Update: the CIS-to-Hong Kong family-office

The CIS-to-Hong Kong family-office corridor remains structurally active in 2027, driven by a recurring pressure: principals who initiated a relocation one or two years ago are now reaching the point at which their tax-residence position, management-and-control arrangements, and entity substance are tested in earnest – by both the originating jurisdiction and Hong Kong. The trigger is no longer the decision to move. It is the failure to complete the move in a legally coherent sequence.

What Is Driving the Current Wave of Incomplete Relocations?

Several CIS-origin family offices that began their Hong Kong relocation between 2024 and 2026 structured the first step – entity incorporation – without completing the substance and governance steps that Hong Kong and the relevant CIS jurisdiction each require. The result is a split position: the principal holds a Hong Kong vehicle but has not extinguished tax residence in the originating CIS state, and the Hong Kong entity has not yet satisfied the management-and-control test that governs where the entity is treated as resident for tax purposes.

Hong Kong taxes on a territorial basis. Under the Inland Revenue Ordinance, profits tax applies only to Hong Kong-sourced profits. But that analysis depends on where management and control of the entity actually sits – not where it is incorporated. A CIS-origin holding structure managed from the originating jurisdiction can find itself taxable in two places simultaneously, or protected by neither.

The foreign-sourced income exemption (FSIE) regime – a set of economic-substance conditions governing whether offshore passive income routed through Hong Kong qualifies for exemption – came into force on 1 January 2023 and has been amended since. It means that a Hong Kong entity holding offshore income-producing assets must satisfy substance conditions or face Hong Kong profits tax on that income. Incomplete relocations routinely fail this test.

The sequencing question is where the legal work is concentrated. Entity incorporation, resignation of CIS-based directors, appointment of Hong Kong-based decision-makers, opening of a Hong Kong bank account, and the establishment of genuine operational presence are not simultaneous steps. They must follow a defined order, and the order depends on the treaty position between Hong Kong and the relevant CIS state.

Who Is Affected Across the CIS-to-Hong Kong Corridor?

The principals most immediately affected are those who:

incorporated a Hong Kong holding entity or family-office vehicle in 2024 or 2025 but have not yet changed the board composition or the location of board decisions;
rely on a CIS-origin trust or holding structure that feeds into a Hong Kong entity without having reviewed whether the CIS trust jurisdiction's forced-heirship or reporting rules interact with the Hong Kong structure;
have a beneficial-ownership (ultimate ownership and control) disclosure obligation pending in the originating CIS jurisdiction that was deferred at the time of the relocation decision; or
are approaching the first or second anniversary of Hong Kong incorporation, at which point the Inland Revenue Department issues the first profits tax return – ordinarily around 18 months after incorporation – and the substance position becomes a live filing question.

Hong Kong-incorporated companies are also required to maintain a Significant Controllers Register (a register of ultimate beneficial owners and significant controllers), a requirement in force since 1 March 2018. For CIS-origin structures with layered offshore holding entities, satisfying this requirement across the full chain is a practical task that incomplete relocations often leave unresolved.

The cross-border interface runs in both directions. The CIS jurisdiction from which the principal is relocating may treat the departure as a taxable event. Whether a bilateral tax treaty between that CIS state and Hong Kong allocates the relevant income and gains is a matter of the specific treaty text – not a general assumption. Our desk regularly reviews treaty positions across the principal CIS corridors for exactly this reason.

For principals who have also established, or are considering, a trust structure to hold Hong Kong or offshore assets, Hong Kong trust law offers a strong position. The Trustee Ordinance (Cap. 29), substantially reformed with effect from 1 December 2013, abolished the rule against perpetuities for Hong Kong trusts and strengthened protection against foreign forced-heirship claims – a material consideration for CIS-origin families subject to civil-law succession regimes in the originating jurisdiction.

The practical guide on the CIS-to-Hong Kong family-office relocation, covering the full sequencing analysis, is available at our relocation guide. For the banking and account-opening dimension, which sits alongside the substance and governance steps, see our analysis of the Hong Kong account-opening process on relocation.

The Immediate Action

For principals in the corridor, three questions are immediate.

First: where, in fact, are board decisions being made? If the answer is the originating CIS jurisdiction – even informally – the management-and-control test may not be satisfied in Hong Kong, and the tax-residence position is at risk.

Second: has the FSIE substance position been assessed for the current year? The Inland Revenue Ordinance and the FSIE regime do not wait for a filing deadline to create exposure. The position accrues from the date the income is received.

Third: is the CIS-side exit complete? Departure from tax residence in most CIS jurisdictions requires a formal step. Assuming that incorporation in Hong Kong achieves the exit is a common error – and one that generates dual-residence exposure.

A structured review of the sequencing, the treaty position, and the substance file is the appropriate next step for principals who initiated a relocation but have not closed it. The full service context is set out at our capital relocation practice page.

For a preliminary read on your relocation position across Hong Kong and the relevant CIS jurisdiction, email info@lockhartyip.com.

Frequently asked questions

What documents are needed for the CIS-to-Hong Kong family-office relocation?

The document set depends on the stage of the relocation and the CIS jurisdiction involved. A typical review covers the constitutional documents of the existing holding structure, any existing trust deed, the register of directors and the Significant Controllers Register of the Hong Kong entity, and the relevant treaty or protocol between Hong Kong and the originating CIS state. The FSIE substance position requires operational records showing where management decisions are made. We assess the current file and identify the gaps before advising on what is needed.

Which jurisdiction's law applies to the CIS-to-Hong Kong family-office relocation?

No single legal system governs the relocation. The corporate and tax position of the Hong Kong entity is governed by Hong Kong law – principally the Companies Ordinance (Cap. 622) and the Inland Revenue Ordinance. The exit tax position and any departure filing in the originating CIS state are governed by that state's domestic law and any applicable double-taxation treaty with Hong Kong. Trust structures introduce a third layer: the law chosen to govern the trust deed, which may be Hong Kong law or the law of an offshore jurisdiction. Mapping the interaction of these systems is the core of the cross-border analysis.

Do I need a Hong Kong adviser for the CIS-to-Hong Kong family-office relocation?

International counsel with a Hong Kong desk is the appropriate starting point for the sequencing, treaty, and substance analysis. Matters of Hong Kong domestic law – filing obligations with the Inland Revenue Department, Companies Registry requirements, and the Significant Controllers Register – are handled together with locally licensed Hong Kong firms. A CIS-origin relocation also requires counsel familiar with the originating jurisdiction's exit rules. Lockhart & Yip coordinates across these layers as international and cross-border counsel, working alongside allied counsel in the relevant jurisdictions.

Speak with Lockhart & Yip

For a scoped view of your matter, contact info@lockhartyip.com. Discuss your matter →

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

Update: the CIS-to-Hong Kong family-office relocation

What Is Driving the Current Wave of Incomplete Relocations?

Who Is Affected Across the CIS-to-Hong Kong Corridor?

The Immediate Action

Frequently asked questions

Speak with Lockhart & Yip

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