Business Succession Tax Planning — Hong Kong

No. Hong Kong abolished estate duty in February 2006 and has never had a gift tax. This makes HK highly favourable for intergenerational wealth transfer. However, overseas taxes (UK Inheritance Tax, US estate tax) may still apply to HK assets held by founders with relevant domicile or citizenship.

Stamp duty applies to all share transfers at 0.2% of the higher of consideration or market value. A gift (for no consideration) is still stampable at 0.2% of market value. There is no gift relief or family exemption for stamp duty on HK share transfers.

It depends. A holding company gives clear ownership and legal rights — simpler, but each generation must positively transfer shares. A discretionary trust allows the trustee to distribute to beneficiaries flexibly, providing protection from divorce and creditors — but it costs more to set up and maintain. We recommend a combination for most large family businesses.

If the founder is UK domiciled (or deemed domiciled after 17 years in the UK), all worldwide assets — including HK company shares — are subject to UK IHT at 40% above the nil-rate band (£325K). Business Property Relief (BPR) may apply at 50% or 100% for qualifying trading companies, significantly reducing the IHT exposure.

A HK Single Family Office (SFO) qualifying under the 2023 tax exemption regime can manage a family's investment portfolio with profits tax exemption on qualifying investments (subject to substance and eligibility conditions). This makes HK an attractive alternative to Singapore for UHNW family office structuring.

Common approaches include: issuing preference shares with priority returns and no voting rights to next-gen, creating a family holding company where the founder retains voting control through a separate share class, or establishing a discretionary trust where the founder is protector with veto rights over distributions. We design the governance structure around your control requirements.