Where the CIS-to-Hong Kong family-office relocation stands now

The question reaching our desk in the first half of 2027 is not whether CIS-based principals should consider Hong Kong. Most have already decided. The question is whether the relocation they began – or planned – is legally sound once the cross-border interface is examined in detail. That interface involves at least three legal systems operating simultaneously: the home jurisdiction of the principal, Hong Kong, and the offshore holding centre sitting between them. The point where they intersect is not theoretical. It is where tax exposure, enforcement risk, and succession planning live.

A CIS-to-Hong Kong family-office relocation is governed by no single instrument. It is instead structured through the interaction of Hong Kong's territorial tax regime and its trust law under the Trustee Ordinance, the management-and-control test for corporate tax residence, and the substance requirements that apply across the preferred offshore holding centres – principally the BVI and the Cayman Islands. The sequencing of these steps, and not merely their completion, determines whether the relocation achieves its objectives.

This analysis examines the current position in four parts: the commercial stakes, the governing instruments and the cross-border interface, a comparative read across the two principal systems, and our assessment of where the risk concentrates now.

What is actually at stake: the commercial question behind the move

For a CIS-based principal, the decision to rebase a family office to Hong Kong is driven by a cluster of pressures that rarely resolve to a single cause. The clearest version runs like this: a principal with operating assets and capital spread across multiple CIS states, a holding entity in an offshore jurisdiction, and a growing family with succession needs across continents finds that the administrative and legal centre of gravity is no longer where the capital is or where the family wants to be. Hong Kong solves a specific version of this problem. It offers a common-law system, English as an official working language of the courts, zero capital gains tax, no withholding tax on dividends or interest, and a mature trust infrastructure under a statute substantially reformed with effect from 1 December 2013.

Those attributes are well known. What is less frequently examined is the gap between establishing a physical presence in Hong Kong and achieving genuine relocation in a legal and tax sense. A family office that opens an office in Hong Kong, appoints local staff, and begins managing assets from that office has done something real. It has not, however, necessarily moved the tax-residence of the holding company, re-anchored the trust situs, or addressed the home-jurisdiction's view of where management and control sits. Each of these requires a separate, sequenced step. The failure to sequence correctly is, in our cross-border practice, the most common structural error we encounter.

The commercial stakes in a CIS context carry specific characteristics. Many CIS states have adopted or are developing controlled foreign corporation (CFC) rules, which attribute the undistributed profits of a foreign-held entity to the resident controller when certain thresholds are met. A principal who relocates personally but whose CFC exposure at the home-jurisdiction level is not extinguished before departure faces ongoing attribution risk. The relocation timetable must account for this. There is also the practical matter of what "relocation" means in jurisdictions where exit tax or unrealised-gain crystallisation may be triggered by a change in tax residence. Principals should verify the current domestic position before any step that changes their residence classification.

The governing instruments and how the cross-border interface bites

No single treaty or ordinance governs a CIS-to-Hong Kong family-office relocation. The legal architecture is assembled from several instruments operating in parallel, and the cross-border interface bites differently at each layer.

At the corporate layer, the central question is which jurisdiction treats a holding company as tax-resident. Hong Kong operates a territorial basis: profits tax applies to Hong Kong-sourced profits only. The two-tier profits tax rate for corporations is 8.25% on the first HK$2 million of assessable profits and 16.5% above that threshold. Capital gains are not taxed. These rates apply only to the entity's Hong Kong-sourced profits; offshore profits are outside the charge, subject to the foreign-sourced income exemption (FSIE) regime, which imposes economic-substance conditions on certain categories of passive income received by Hong Kong-resident entities from associated offshore entities. The FSIE regime has been in force from 1 January 2023 and was subsequently amended; the current scope should be verified before relying on the offshore-income exemption for any specific passive income type.

The management-and-control test is the instrument through which CIS home jurisdictions typically assert that a formally Hong Kong or offshore entity remains locally tax-resident. Where the board meets, where strategic decisions are made, where the actual investment management function sits – these are the factual questions that determine the outcome of a challenge. A principal who relocates to Hong Kong but continues to take calls from senior CIS-based employees, signs documents remotely, and attends no physical board meetings has not moved management and control in any legally meaningful sense. The home jurisdiction's tax authority will have arguments. They are not always wrong.

