Ordinance, a landmark reform that cemented Hong Kong՚s position as a premier succession planning jurisdiction in Asia. There is equally no capital gains tax, no dividend withholding tax, and no tax on interest income earned by individuals.

The three principal direct taxes are Salaries Tax, Profits Tax, and Property Tax, each governed by the Inland Revenue Ordinance (Cap. 112). Salaries Tax applies to income from employment, an office, or a pension arising in Hong Kong, with progressive rates ranging from 2% to 17% on net chargeable income, capped at a standard rate of 15% on net income before personal allowances. Profits Tax applies to persons carrying on a trade, profession, or business in Hong Kong, with a two-tiered regime of 8.25% on the first HKD2 million of assessable profits and 16.5% on the remainder for corporations (7.5% and 15% respectively for unincorporated businesses). Stamp duty is levied on transfers of Hong Kong immovable property and Hong Kong stock under the Stamp Duty Ordinance (Cap. 117).

1.2 Exemptions

As Hong Kong does not impose estate duty, inheritance tax, gift tax, or capital gains tax, the concept of statutory exemptions for wealth transfer taxes is largely inapplicable. Wealth may be transferred freely between generations, whether by lifetime gift or on death, without triggering any domestic transfer tax liability. This stands in stark contrast to jurisdictions such as the United Kingdom, the United States or France, where complex exemption thresholds, annual allowances and reliefs must be carefully navigated.

For Profits Tax purposes, certain categories of income benefit from specific exemptions or concessionary treatment. Qualifying profits derived by a Family-owned Investment Holding Vehicle (FIHV) managed by a single-family office that meets prescribed conditions are subject to a 0% concessionary tax rate. This attractive regime was introduced in 2023 and expanded in the 2025/26 Budget to include digital assets, gold, and funds-of-one, representing a targeted incentive to attract ultra high net worth families to establish their wealth management operations in Hong Kong. The Inland Revenue Department (IRD) administers these concessions, and qualifying conditions include minimum net asset value thresholds, substance requirements and restrictions on the types of permissible investments.

1.3 Income Tax Planning

Income tax planning in Hong Kong is largely driven by the territorial principle and the absence of capital gains tax. The primary objective is to ensure that income and gains are structured to arise offshore, or to fall within the scope of the concessionary regimes available. A common strategy involves holding investments through offshore companies or trusts that generate capital appreciation rather than trading profits, thereby keeping returns outside the Hong Kong Profits Tax net.

However, practitioners must be alert to the Foreign-Sourced Income Exemption (FSIE) regime, which was significantly expanded with effect from 1 January 2024 (the “FSIE 2.0” regime) in response to the European Union՚s concerns about Hong Kong՚s tax framework. The expanded regime now covers foreign-sourced dividends, interest, income from intellectual property, and disposal gains (including gains on shares and other equity interests). For such income to remain exempt from Profits Tax when received by a Hong Kong entity, the entity must satisfy either an economic substance requirement, a participation exemption condition, or a nexus requirement (for IP income). This has materially increased the compliance burden for holding structures and requires careful review of existing arrangements.

For individuals, the use of personal allowances, deductions for self-education expenses, approved charitable donations and mandatory provident fund contributions can reduce the effective Salaries Tax burden. The IRD publishes annual tax measures in the Budget, which in recent years have included one-off tax reductions subject to a ceiling, providing modest relief to individual taxpayers.

1.4 Pre-Immigration and Exit Planning

Hong Kong imposes no entry or exit taxes on individuals. There is no deemed disposal of assets upon becoming a Hong Kong tax resident, and no exit charge on departure. This makes Hong Kong an exceptionally clean jurisdiction from a pre-immigration and exit planning perspective, particularly when compared with jurisdictions that impose deemed realisation taxes or departure levies.

Pre-immigration planning typically focuses on restructuring offshore assets and income streams before establishing Hong Kong residency, to ensure that future income and gains are generated in a manner consistent with the territorial tax principle. Individuals relocating from high-tax jurisdictions should obtain advice on whether existing structures, such as controlled foreign corporations or offshore trusts, may inadvertently generate Hong Kong-sourced income once the individual is resident.

On exit, individuals must settle all outstanding Salaries Tax liabilities. Under the Inland Revenue Ordinance (Cap. 112), an employer is required to notify the IRD when an employee intends to leave Hong Kong for a period exceeding one month, and the IRD will issue a tax clearance letter before the individual departs. Careful planning of the timing of departure and the cessation of Hong Kong-sourced income can optimise the final tax position. Individuals should also consider the tax implications of their destined jurisdiction, particularly regarding the treatment of trust distributions, deferred compensation, and unrealised gains.

1.5 Taxation of Real Estate Owned by Non-Residents and Non-Citizens

Hong Kong imposes taxes on real estate based on its location, irrespective of the owner՚s residency or citizenship status. Property Tax at a standard rate of 15% is levied on the net assessable value (namely, the rental income less a statutory 20% allowance for repairs and outgoings) of Hong Kong real estate. Owners who are also subject to Profits Tax on the same rental income may elect to be assessed under Profits Tax instead, with a corresponding offset.

In a significant policy reversal, the Hong Kong government abolished all demand-side management stamp duty measures for residential properties with effect from February 2024. This included the Buyer՚s Stamp Duty (BSD), which had previously imposed an additional 15% on non-permanent residents, and the New Residential Stamp Duty (NRSD). Non-residents now pay the same ad valorem stamp duty (AVD) as Hong Kong permanent residents, substantially reducing the cost of entry for foreign buyers. The current AVD rates are set out on the government՚s stamp duty rates page.

In the 2026/27 Budget, the Financial Secretary proposed to increase the stamp duty rate for residential properties valued above HKD100 million from 4.25% to 6.5%, targeting the ultra-luxury segment. Indirect ownership through a corporate vehicle, typically a British Virgin Islands or Hong Kong company, remains a common strategy, as the transfer of shares in such a company attracts stamp duty at only 0.2% of the consideration or net asset value, compared with the higher AVD on direct property transfers. However, this approach requires corporate governance, annual filing obligations, and potential Profits Tax exposure if the company is deemed to be carrying on a property trading business. For detailed analysis of investment vehicle options, see Choosing the Right Investment Vehicle for Hong Kong Real Estate and Property Holding Trusts for Family Wealth Preservation.

