Buying stocks with Hong Kong limited company while maintaining offshore status

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tokilopov

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Dec 7, 2024
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Assignment: Opening a personal Multi-Currency Account with IBAN in a SEPA Country

Case Description:
  • I am not a citizen nor a resident of any EEA countries, and my home country is not on the CRS list. Furthermore, my country does not have sanctions against Russia, and it is generally not considered a strong partner of Western countries.
  • I am looking to open a personal functional multi-currency account with IBAN in a SEPA country. The account should allow for both a plastic and a virtual card. The account will primarily be used for income payments from third parties, specifically from Swiss and EU-based companies. These payments will typically be in € and will amount to up to 20 transactions per year. The total sum for all transactions will range from €50k to €100k annually, with each individual transaction being less than €10k. secondary use will be small outgoing transaction and card payments in EEA.
I have several key supporting documents and credentials available to facilitate the process:
  • E-citizenship in Estonia
  • An active company registered in the EU.
  • A company registered in my home country.
  • Very good Proof of funds (showing the legitimacy of the income and capital flow).
  • Bank statement from main financial institution from my country and business EMI account (Paysera)
  • Willingness to start with smaller amounts initially, transferring funds from a home-country-based account in my name, to build trust with the financial institution.
Given my profile and documents, I am looking for insights and advice on:
  • Which financial institutions are most likely to accept customers with my profile, considering my country of origin and status outside the EEA?
  • What additional documentation or steps may be required to open such an account?
  • How to approach the process of establishing trust with the financial institution?
  • Any potential challenges or hurdles I may face when trying to open this type of account?
PS maybe it seems like an easy or already covered topic (partly yes, I agree) but keep in mind that I have already applied in non-EEA friendly countries - Cyprus, Slovenia, Italy, Swiss, Hungary and Spain and have been rejected by 50+ banks. Also, I have been rejected by 30+ major EMIs too. I didn't just show up at the bank, I built trust with emails and phone calls before going to the bank in person, I speak 3 of the 5 local languages of the states mentioned. So far, the biggest progress I have made with Dukascopy is that they allowed me to use their trading account and after 6 months, they finally opened a bank account for me with strict limits of 3k USD and a max. of 5 transactions per quarter, and only from my two accounts mentioned above.
 
What neobanks you tried to open an account with if any ?
 
daniels27 said:
daniels27 said:
Maybe, we can help. But do you know what is the reason they do not like you? Are you from Serbia? Any ties to Russia?
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No ties with Russia, but all financial institutions suspect that there are connections. There are about 400k Russian refugees in Serbia and about 13k registered Russian companies (12k registered in the last 3 years!), basically, the state has become the Russian trade representative. I work in IT, as half of those Russians and their companies in Serbia, so... I'm registered as some sort of freelancer in Italy and Serbia, both companies with law taxes but many limits, and both are registered in last 3 years. All this together is probably the first reason.
The second one can be Serbia in general, I checked in "our" similar forums and basically nobody has account abroad if don't have resident permit abroad. Everything starts with state permission to open account abroad, central bank is the body in charge, and its very hard to get (I have it), so maybe also that is it reason why many people don't even try, so, in some way, we are not present on that market.
Third reason is probably the nature of the potential transaction - I ask for personal account where I should get money from companies based in Swiss and Luxembourg. Contract with both of these companies is with my "freelance" company form in Serbia, where I'm not obligated to have business account and I have a permission to open account abroad.
 
dany said:
dany said:
What neobanks you tried to open an account with if any ?
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Click to expand...
I tries with more than 30 "major". Many of them are not available in my region, but this available are very limited. For example, Paysera accepted to open account, but without even international card in USD (where expensive to use in euro zone, btw) and for beginning, payments are allowed only from and to Serbia, exactly what I don't need. This was the best experience with big players.
I'm currently trying out some alternatives, such as Sikirapay
Must add about neobanks that if I present with temporary address (from Booking), local phone number from the same country and only documents about my Italian based company, they are open to work with me even if they are not present in my country, so actually I have Revolut business account despite that they technically don't operate in Serbia. Obviously, I cant use that or similar account for my Serbia-based company.
 
A little bit late to this party (although I was aware that it had started 😉 ), sorry...

@tokilopov, my sympathies are with you.

A few questions and food for thought (I conclude that you are located in Serbia):

1) Do you really need this SEPA account as a personal account? Can't it be an account of your Serbian company? (If yes, your situation will be remarkably better.)

2) What is your business? I mean especially the business that will generate income payments from third parties, specifically from Swiss and EU-based companies. It's probably crucial.

3) In general, on many occassions it is not so important how the issues really look but how you present them. Opening a bank account is an exact example of this. It means, in many cases a good introducer (who knows what bank monkeys want to hear) can help you a lot.

4) Are you able and willing to deposit some remarkable amount (high 5 figures min.) of money with the bank? (It would also help you a lot.)

If you share the aforementioned information, you can expect some more founded advice...

(Well, not to finish without leaving some particular tip(s) as for this moment ”“ knowing nothing more so for the worst case 😉:
”“ I know that LT EMIs went crazy in the last time; but have you checked Verifo?
”“ It's not the excellent option in general (IMO) but Kingdom Bank (advertising here) onboards Serbia and perhaps is able to offer SEPA...
”“ Have you checked Paywiser /a Slovenian EMI/?)