At the trust layer, the governing statute in Hong Kong is the Trustee Ordinance (Cap. 29), reformed substantially in 2013. Three features matter for the CIS context. First, Hong Kong abolished the rule against perpetuities for trusts governed by Hong Kong law. Second, the statute provides that a trust is not invalidated by the settlor reserving certain powers – a feature that addresses a concern frequently raised by CIS principals who are accustomed to retaining operational control. Third, the 2013 reform strengthened the protection of Hong Kong-law trusts against foreign forced-heirship claims, a material point for principals from CIS jurisdictions whose domestic succession regimes impose mandatory shares for family members.

At the offshore layer, BVI and Cayman Islands entities continue to serve as the intermediate holding vehicle between the Hong Kong family-office entity and the operating assets. Both jurisdictions have economic-substance regimes, and a pure holding company in either centre must satisfy the relevant substance conditions or face consequences under those regimes. The interaction between the BVI or Cayman substance requirement and the Hong Kong substance requirement for FSIE purposes creates a layered compliance obligation. The two are not always aligned.

For large MNE groups whose consolidated revenue meets the OECD Pillar Two threshold of EUR 750 million, the Hong Kong minimum top-up tax and income-inclusion rule, effective for fiscal years beginning on or after 1 January 2025, adds a further layer. Most family-office structures operate below this threshold, but principals whose underlying groups approach it should model the position before completing the relocation.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the route is won or lost. To discuss how this cross-border interface applies to your structure, write to us at info@lockhartyip.com.

How does the CIS legal environment compare with the Hong Kong position?

The CIS group of states is not a uniform legal system, and the analytical error made most frequently by advisers unfamiliar with the region is to treat it as one. Russia, Kazakhstan, and Uzbekistan each have distinct regimes on CFC rules, tax-residency tests, and currency controls. The comparison with Hong Kong therefore has to be constructed carefully, looking at the specific home jurisdiction of the principal rather than "CIS" as a category.

That said, some structural contrasts hold broadly. Most CIS states operate a worldwide taxation model for individuals, or a near-worldwide model qualified by residence tests. Hong Kong's territorial approach for companies – and the absence of personal income tax on offshore income for individuals resident in Hong Kong – represents a structural divergence, not merely a rate difference. A principal moving from a worldwide-tax jurisdiction to Hong Kong is not simply obtaining a lower rate. The principal is moving to a different conceptual model, with different filing obligations, different substance requirements, and different treaty networks.

Hong Kong's double-tax agreement network has expanded materially in recent years. The relevant agreements in force for a CIS-origin structure vary by the specific CIS state and by the treaty history between that state and Hong Kong. Principals should not assume that a Hong Kong holding entity will have treaty access to the home-jurisdiction's income tax or withholding-tax relief provisions. Treaty shopping restrictions apply, and the treaty position must be confirmed for the specific fact pattern.

On the trust side, the contrast is sharper. Most CIS jurisdictions either lack a mature trust statute or treat trusts with significant suspicion from a substance and sham-avoidance perspective. The Hong Kong Trustee Ordinance, operating within a common-law system, is a different instrument. A structure where a CIS-domiciled settlor transfers assets to a Hong Kong-governed discretionary trust with a Hong Kong-licensed trustee is legally recognisable in Hong Kong and in most offshore centres. Whether it is recognised – and respected – by the home jurisdiction depends on the domestic conflict-of-laws position and, in some cases, on whether the home jurisdiction has incorporated the Hague Convention on the Law Applicable to Trusts and on their Recognition. Several CIS states have not done so. The home-jurisdiction legal analysis is, therefore, not optional.

A manufacturing-and-distribution group controlled by a Central Asian principal came to our desk in early 2026. The principal had established a BVI holding entity several years earlier and was now seeking to move the family-office function to Hong Kong. The operating assets were in two CIS states. The problem was not the Hong Kong step – that was straightforward. The problem was that the principal remained tax-resident in the home jurisdiction, the BVI entity was already subject to a CFC attribution argument under that jurisdiction's rules, and the Hong Kong trust the principal proposed to settle had not been reviewed against the home jurisdiction's firewall position. We re-sequenced the steps: home-jurisdiction exit first, BVI substance review second, Hong Kong entity and trust establishment third. The matter closed within two planning cycles.

Where the risk concentrates: our current read

Three risk areas stand out in mid-2027 for CIS-to-Hong Kong family-office relocations that are in progress or being planned.

The first is the management-and-control gap. As noted, principals who have established a physical presence in Hong Kong but have not genuinely relocated operational decision-making remain exposed to home-jurisdiction tax-residence arguments. This risk has intensified because several CIS states have revised their domestic CFC and tax-residence rules in response to OECD guidance. A structure that worked three years ago may not hold under the current domestic rules. The governing instrument is, in each case, the domestic tax law of the home state, interpreted in light of the principal's current conduct – not the law as it was when the structure was put in place.