1.6 Stability of Tax Laws

The stability and predictability of Hong Kong՚s tax regime is one of its most compelling attributes for long-term wealth planning. The Basic Law of the Hong Kong Special Administrative Region guarantees the continuation of Hong Kong՚s existing capitalist system and way of life for 50 years from 1997, and specifically preserves the independent taxation system. This constitutional guarantee underpins investor confidence and provides a secure foundation for multi-generational planning.

Notwithstanding this stability, Hong Kong has been responsive to international developments. The FSIE regime reforms reflect the jurisdiction՚s commitment to meeting OECD/G20 Base Erosion and Profit Shifting (BEPS) standards and avoiding placement on the EU՚s list of non-cooperative jurisdictions. The government has consistently demonstrated that it will adapt its tax framework to maintain international compliance whilst preserving the low-tax, business-friendly environment that defines Hong Kong.

The recent expansion of the family office tax concession regime to include digital assets, gold, and funds-of-one in 2026 is illustrative of Hong Kong՚s proactive approach to attracting wealth. Rather than imposing new taxes, the government continues to refine and expand incentive regimes to compete with Singapore and other regional wealth management centres. For a comprehensive overview of the family office regime, see Setting Up Family Offices in Hong Kong: Advantages and Tax Benefits.

1.7 Transparency and Increased Global Reporting

Hong Kong is a committed participant in the global tax transparency framework. It has implemented the OECD՚s Common Reporting Standard (CRS) for the automatic exchange of financial account information with exchanges taking place annually with over 100 partner jurisdictions. Financial institutions in Hong Kong are required to conduct due diligence on account holders and report information on accounts held by foreign tax residents to the Inland Revenue Department, which then transmits the information to the relevant foreign tax authorities. Hong Kong has also entered into an intergovernmental agreement with the United States to implement the Foreign Account Tax Compliance Act (FATCA).

In terms of beneficial ownership transparency, Hong Kong requires all companies incorporated in Hong Kong to maintain a Significant Controllers Register (SCR), identifying individuals who ultimately own or control more than 25% of the shares or voting rights, or who otherwise exercise significant control. The SCR must be kept at the company՚s registered where it can be accessed by law enforcement and regulatory authorities upon demand, although it is not publicly accessible. This approach balances the legitimate global push for transparency with the privacy expectations of legitimate wealth structures.

For trust structures, there is no public register of trusts in Hong Kong. However, financial institutions are required under the CRS and anti-money laundering regulations to identify the beneficial owners of trusts, including settlors, trustees, protectors, and beneficiaries. Clients must therefore assume that their trust structures will be visible to their home tax authorities through the CRS reporting chain, making it essential that all structures are commercially justified, properly documented, and tax-compliant in all relevant jurisdictions.

2 Succession

2.1 Cultural Considerations in Succession Planning

In Hong Kong, succession planning is profoundly shaped by traditional Chinese cultural values, which place a premium on family cohesion, filial piety and the preservation of accumulated wealth across generations. The concept of “family wealth” is deeply ingrained, and there is a strong cultural expectation that assets, particularly the family home and the family business, will remain within the family bloodline. Historically, this manifested in a preference for passing control to the eldest son, a practice that can create significant tensions in modern, blended, or internationally mobile families.

A recurring challenge in practice is the reluctance of the founding generation to engage in formal succession planning. Many wealth creators are uncomfortable confronting their own mortality or relinquishing control of assets they have spent a lifetime building. This cultural hesitancy often results in delayed planning, leaving families exposed to costly disputes and probate delays. Legal advisors must approach these conversations with sensitivity, framing succession planning not as a loss of control but as an act of stewardship for the family՚s future.

To bridge the gap between the desire for control and the need for succession, practitioners frequently recommend reserved power trusts, which are expressly recognised under the Hong Kong Trustee Ordinance (Cap. 29). Such structures allow the settlor to retain specific powers, such as the power to direct investments or to add or remove beneficiaries, without invalidating the trust. This provides a legally sound mechanism for the founding generation to maintain meaningful oversight whilst achieving the succession and asset protection objectives of the trust. For a broader discussion of the role of family trusts in succession, see Succession Battles, Family Trusts and Inherited Wealth.

2.2 International Planning

The international dimension of succession planning is a defining feature of advising high net worth families in Hong Kong. Many clients hold assets across multiple jurisdictions: real estate in the United Kingdom, Australia, or Canada; investment portfolios in the United States; business interests in mainland China; and liquid assets in Singapore or Switzerland. Simultaneously, their children and grandchildren may be resident or domiciled in jurisdictions with starkly different succession laws, including forced heirship regimes, high estate taxes or complex probate procedures.

Such cross-border elements create a risk of multiple, conflicting legal regimes applying to the same estate. Without scrupulous planning, an estate may be subject to probate proceedings in several jurisdictions simultaneously, each with its own procedural requirements, timelines, and costs. Forced heirship rules in civil law countries, such as France, Italy, or certain Middle Eastern jurisdictions, may override the testator՚s wishes if the relevant connecting factors (domicile, nationality, or asset location) are not meticulously managed.

In Hong Kong, the preferred solution is to establish a centralised holding structure, typically a Hong Kong discretionary trust, in which to hold global assets. By vesting legal ownership of assets in a trustee, the assets are removed from the settlor՚s personal estate and are therefore not subject to the probate process or the forced heirship rules of the settlor՚s domicile or nationality at the time of death. This approach requires considered co-ordination with local counsel in each relevant jurisdiction, and particular attention must be paid to the recognition of trusts in civil law countries. For a detailed discussion of multi-jurisdictional estate planning, see Estate Planning for Assets Located in Multiple Jurisdictions.

2.3 Forced Heirship Laws

As discussed in 2.2 International Planning, Hong Kong does not impose a forced heirship regime. By contrast, the jurisdiction celebrates testamentary freedom, allowing individuals to dispose of their estate as they see fit through a validly executed will. A testator may, in principle, disinherit any family member, including children and spouses, subject to the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481). Under Cap. 481, certain categories of persons may apply to the court for financial provision from the estate of a deceased person if the will or the intestacy rules fail to make “reasonable financial provision” for them. The categories of eligible applicants include:

• the spouse or former spouse of the deceased;
• a child of the deceased (including an adult child);
• any person treated as a child of the family; and
• any person who was being maintained, wholly or substantially, by the deceased immediately before death.

The standard of provision varies by applicant. For a surviving spouse, the court applies a higher standard of what is “reasonable in all the circumstances”, whereas for other applicants the standard is limited to what is reasonable for their maintenance. The court has broad discretion in fashioning the remedy, which may include periodic payments, a lump sum, a transfer of specific property, or a settlement of property. As such, testators must be advised to consider the possibility of a claim being brought against their estate by disinherited applicants and plan accordingly. For a detailed analysis of claims under Cap. 481, see Inheritance Provision for Family and Dependants and the Hugill & Ip commentary on A Key Judgment on Interim Maintenance for a Child Under Cap. 481.