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I am just a simple countryman. Anything I say is only a personal opinion, not a certified advice 🙂

If you think it makes sense, you can like it; if opposite, please, tell me, why I am wrong...
 
Hi everyone,



I've recently opened an Interactive Brokers account with my Hong Kong company and I’ve started buying stocks to get some returns on the cash instead of keeping it in Airwallex getting 0%.



I bought some HK-listed stocks but now I worry if this could potentially break the offshore status? Anyone with experience in this? Should I use a broker outside Hong Kong?



Thank you!
 
Yes , check "Profits from the purchase and sale of listed shares and other listed securities".

Treatment of other profits

Some examples of the tests used to determine the source of the main types of other business profits are as follows


ProfitsTax liability in Hong KongRental income from real property

Taxable if the property is located in Hong Kong

Profits derived by an owner from the sale of real property

Taxable if the property is located in Hong Kong

Profits from the purchase and sale of listed shares and other listed securities

Taxable if the stock exchange where the shares or securities in question are traded is located in Hong Kong



Where the purchase and sale took place over-the-counter, taxable where the contracts of purchase and sale are effected in Hong Kong

Profits accruing to a business (other than a financial institution) from the purchase and sale of unlisted shares and other unlisted securities

Taxable where the contracts of purchase and sale are effected in Hong Kong

Service fee income

Taxable if the services which give rise to the payment of the fees are performed in Hong Kong

Royalties received by a business

Taxable if the licence or right of use is acquired and granted in Hong Kong

Royalties on intellectual property received from Hong Kong by a non-resident

Taxable if the intellectual property is used in Hong Kong



For royalties received or accrued on or after 25 June 2004, if the intellectual property is used outside Hong Kong, taxable if the royalty payment is deductible in ascertaining the assessable profits of the payer under profits tax

Interest accruing to a business (other than a financial institution)

Taxable if the lender provides the funds in Hong Kong to the borrower
 
You could have used a Cyprus company to trade instead and any trading would be exempt from taxation by default, without recourse to any such rules.

It could be the case that you re-domicile the company and keep the current arrangements or you set up a new one from scratch. Let me know if I could be of help.
 
CyprusLawyer101 said:






You could have used a Cyprus company to trade instead and any trading would be exempt from taxation by default, without recourse to any such rules.

It could be the case that you re-domicile the company and keep the current arrangements or you set up a new one from scratch. Let me know if I could be of help.

Click to expand...

Hong Kong allows only inward re-domiciliation
 
So it would have been better for OP to setup a Cyprus company for this purpose? I assume there is less privacy in Cyprus compared to Hong Kong companies?
 
mikemcd said:






Hi everyone,



I've recently opened an Interactive Brokers account with my Hong Kong company and I’ve started buying stocks to get some returns on the cash instead of keeping it in Airwallex getting 0%.



I bought some HK-listed stocks but now I worry if this could potentially break the offshore status? Anyone with experience in this? Should I use a broker outside Hong Kong?



Thank you!

Click to expand...

Hi,



The fact that you've already made investments = risk, but not the end

Buying stock throw (i guess you are linked to IBKR Hong Kong right? check this in you account )



Hong kong ibkr, is a red flag for IRD for review, they could treat this as Hong Kong–sourced activity - especially if trades were managed locally. To reduce risk, I’ll stop using IBHK, transfer assets to an offshore broker, and prepare documentation showing that investment decisions were made outside Hong Kong and are not part of the company’s core business(Demonstrate that investing is not the core business activity of the company).



+ Explain that the investments were one-off or made in error,



If IRD decides that investment = local activity:

Offshore status can be revoked for a particular financial year.

You will have to pay 16.5% tax on income recognized as “sourced in HK”.

The rest of the activities can remain offshore if they were separate.





each case individual, you could be lucky and have no issues at all. Good luck!
 
plotoffshore said:






So it would have been better for OP to setup a Cyprus company for this purpose? I assume there is less privacy in Cyprus compared to Hong Kong companies?

Click to expand...

Normally yes it would have been a better option though some more info on the individual would be relevant.

In terms of privacy HK and CY are quite similar, with both having a public registry on directors and shareholders while UBOs are held also in a registry but only available to governmental authorities.
 
All my investments are held through a Cyprus company. It's not the most tax-optimized setup, but it's fairly secure for me, and I haven't had any issues with the tax authorities at least not so far. The company has been running for 5 years.
 
Hi guys, thank you for your comments. What offshore broker do you guys recommend?



What about doing some basic investment through a regular Hang Seng business account? Would that raise red flags as well @shimo?



Investing is definitely not the main activity of the company. I guess I'll continue business as usual and, in the event that the IRD requests to pay on those profits, I'll just pay.



Thank you!
 
shimo said:






i mean non-HK based

Click to expand...

If you conduct business or investment activities through a broker with a license or office in Hong Kong, the IRD may treat this as local activity, which can result in the loss of your offshore status and a 16.5% tax on profits. To avoid this, use brokers without any presence in Hong Kong, such as TradeStation International (UK) or Swissquote (Switzerland) , both operate remotely and accept offshore companies.
 
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