The second risk is FSIE. A Hong Kong holding entity receiving dividends, interest, or capital gains from associated offshore entities must satisfy the economic-substance test under the FSIE regime to obtain the exemption for that income. A family office that has moved to Hong Kong but whose investment management function is still being performed elsewhere – by a CIS-based investment team, or by a retained external manager outside Hong Kong – may not satisfy substance. The consequence is that the passive income is brought within the Hong Kong profits tax charge. This is not a theoretical outcome. We see it as an active risk in structures where the Hong Kong office is primarily administrative rather than genuinely managing.

The third risk is succession-planning incompleteness. Principals who have relocated their family-office entity but have not settled a Hong Kong-law trust, or who have settled a trust but have not reviewed its interaction with the home jurisdiction's succession regime, have completed the first half of the exercise. The forced-heirship firewall under the 2013 Trustee Ordinance reform is a Hong Kong-law protection. It does not bind a CIS court. Where the principal's estate includes assets situated in the CIS – land, operating interests, bank accounts – the local succession regime applies to those assets, and the trust may have no effect on them.

If an earlier filing, structure or enforcement attempt produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. Write to us at info@lockhartyip.com.

What foreign advisers frequently misread about the Hong Kong position

The most common error made by CIS-based advisers coordinating a Hong Kong relocation from the home side is to treat Hong Kong as a simple low-tax holding location. It is not. Hong Kong is a jurisdiction with a mature regulatory regime, a functioning tax authority in the Inland Revenue Department, an active Companies Registry, and a Securities and Futures Commission that has, since 1 June 2023, a mandatory licensing regime for virtual-asset trading platforms. For a family office with digital-asset holdings, that licensing position has to be addressed specifically.

The second misread is on the Significant Controllers Register. Since 1 March 2018, Hong Kong-incorporated companies are required to keep a Significant Controllers Register (SCR), which records the beneficial owners of the company. A CIS-origin principal who incorporates a Hong Kong entity and does not address the SCR at the outset creates a compliance gap that will need to be resolved before any corporate action is taken. This is a straightforward requirement, but it is routinely overlooked by advisers who view the Hong Kong incorporation as an administrative formality.

The third misread is the assumption that inward re-domiciliation is the right vehicle for moving the holding entity to Hong Kong. Hong Kong commenced an inward company re-domiciliation regime in 2025, allowing an eligible non-Hong Kong company to re-domicile to Hong Kong while preserving its legal identity. Whether re-domiciliation is preferable to incorporating a new Hong Kong entity and migrating assets into it depends on the specific corporate history, the asset profile, and the stamp-duty position. The two routes are not interchangeable, and the choice should be made after a structured comparison rather than by default. Parties should verify the current eligibility conditions before relying on re-domiciliation as a solution.

For a linked discussion of how BVI holding structures interact with the Hong Kong family-office relocation question, see our briefing on the BVI-to-Hong Kong family-office relocation. The holding-structure sequencing question is also addressed in detail in our analysis of relocating a holding company from the BVI to Hong Kong. For the full scope of our capital-relocation practice, including the cross-border structuring analysis, see the Capital Relocation practice page.

The decision matrix: situation, instrument, route, timing, and residual risk

How should a principal approaching this exercise structure their thinking? The answer depends on which stage of the relocation they have reached and what the dominant exposure is.

Situation A: the principal is still tax-resident in the home CIS jurisdiction and the holding entity is offshore. The governing instruments are the home-jurisdiction CFC and exit-tax rules, the offshore economic-substance regime, and the Hong Kong FSIE regime if a Hong Kong entity is being added. The route is: home-jurisdiction exit assessment first, CFC position second, offshore substance review third, Hong Kong entity and trust establishment fourth. The timing is driven by the home-jurisdiction's tax-year calendar and any CFC attribution window. The residual risk is on the management-and-control test in the transitional period when the principal is in neither jurisdiction full-time.

Situation B: the principal has already relocated to Hong Kong personally but has not moved the holding entity. The governing instruments are the Hong Kong FSIE regime and the offshore economic-substance requirement. The route is: establish the Hong Kong family-office entity with genuine investment management substance, review the offshore entity's substance position, settle the Hong Kong-law trust if succession planning has not been completed. The timing risk is that each year in which the passive income flows through an entity with insufficient substance is a year of potential tax exposure. The residual risk is the home-jurisdiction's view of whether the principal has genuinely exited.