2.4 Marital Property

Hong Kong operates a separate property regime during marriage, as codified in the Married Persons Status Ordinance (Cap. 182). Each spouse retains independent legal ownership and control of the assets they acquire before and during the marriage and may deal with their own property without the other spouse՚s consent. There is no concept of communally owned property or automatic joint ownership of matrimonial assets during a marriage.

Upon divorce, the court exercises broad discretionary powers under the Matrimonial Proceedings and Property Ordinance (Cap. 192) to redistribute assets between the parties. The starting point is an equal division of the matrimonial pot, which is broadly defined as the assets acquired during the marriage through the joint efforts of the parties, although the court may depart from equality to reflect the needs of the parties, the presence of pre-marital assets, or other relevant factors. Assets held in trust are not automatically excluded from consideration. In fact, the court may treat trust assets as a financial resource available to a party, particularly where they have maintained a degree of control over the trust.

Prenuptial and postnuptial agreements are not expressly regulated by Hong Kong statute. However, following the landmark Court of Final Appeal decision in SPH v SA [2014] 3 HKLRD 497, the courts will accord them significant, often decisive, weight, provided that the agreement was freely entered into by both parties with a full appreciation of its implications, and that it would not be unfair to hold the parties to it. The prerequisites for enforceability include independent legal advice for each party, full and frank financial disclosure, and adequate time for reflection before signing. For comprehensive guidance on nuptial agreements, see Prenuptial Agreements and Protecting Your Wealth in Marriage.

2.5 Transfer of Property

The transfer of property in Hong Kong, whether by lifetime gift or on death, does not give rise to any capital gains tax liability, as Hong Kong does not levy such a tax. There is accordingly no concept of a “step-up” in cost basis upon death, nor any deemed disposal at market value on a gift. This simplicity is a significant advantage for estate planning, as assets can be transferred between generations without triggering an immediate tax charge on embedded gains.

For assets that may be subject to Profits Tax if disposed of in a trading context ‒ for example, properties held by a company that is deemed to be trading in properties ‒ the transfer mechanism and the consideration paid will be relevant to the Profits Tax computation. However, for typical private wealth assets held for long-term investment purposes, the absence of capital gains tax means that the cost basis of assets is generally not a primary planning consideration within the Hong Kong domestic tax framework.

Stamp duty remains the principal transaction cost on the transfer of Hong Kong real estate and Hong Kong stock. The transfer of assets located outside Hong Kong ‒ such as foreign securities, overseas real estate, or interests in foreign companies ‒ does not attract Hong Kong stamp duty, though it may trigger tax liabilities in the jurisdiction where the assets are located.

2.6 Transfer of Assets: Vehicle and Planning Mechanisms

Given the absence of gift and inheritance taxes in Hong Kong, the direct transfer of assets to younger generations is inherently tax-efficient from a domestic perspective. In terms of wealth planning, the primary objectives are therefore asset protection, governance, and the management of family dynamics, rather than tactical tax minimisation per se.

The discretionary trust remains the premier vehicle for intergenerational wealth transfer in Hong Kong. By vesting legal ownership of assets in an independent trustee, the settlor removes those assets from their personal estate, protecting them from future personal creditors, matrimonial claims of beneficiaries, and the risks of beneficiary insolvency or incapacity. The trustee exercises discretion over the timing and quantum of distributions, allowing the family՚s wealth to be managed in a flexible and responsive manner. For an introduction to the different types of trusts available, see Trust Focus Week: Different Types of Trusts and Estate Planning FAQ: Trusts.

Family investment companies (FICs) and limited partnerships are increasingly popular alternatives or complements to trusts. An FIC allows the founding generation to transfer economic value through non-voting shares or preference shares to the next generation whilst retaining voting control and management authority through ordinary shares. This structure is particularly effective for family businesses, where continuity of management is critical. Similarly, a limited partnership structure offers economic and governance benefits with greater flexibility in profit allocation.

For families with a single-family office, the FIHV regime, discussed at 1.2 Exemptions, provides a compelling tax incentive to centralise investment management in Hong Kong, as detailed on the IRD’s FIHV page.

2.7 Transfer of Assets: Digital Assets

The succession of digital assets, including cryptocurrencies, non-fungible tokens (NFTs), digital wallets, and online accounts, presents novel and rapidly evolving challenges in Hong Kong estate planning. The foundational legal question of whether cryptocurrencies constitute “property” capable of being owned and transferred was definitively answered by the Hong Kong Court of First Instance in Re Gatecoin Limited (In Liquidation) [2023] HKCFI 914, which confirmed that cryptocurrencies are “property” under Hong Kong law and can be held on trust. This landmark ruling provides a legal foundation from which to include digital assets in wills and trust structures.

Despite this necessary legal clarity, the practical challenges of digital asset succession remain formidable. Self-custodied cryptocurrency holdings are secured by private keys and seed phrases, which are known only to the holder. If an executor cannot locate these credentials, the assets are practically irrecoverable, regardless of the legal entitlement. Executors dealing with custodial exchange accounts face additional hurdles, including platform-specific account recovery procedures, anti-money laundering verification requirements, and the risk of account-freezing during probate.

Effective planning requires a comprehensive digital asset inventory, maintained securely and updated regularly, identifying all digital assets, the platforms or wallets where they are held, and the access credentials or recovery instructions. To avoid the will becoming a public document that discloses sensitive security information, this inventory should be stored separately from the will itself but in a location disclosed to the executor. For detailed guidance on this topic, see Cryptocurrencies in the Complicated World of Tax, Estate and Trust Law and the Hugill & Ip insights on Cryptocurrency Inheritance and Digital Asset Succession. In 2026, Hong Kong expanded the family office FIHV tax concession to cover digital assets, as discussed in Hong Kong Family Offices: The New Tax Concession Expansion.

3 Trusts, Foundations and Similar Entities

3.1 Types of Trusts, Foundations or Similar Entities

Hong Kong possesses a mature and sophisticated trust law framework, making it one of the most trust-friendly jurisdictions in Asia. The discretionary trust is the dominant vehicle for private wealth planning, offering maximum flexibility in the distribution of income and capital among a class of beneficiaries. The trustee exercises absolute discretion over distributions, ensuring that the trust can adapt to changing family circumstances, tax environments, and beneficiary needs over time.

