SPV (special purpose vehicles) are subsidiaries that are registered with the main purpose of securing assets of the mother company if it faces serious risks such as Bankruptcy. In Hong Kong, SPVs can be fully incorporated companies, trustees, or partnership.
The SPV can also be formed to assist businesses seek funds for the parent companies without adding unnecessary risks. This operation has been a huge attraction for SPVs coming to Hong Kong because they can enjoy advantages of specific tax as well as foreign exchange special treatment. In this post, we bring you everything that you need to know about offshore SPV.
The main requirements for formation of an SPV in Hong Kong
- For SPVs to be incorporated in Hong Kong, the company registry requires that they have to be owned partially or fully by non-residents.
- Besides, the mother company must be registered outside Hong Kong. You have to provide proof of registration, objective, and extent of the mother company operations in other countries.
- Hong Kong demands that the SPV will only engage in holding and no other activities. At no moment should the SPV engage in direct business operations, seeking deals, or transacting on behalf of the mother company.
- The SPV must not be incorporated as an immune/excepted private business.
Registering an offshore SPV in Hong Kong using an agency
Unlike registering a completely new company in Hong Kong, SPVs are different. Their requirements are different, and the authorities are very strict. It is because of this that a lot of people find it very difficult to register it on their own. However, there is a better way using an agency in Hong Kong such as Accoplus can assist.
Having been in Hong Kong offering SPV and other company registration services for many years has provided Accoplus with a lot of experience. The agency understands all the requirements, twists in the legislation, and how to go about it to have the SPV registered. You can expect to get the best advice and guidance on driving the company ahead.
SPV and tax substance in Hong Kong
One thing that Accoplus advises its clients is to ensure that they maintain top notch tax substance. Using Tax Circular 601, the Inland Revenue Department insisted that not every SPV would enjoy all benefits espoused in HK-PRC Double Tax Agreement.
The agency helps you to add substance in line with DTA rules between Hong Kong and other countries. For example, the agency will assist you to acquire tax residency certificate from IRD to qualify for all benefits under DTA.
SPV : Reduce risks
Having an offshore SPV is a great way to reduce risks of a parent company when investing abroad. By separating the assets of an SPV and those of the mother business, it becomes easy to fund even bigger projects.
Do not simply try to walk the route of establishing an offshore SPV alone because it will be illustrious and might not bear the right results. However, let agencies such as Accoplus to assist you to incorporate the SPV in order get assistance on creating substance.