Situation C: the principal has established both the Hong Kong entity and the offshore holding structure but has not addressed the trust layer. The governing instrument is the Trustee Ordinance. The route is: engage a Hong Kong-licensed trustee, settle a discretionary trust under Hong Kong law, review the interaction with the home-jurisdiction succession regime for assets situated there, and document the genuine transfer of beneficial ownership. The timing risk is that succession events do not wait for structural completion. The residual risk is the home-jurisdiction's refusal to recognise the trust for assets physically situated within its territory.

A European principal with a Central Asian operating group used a Cayman holding entity above a Hong Kong management company. In late 2026, the principal sought to settle a Hong Kong-law trust over the Cayman entity. The analysis turned on whether the Cayman entity itself had sufficient substance to sustain the FSIE position at the Hong Kong level and whether the home-jurisdiction succession regime would recognise the trust over the Cayman shares. We mapped the Cayman substance position, reviewed the home-jurisdiction conflict-of-laws treatment, and identified a jurisdictional mismatch between the trust situs and the location of the principal assets. A parallel step under the home-jurisdiction's domestic rules addressed the gap. The structure closed with a documented trustee-acceptance step and an updated board composition to satisfy management-and-control requirements.

Where this is heading: the medium-term outlook

Three trajectories shape the outlook for CIS-to-Hong Kong family-office relocations in the period ahead.

First, home-jurisdiction CFC enforcement is intensifying. Several CIS states have signalled – and in some cases have already enacted – expanded CFC rules that lower attribution thresholds and broaden the definition of a passive entity subject to attribution. A structure that passes the current threshold test may not pass the amended one. The practical implication is that the home-jurisdiction CFC position should be reviewed against the current law, not the law at the time the structure was put in place. Principals who have not done this review since 2023 are operating on an outdated assessment.

Second, Hong Kong's FSIE regime will continue to be the primary compliance point for passive income flowing through the Hong Kong family-office entity. The regime has been amended since its introduction, and further amendment is possible as the OECD's work on Pillar Two and substance standards continues. The safe course is to ensure that the investment management function – the people making the investment decisions, on Hong Kong premises, with Hong Kong records – is genuinely present in Hong Kong and not simply documented there.

Third, the Hong Kong trust infrastructure is increasingly being used by CIS principals as a succession instrument rather than merely a holding device. This is a positive development, but it requires a trustee who understands the cross-border succession interface and a trust instrument that has been reviewed against the home-jurisdiction's treatment of offshore trusts. The 2013 Trustee Ordinance reform provides a strong platform. The question is whether the structure built on that platform is complete and coherent across all the jurisdictions engaged.

The overall direction of travel is towards greater scrutiny, not less. The era in which an offshore holding entity and a nominal Hong Kong address sufficed is over. The regulatory and tax environment now rewards structures with genuine substance, genuine management, and genuinely completed succession planning. For principals who have done this work, Hong Kong remains a strong and legally coherent base. For those who have not, the exposure is real and growing.

How to assess whether your current structure holds

The self-assessment question is direct: can the structure withstand a well-informed challenge from the home-jurisdiction tax authority, the home-jurisdiction succession court, and the Hong Kong Inland Revenue Department simultaneously? That means three things in practice.

On the management-and-control test: is there contemporaneous documentary evidence that the investment decisions, the board resolutions, and the operational direction of the holding entity are made in Hong Kong? Minute books, email trails, and board attendance records are the primary evidence. If they show that decisions are routinely taken elsewhere, the tax-residence argument is not won.

On FSIE substance: does the Hong Kong entity have qualified staff, with investment management expertise, physically present in Hong Kong and engaged in the management of the portfolio? The substance test is not satisfied by an office address and an administrative employee. It requires the investment function to be genuinely in Hong Kong.

On the trust layer: has a Hong Kong-law trust been settled, is the trustee a licensed and independent Hong Kong entity, and has the home-jurisdiction treatment of that trust been reviewed for assets situated in the home jurisdiction? If any of these three questions returns a no, the succession-planning objective of the relocation is incomplete.

These questions are not checklists. They are the analytical framework through which a challenge will be assessed. Our practice is to work through them in the specific context of the client's jurisdictions and asset profile – not generically, but in the sequence that the facts require.

Related practices

• Private Wealth – trust structuring, succession planning and asset protection across jurisdictions
• Tax Positions – FSIE regime, territorial tax analysis and Pillar Two modelling for cross-border groups
• Holding Structures – offshore and Hong Kong holding-entity design, substance and re-domiciliation

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Related

• Capital Relocation
• Bvi Hong Kong Family Office Relocation Bvi Briefing
• Relocating Holding Company From Bvi Hong Kong Bvi

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.