The Trustee Ordinance (Cap. 29) expressly permits the creation of reserved power trusts, under which the settlor retains specified powers ‒ such as the power to direct investments, to appoint and remove trustees, or to add and exclude beneficiaries ‒ without invalidating the trust. This is a critical feature for Hong Kong clients who are reluctant to relinquish all control, as it allows the trust to serve its protective and succession functions whilst accommodating the settlor՚s desire for ongoing involvement.

Other trust structures used in Hong Kong include fixed interest trusts (where beneficiaries have defined, non-discretionary entitlements), purpose trusts (used for specific commercial or charitable purposes), and charitable trusts. Bare trusts are commonly used in the context of property holding arrangements, where a nominee holds legal title to real estate on behalf of the beneficial owner, as discussed in Property Holding Trusts for Family Wealth Preservation.

Hong Kong does not have a standalone foundation law. Clients seeking a foundation-like structure for philanthropic or succession purposes typically use a company limited by guarantee, which provides limited liability and a familiar governance framework, or establish a foundation in a jurisdiction such as Jersey, the Cayman Islands or Liechtenstein. The integration of trusts with single-family offices has become increasingly prevalent given the desirable tax incentives of the FIHV regime. For an overview of family office structures, see What Does the Future Hold for Family Offices in Hong Kong? and Setting Up a Family Office in Hong Kong.

3.2 Recognition of Trusts

Trusts are fully recognised and enforced in Hong Kong, which has one of the most robust and well-developed trust law frameworks in Asia. Hong Kong՚s legal system, independent from mainland China, continues to operate on the basis of English common law principles, further enhancing its reliability as a trust jurisdiction. The Trustee Ordinance (Cap. 29) was comprehensively modernised in 2013 to introduce, among other things, a statutory duty of care for trustees, enhanced investment powers, provisions governing the delegation of trustee functions and controls on trustee exoneration clauses. These essential reforms brought Hong Kong’s trust law in line with modern international standards and reinforced its competitiveness as a trust domicile.

The courts of Hong Kong have extensive experience in adjudicating complex trust disputes, including questions of trust validity, trustee duties, beneficiary rights and the recognition of foreign trusts. The judiciary՚s familiarity with sophisticated trust structures and their adherence to the common law tradition provide a high degree of legal certainty for settlors, trustees, and beneficiaries alike.

3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions

Hong Kong՚s territorial tax system creates a highly favourable environment for Hong Kong residents who are beneficiaries of foreign trusts. As Hong Kong only taxes income arising in or derived from Hong Kong, a Hong Kong resident beneficiary who receives distributions of offshore income or capital from a foreign trust is generally not subject to Hong Kong income tax on those distributions. This significant planning advantage allows Hong Kong-resident beneficiaries to receive the benefits of global wealth structures without incurring a domestic tax charge.

A foreign trust that conducts a trade or business in Hong Kong, or that derives income from Hong Kong sources, will be subject to Profits Tax on those Hong Kong-sourced profits. However, a passive investment trust that holds offshore assets and distributes income to Hong Kong-resident beneficiaries will not ordinarily trigger a Hong Kong Profits Tax liability.

The FSIE regime is relevant for Hong Kong entities (including corporate trustees of Hong Kong trusts) that receive foreign-sourced passive income. Such entities must satisfy the applicable substance, participation exemption, or nexus requirements to maintain the tax exemption on that income. Practitioners advising on the establishment of Hong Kong trusts with offshore investment portfolios should carefully consider the FSIE implications, particularly where the trustee is a Hong Kong-incorporated trust company.

3.4 Tax Consequences of Fiduciary and Beneficiary Roles

Under Hong Kong՚s territorial tax regime, the fact that a settlor or beneficiary also serves as a trustee does not, in itself, alter the tax treatment of the trust or its income. The trust is assessed to Profits Tax only on Hong Kong-sourced trading profits, and the trustee՚s personal tax position is assessed separately on their own income.

However, the legal consequences of a settlor or beneficiary acting as trustee are significant. Where a settlor retains excessive control over a trust ‒ for example, by acting as sole trustee with unfettered powers ‒ the trust may be vulnerable to challenge as a “sham” trust (where the parties never truly intended to create a trust) or an “illusory” trust (where the trustee՚s discretion is so fettered as to be meaningless). In either case, the assets would be treated as remaining in the settlor՚s personal estate, defeating the asset protection and succession objectives of the structure. For a detailed analysis of these risks, see Can a Settlor Maintain Control and Avoid an Illusory or Sham Trust?

In practice, to maintain the integrity of the trust structure, independent professional trustees are appointed, either exclusively or as co-trustees alongside family members. Where family members serve as co-trustees, their powers are carefully circumscribed in the trust deed to ensure that the professional trustee retains meaningful independent judgment. The use of a protector, an independent third party with the power to oversee the trustee and, in some cases, veto certain trustee decisions, provides an additional layer of governance and accountability.

4 Family Business Planning

4.1 Asset Protection

Asset protection planning in Hong Kong is primarily achieved using trust structures, often combined with corporate holding vehicles. The most common arrangement involves an offshore or Hong Kong discretionary trust holding shares in a British Virgin Islands or Hong Kong company, which in turn holds the family business assets or investment portfolio. By vesting legal ownership in the trustee, the assets are separated from the settlor՚s personal estate and are therefore not directly available to the settlor՚s personal creditors or to claims arising from the matrimonial disputes of beneficiaries.

A crucial limitation is the rule against fraudulent dispositions. Under Section 60 of the Law Amendment and Reform (Consolidation) Ordinance (Cap. 23), any disposition of property made with intent to defraud creditors is voidable at the instance of any person prejudiced by the disposition. Transfers into a trust made when the settlor was already insolvent, or which rendered the settlor insolvent, are particularly vulnerable to challenge. Accordingly, asset protection planning must be undertaken well in advance of any anticipated financial difficulty, and the settlor must be solvent at the time of the transfer.

As discussed in 3.4 Tax Consequences of Fiduciary and Beneficiary Roles, the risk of a trust being challenged as a sham or illusory trust is a primary concern. Practitioners must ensure that the trust is genuinely constituted, that the trustee exercises real and independent discretion, and that the trust documentation accurately reflects the parties՚ true intentions. For a detailed discussion of the use of trusts in the context of divorce proceedings, see Trusts and the Impact of Divorce Proceedings.

4.2 Succession Planning

Effective family business succession planning in Hong Kong requires the integration of legal structures, governance frameworks, and open communication within the family. The legal architecture typically involves a trust holding the business, with a shareholders՚ agreement or articles of association governing the rights and obligations of shareholders within the underlying corporate vehicle. Correctly administered, the trust can ensure the seamless transfer of economic value across generations without the delays and publicity of probate, whilst the shareholders’ agreement provides binding rules for dividend policy, board representation, share transfer restrictions and dispute resolution mechanisms.

At the governance level, families are increasingly adopting family constitutions, also known as family charters, to articulate the family՚s shared values, vision, and rules for engagement with the business. Whilst a family constitution is not strictly legally binding, it serves as a powerful tool for aligning expectations, preventing disputes, and providing a framework for decision-making that transcends individual generations. The constitution typically addresses matters such as employment criteria for family members, the role of the family council, the process for resolving disagreements and the family’s approach to philanthropy and social responsibility.

The “Great Wealth Transfer” ‒ the unprecedented intergenerational transfer of wealth currently underway in Hong Kong and across Asia ‒ places succession planning at the forefront of the private wealth agenda. As the first generation of post-war wealth creators passes away, their children and grandchildren are inheriting businesses and assets of enormous complexity and value. The challenges of this transition are explored in depth in Succession Battles, Family Trusts and Inherited Wealth.

4.3 Transfer of Partial Interest

As Hong Kong does not levy gift, estate, or inheritance taxes, the valuation of a partial interest in an entity for transfer tax purposes is generally not a primary planning consideration in the domestic context. The principal tax cost on the transfer of shares in a Hong Kong private company is stamp duty, which is levied at 0.2% of the higher of the consideration paid or the fair market value of the shares as determined by the net asset value of the company.

For stamp duty purposes, the IRD will assess the fair market value of the shares by reference to the underlying net asset value of the company. Whilst minority discounts and discounts for lack of marketability are well-established concepts in commercial valuation practice, the IRD՚s primary focus is the underlying net asset value, and significant valuation discounts are subject to scrutiny. Practitioners should obtain independent professional valuations to support any discount applied, and should be prepared to engage with the IRD on the methodology.

For the transfer of interests in offshore entities, such as BVI or Cayman Islands companies, Hong Kong stamp duty is not applicable, as the shares are not “Hong Kong stock” within the meaning of the Stamp Duty Ordinance. This is one of the many reasons why offshore holding structures remain popular for family business planning in Hong Kong.

5 Trends Driving Disputes

5.1 Trends Driving Disputes

Wealth disputes in Hong Kong are increasing in both volume and complexity, driven by a confluence of demographic, social, and economic factors. The most significant driver is the aforementioned Great Wealth Transfer (see 4.2 Succession Planning). Disputes often involve challenges to the validity of wills, claims for financial provision under Cap. 481, and conflicts between trustees and beneficiaries over the administration of trust assets.

Challenges to testamentary capacity are among the most common forms of probate dispute in Hong Kong. As the population ages and mental incapacity becomes more prevalent, the question of whether a testator had the requisite mental capacity to execute a valid will and thereby satisfy the four-limb test in Banks v Goodfellow is increasingly litigated. These cases are factually intensive and require medical evidence, witness testimony, and a careful reconstruction of the testator’s mental state at the time of execution. For a comprehensive analysis, see Essential Considerations on Testamentary Challenges and Safeguards on Will-Writing in Complex Family Situations.

Undue influence claims are closely related and equally contentious. For probate purposes, a claimant alleging undue influence must present evidence of coercion, namely that the testator՚s will was overborne by the improper pressure of another person. This a high threshold to satisfy as the courts are typically reluctant to rule against an otherwise validly executed will. However, suspicious circumstances, such as a sudden change in testamentary disposition in favour of a carer or a new partner, combined with evidence of the testator՚s vulnerability, can shift the evidential burden in the claimant’s favour.

In the context of trusts, disputes between trustees and beneficiaries are increasingly driven by demands for transparency and accountability. Beneficiaries are increasingly seeking disclosure of trust documents, including the letter of wishes, trustee minutes, and investment reports, and challenging the trustee՚s exercise of discretion as irrational or made in bad faith. The tension between the trustee՚s duty of confidentiality and the beneficiary’s right to information is a recurring theme in Hong Kong trust litigation.

5.2 Mechanism for Compensation

The mechanisms for compensating aggrieved parties in Hong Kong wealth disputes vary according to the nature and basis of the claim. In contentious probate proceedings, if a will is found to be invalid ‒ whether for want of testamentary capacity, undue influence, fraud, or failure to comply with the formal execution requirements under the Wills Ordinance (Cap. 30) ‒ the estate will be distributed in accordance with the most recent prior valid will, or, in the absence of any valid will, in accordance with the intestacy rules under the Intestates’ Estates Ordinance (Cap. 73).

For claims under Cap. 481, the court has a wide discretion to make such orders as it thinks fit, including orders for periodic payments, a lump sum, a transfer of specific property, a settlement of property, or a variation of an ante-nuptial or post-nuptial settlement. The court՚s primary consideration is the financial needs and resources of the applicant, though for surviving spouses the standard is higher and encompasses a broader assessment of what is fair and reasonable in all the circumstances.

In trust disputes, the primary remedy for a breach of fiduciary duty is equitable compensation, which aims to restore the trust fund to the position it would have been in “but for” the breach. Where a trustee has made an unauthorised profit ‒ for example, by accepting a commission or entering into a self-dealing transaction ‒ the court will order the trustee to personally account to the beneficiaries for that profit. Trustees may also be removed and replaced by the court under its inherent jurisdiction or under the Trustee Ordinance. The availability of injunctive relief, including freezing orders and search orders, makes Hong Kong an effective jurisdiction for asset protection in the context of trust and estate disputes.

6 Roles and Responsibilities of Fiduciaries

6.1 Prevalence of Corporate Fiduciaries

Corporate and professional fiduciaries occupy a central role in Hong Kong՚s private wealth ecosystem. Licensed trust companies ‒ regulated under the Trustee Ordinance (Cap. 29) and, where they carry on regulated activities, by the Securities and Futures Commission ‒ are routinely engaged by high net worth families to administer complex, multi-jurisdictional trust structures. The use of a professional corporate trustee provides several advantages:

• it ensures continuity of administration across generations;
• it brings specialist expertise in investment management, tax compliance, and beneficiary communications; and
• it provides a degree of independence that is essential for the trust to withstand legal challenge.

Professional trustees are held to a higher standard of care than lay trustees. Under Cap. 29, a trustee who acts in the course of a business or profession must exercise the special knowledge and skill that it holds itself out as possessing. This elevated standard reflects the trust that settlors and beneficiaries place in professional fiduciaries and provides a meaningful and legally binding basis for accountability. For a discussion of trust administration disputes and the duties of trustees, see Kerby Lau on Trust and Estate Administration Disputes.

6.2 Fiduciary Liabilities

The personal liability of trustees in Hong Kong is a well-developed area of law. A trustee is personally liable for any breach of trust, including unauthorised investments, failure to diversify, self-dealing, and failure to act in the best interests of the beneficiaries as a whole. However, the Trustee Ordinance provides several mechanisms for limiting or relieving trustee liability.

For instance, the trust deed may contain an exoneration clause, which excludes the trustee’s liability for certain categories of breach. Following the 2013 reforms to the Trustee Ordinance, such clauses cannot exclude liability for any breach of trust arising from the trustee՚s own fraud, and cannot exclude liability for breach of the statutory duty of care in relation to investment and delegation functions. This represents a meaningful floor of accountability for professional trustees.

Second, the Trustee Ordinance permits trustees to delegate investment management functions to authorised agents, provided the trustee exercises reasonable care in selecting the agent, defining the scope of the delegation, and reviewing the agent՚s performance. Where these conditions are met, the trustee is generally not liable for the agent՚s defaults. This delegation framework is particularly important for family trusts with complex, multi-asset portfolios that require specialist investment management.

Additionally, the court has jurisdiction under the Trustee Ordinance to relieve a trustee from personal liability where the trustee acted honestly and reasonably and ought fairly to be excused. This equitable relief provides a safety net for trustees who make genuine mistakes in good faith, though it is not available where the breach was deliberate or reckless. For a detailed analysis of anti-Bartlett clauses and their role in limiting trustee liability for underlying business management decisions, see Anti-Bartlett Clauses and Their Role in Trust Administration.

6.3 Fiduciary Regulation

The regulatory framework governing fiduciaries in Hong Kong is multi-faceted. The Trustee Ordinance (Cap. 29) provides the primary statutory framework for trustee duties, powers, and liabilities. Trust companies that carry on a trust business in Hong Kong must be registered under Cap. 29 and are subject to ongoing regulatory oversight.

A trustee conducting activities that constitute “regulated activities” under the Securities and Futures Ordinance (Cap. 571), such as managing a portfolio of securities or providing investment advice, must be licensed by the Securities and Futures Commission (SFC). The SFC՚s regulatory requirements include minimum capital adequacy standards, fit and proper criteria for responsible officers, and obligations relating to client asset protection and anti-money laundering (AML) compliance.

The AML and counter-terrorist financing framework is also directly relevant to fiduciaries. Under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615), trust service providers are required to conduct customer due diligence, identify beneficial owners, maintain transaction records, and report suspicious transactions to the Joint Financial Intelligence Unit. These obligations apply to the trustee’s relationship with the settlor, beneficiaries, and any underlying corporate entities.

6.4 Fiduciary Investment

Hong Kong applies the prudent investor standard to fiduciary investments, as codified in Cap. 29. Trustees are required to exercise the care and skill of a prudent person making investments for the benefit of others, having regard to the need for diversification and the suitability of investments in the context of the trust’s overall portfolio. This standard is consistent with modern portfolio theory, which evaluates investment risk at the portfolio level rather than in relation to individual assets.

The statutory duty to diversify is a default rule that can be modified by the trust deed. In practice, trust deeds for family trusts frequently contain anti-Bartlett clauses, which relieve the trustee of the duty to interfere in the management of an underlying company or business held by the trust, and may also relieve the trustee of the duty to diversify where the trust fund is concentrated in the family business. The rationale is to allow the family to continue operating the business without the trustee being required to sell the holding in the interests of diversification.

However, anti-Bartlett clauses have limits. The Hong Kong courts have confirmed that such clauses do not relieve the trustee of the duty to intervene where the trustee has actual knowledge of dishonesty or fraud in the management of the underlying company. The trustee retains a residual supervisory duty, and a blanket anti-Bartlett clause will not protect a trustee who willingly turns a blind eye to clear evidence of mismanagement or misconduct. This principle was reinforced in the significant case of Ivanishvili, Bidzina and others v Credit Suisse Trust Limited [2023] SGCH (I) 9 1, which has major ramifications for the interpretation of anti-Bartlett clauses in Hong Kong and other common law jurisdictions.

7 Citizenship and Residency

7.1 Requirements for Domicile, Residency and Citizenship

Hong Kong does not have its own citizenship, as it is a Special Administrative Region (SAR) of the People’s Republic of China. Individuals who are connected to Hong Kong may hold a Hong Kong Permanent Identity Card and enjoy the Right of Abode in the HKSAR, which is the closest equivalent to permanent residency. The Right of Abode confers the right to land in, enter, and remain in Hong Kong without restriction.

Under the Basic Law and the Immigration Ordinance (Cap. 115), Chinese nationals who were born in Hong Kong, or who have ordinarily resided in Hong Kong for a continuous period of not less than seven years and have taken Hong Kong as their place of permanent residence, are entitled to the Right of Abode. Non-Chinese nationals may also acquire the Right of Abode if they have entered Hong Kong with a valid travel document, have ordinarily resided in Hong Kong for a continuous period of not less than seven years, and have taken Hong Kong as their place of permanent residence. The requirements for the Right of Abode are set out on the Immigration Department’s website.

The Domicile Ordinance (Cap. 596) governs domicile in Hong Kong. A person acquires a domicile of choice in Hong Kong by being physically present in Hong Kong and forming the intention to reside there permanently or indefinitely. The concept of domicile is relevant to the choice of law rules governing succession to moveable property, and to the application of the Inheritance (Provision for Family and Dependants) Ordinance.

7.2 Expeditious Citizenship

Whilst Hong Kong does not offer a citizenship-by-investment programme, it reintroduced the Capital Investment Entrant Scheme (CIES) in March 2024 as a pathway to residency for high net worth individuals. Under the scheme, eligible applicants must demonstrate net assets of not less than HKD30 million throughout the two years preceding the application and must make a net investment of not less than HKD30 million in permissible investment assets in Hong Kong. Permissible assets include equities listed on the Hong Kong Stock Exchange, debt securities, certificates of deposit, subordinated debt, and eligible collective investment schemes. A mandatory contribution of HKD3 million must be made to the new Capital Growth Portfolio managed by the Hong Kong Investment Corporation Limited.

Successful CIES applicants, together with their spouses and unmarried dependent children under 18, are granted permission to remain in Hong Kong. After seven years of continuous ordinary residence, they may apply for the Right of Abode. The scheme has attracted significant interest from mainland Chinese, Southeast Asian, and Middle Eastern investors seeking to establish a Hong Kong base. As of 2025, over 800 applications had been received in the first year of the scheme՚s operation, demonstrating strong demand. For an analysis of the scheme’s implications for wealth planning, see the Chambers Update on the CIES.

8 Planning for Minors, Adults with Disabilities and Elders

8.1 Special Planning Mechanisms

Planning for vulnerable individuals, including minors, adults with physical or intellectual disabilities, and elderly persons at risk of losing mental capacity, requires a thoughtfully tailored combination of legal structures and practical arrangements. The overarching objective is to ensure that the vulnerable person՚s financial needs are met, their welfare is protected, and their assets are managed by a trusted and accountable person or institution.

For minors, the primary planning tools are testamentary trusts (established under a will to take effect on the testator՚s death) and inter vivos trusts (established during the settlor՚s lifetime). A testamentary trust for a minor typically provides for the trustee to manage the assets and apply income and capital for the minor’s maintenance, education, and benefit until the minor reaches a specified age, at which point the capital is distributed. The age of distribution can be staggered ‒ for example, one-third at 21, one-third at 25, and the balance at 30 ‒ to allow the beneficiary to develop financial maturity before receiving the full inheritance.

For adults with intellectual or physical disabilities, a discretionary trust is the preferred vehicle, as it allows the trustee to make distributions tailored to the beneficiary՚s specific needs without the beneficiary having a fixed entitlement that might affect their eligibility for government benefits or social welfare assistance. The government՚s Special Needs Trust Scheme, administered by the Director of Social Welfare, provides an affordable and regulated option for parents of children with special needs to make provision for their long-term care. For a comprehensive insight into trusts for special needs beneficiaries, see Bridging Legal Gaps: Estate Planning for Families with Special Needs.

8.2 Appointment of a Guardian

The appointment of a guardian for a minor child can be affected by a parent through a will, without the need for court proceedings, under the Guardianship of Minors Ordinance (Cap. 13). The appointment takes effect on the death of the appointing parent (or the death of the surviving parent, if both parents have appointed guardians). This is a straightforward yet crucial element of estate planning for parents of underage children.

For adults who have lost mental capacity and for whom no Enduring Power of Attorney (EPA) is in place, the process of obtaining legal authority to manage their affairs is more complex and costly. Two principal routes are available. First, an application may be made to the Guardianship Board for a guardianship order under the Mental Health Ordinance (Cap. 136). A guardianship order may grant the guardian the power to make decisions about the incapacitated person՚s welfare and, in limited circumstances, their finances. Alternatively, an application may be made to the High Court for a Part II Order under Cap. 136 to appoint a committee of the estate, who will have authority to manage the incapacitated person’s property and financial affairs. Both processes require medical evidence of incapacity and are subject to ongoing court or Board supervision. The committee of the estate must account to the court for all dealings with the incapacitated person՚s assets.

8.3 Planning for Incapacity

The Enduring Power of Attorney (EPA) is the cornerstone of incapacity planning in Hong Kong for financial and property matters. Under the Enduring Powers of Attorney Ordinance (Cap. 501), a donor may appoint one or more attorneys to manage their property and financial affairs in the event that they subsequently lose mental capacity. The EPA must be executed whilst the donor has full mental capacity, in the prescribed form, in the presence of a solicitor (who must certify that the donor understood the nature and effect of the document) and a registered medical practitioner (who must certify that the donor was mentally capable of making the EPA at the time of execution).

A critical limitation of the current EPA regime is that it covers only financial and property decisions; it does not extend to decisions about personal welfare or medical treatment. For end-of-life medical decisions, individuals may execute an Advance Medical Directive (AMD), which allows a mentally competent adult to refuse specified life-sustaining treatments in the event of a terminal illness, a persistent vegetative state, or other specified end-of-life conditions. The AMD regime was placed on a statutory footing by the Advance Decision on Life-sustaining Treatment Ordinance.

For detailed practical guidance on EPAs, see Enduring Power of Attorney: Practical Considerations and Private Client Explained: Powers of Attorney.

8.4 Elder Law

Hong Kong՚s rapidly ageing population ‒ with the proportion of residents aged 65 and above projected to reach 36% by 2066 ‒ has brought elder law to the forefront of the private wealth agenda. Legal practitioners are increasingly called upon to advise on a holistic suite of incapacity planning tools, combining EPAs, AMDs, trusts, and family governance arrangements to ensure that elderly clients are protected and their wishes are respected.

A significant gap in the current framework is the absence of a mechanism for appointing an attorney to make personal welfare and healthcare decisions. The Law Reform Commission has recommended the introduction of a Continuing Power of Attorney (CPA) regime, which would extend the scope of the EPA to include personal care decisions. The Law Reform Commission’s report on Enduring Powers of Attorney: Personal Care sets out detailed proposals for the CPA regime, and the government has been consulting on implementing legislation. Once enacted, the CPA will significantly enhance the toolkit available to individuals planning for incapacity.

Elder abuse ‒ including financial abuse, physical abuse, and psychological abuse ‒ is a growing concern in Hong Kong. Legal practitioners play an important role in identifying and responding to elder abuse, including through the use of EPAs to protect vulnerable elderly clients from exploitation by family members or carers. For a discussion of the legal responses to elder abuse, see Shedding Light on Elder Abuse: Protecting Our Loved Ones.

9 Planning for Non-Traditional Families

9.1 Children

Hong Kong law has substantially equalised the succession rights of children regardless of their birth status. Under the Intestates՚ Estates Ordinance (Cap. 73) and the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481), children born outside marriage have the same rights to inherit from their parents as children born within marriage. Adopted children, legally adopted under the Adoption Ordinance (Cap. 290), are treated as the lawful children of their adoptive parents for all succession purposes and lose their succession rights in relation to their birth parents.

Surrogacy presents a more complex legal landscape. Commercial surrogacy is prohibited in Hong Kong. For altruistic surrogacy arrangements, the surrogate mother is recognised as the legal mother of the child at birth, regardless of any genetic connection. The commissioning parents ‒ whether a heterosexual or same-sex couple ‒ must apply to the court for a Parental Order under Section 12 of the Parent and Child Ordinance (Cap. 429) to be legally recognised as the child՚s parents. The Parental Order extinguishes the legal parentage of the surrogate and her spouse and vests full legal parentage in the commissioning parents, which is essential for the child՚s succession rights, immigration status, and access to government benefits. For case analysis on surrogacy and parental orders, see The Controversial Topic of Surrogacy Hits Hong Kong Again and Case Analysis: Children of the Family Are Children!

9.2 Same-Sex Marriage

The legal landscape for same-sex couples in Hong Kong has evolved significantly through a series of landmark court decisions, though comprehensive statutory recognition remains absent. Hong Kong does not legally recognise same-sex marriage or civil partnerships performed domestically, and the government has been resistant to introducing a formal partnership framework despite judicial pressure.

The pivotal decision is Sham Tsz Kit v Secretary for Justice [2023] HKCFA, in which the Court of Final Appeal ruled that the government had a positive obligation under the Basic Law to provide same-sex couples with a framework for legal recognition, and gave the government a two-year deadline to establish such a framework. Whilst the court did not mandate same-sex marriage, it confirmed that the complete absence of legal recognition was constitutionally untenable.

In Secretary for Justice v Li Yik Ho (in substitution for Ng Hon Lam Edgar, deceased) FACV No 4 of 2024, [2024] HKCFA 30, a further landmark ruling in November 2024, the Court of Final Appeal upheld earlier decisions confirming that same-sex spouses married overseas are entitled to equal treatment under the Intestates՚ Estates Ordinance (Cap. 73) and the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481). Therefore, a same-sex spouse in a valid overseas marriage has the same intestacy rights as a heterosexual spouse and can bring a claim for financial provision under Cap. 481 on the same basis.

Despite these judicial advances, the absence of a domestic partnership framework means that same-sex couples cannot rely solely on the law to protect their interests. A carefully drafted will is essential to ensure that a same-sex partner inherits as intended. The use of a discretionary trust, with the partner as a primary beneficiary, provides additional protection. For comprehensive guidance on planning for same-sex couples, see The State of LGBTQ+ Rights in Hong Kong: A Legal Roadmap, Protecting Your Family as a Same-sex Couple, and With No Legal Status, Hong Kong Same-Sex Couples Take End-of-Life Planning Into Their Own Hands.

9.3 Cohabitation and Unmarried Couples

Hong Kong law provides very limited legal protection for unmarried cohabiting couples, regardless of sexual orientation. Unlike married couples, cohabitants have no automatic right to inherit from each other under the intestacy rules, no statutory right to claim a share of their partner՚s property on the breakdown of the relationship, and no automatic entitlement to spousal benefits such as joint tax assessment or public housing rights.

On the death of a cohabiting partner, the surviving partner՚s primary legal recourse is a claim under the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481). To succeed, the applicant must prove that they were being maintained, either wholly or substantially, by the deceased immediately before the death. The standard of provision available to a cohabitant is limited to maintenance, principally, what is reasonably required for their financial support, and does not extend to the higher standard applicable to spouses. This is a significant limitation, particularly for long-term cohabiting partners who have made substantial contributions to the household or to the deceased՚s business.

Given these limitations, proactive legal planning is essential for cohabiting couples. The minimum steps include executing mutual wills, ensuring that any jointly owned property is held as joint tenants (so that the survivor takes automatically by right of survivorship), nominating the partner as beneficiary of any pension or life insurance policy, and granting the partner an EPA to manage financial affairs in the event of incapacity. As with same-sex couples, a discretionary trust with the cohabiting partner named as the primary beneficiary provides the most comprehensive protection, ensuring that the partner’s financial security is not dependent on the vagaries of intestacy law or the outcome of a Cap. 481 claim.

10 Charitable Planning

10.1 Charitable Giving

Hong Kong has a long and distinguished tradition of philanthropy, and the legal framework actively encourages charitable giving through targeted tax incentives. Under Section 88 of the Inland Revenue Ordinance (Cap. 112), charitable institutions and trusts of a public character that are established in Hong Kong and are operated exclusively for charitable purposes are exempt from Profits Tax. The Inland Revenue Department maintains a searchable list of all tax-exempt charities, providing donors with a straightforward means of verifying a charity’s status before making a donation.

For individuals and corporations making approved charitable donations to Section 88 charities, the donation is deductible for Salaries Tax or Profits Tax purposes. The deduction is capped at 35% of the donor՚s assessable income or assessable profits for the year of assessment. This represents a meaningful tax incentive, particularly for high-income individuals who can reduce their effective tax rate by directing a portion of their income to charitable causes. Donations of property ‒ as opposed to cash ‒ may also be deductible, though the valuation of non-cash donations requires careful documentation.

The integration of charitable giving into estate planning is increasingly sophisticated. Charitable bequests in a will, the establishment of charitable trusts, and the creation of donor-advised funds are all mechanisms through which high net worth individuals can leave a lasting philanthropic legacy whilst optimising their tax position during their lifetime and on death.

10.2 Common Charitable Structures

The two most common structures for formalised charitable activity in Hong Kong are the company limited by guarantee and the charitable trust. Each has distinct advantages and is suited to different philanthropic objectives.

A company limited by guarantee is a corporate entity in which the members՚ liability is limited to a nominal guarantee amount (typically HKD100 or HKD1,000) rather than a shareholding. It provides limited liability for its members and directors, a familiar governance structure with a board of directors and annual general meetings, and the ability to employ staff, hold property, and enter into contracts in its own name. Companies limited by guarantee are required to file annual returns and financial statements with the Companies Registry, providing a degree of public accountability. They are well suited to operational charities with significant assets, employees, or public-facing activities.

A charitable trust is a private law arrangement in which a trustee holds assets for charitable purposes. It does not require incorporation or registration (other than the Section 88 application to the IRD), and its financial affairs are not publicly disclosed in the same manner as a company. This makes it particularly attractive to high net worth families who wish to conduct their philanthropy privately. A charitable trust can be established during the settlor՚s lifetime or by will, and can be structured to provide for distributions to specific causes or to a broad range of charitable purposes at the trustee՚s discretion.

Both structures must apply to the Inland Revenue Department for Section 88 tax-exempt status in order to offer tax-deductible receipts to donors. The application process requires the submission of the governing documents, a description of the charitable activities, and evidence that the organisation is established and operated exclusively for charitable purposes. For a discussion of Hong Kong՚s philanthropic culture and the role of corporate social responsibility in the private wealth context, see The Positive Impact of Corporate Social Responsibility.