Update: relocating a holding company from Mainland China to Hong Kong

Relocating a Mainland-incorporated holding company to Hong Kong is not a single filing event. It is a sequenced exercise governed by the Inland Revenue Ordinance's management-and-control test, Hong Kong's new inward re-domiciliation regime, and the cross-border regulatory requirements of both jurisdictions – and the order in which those steps are taken can determine whether the move is clean or contested.

What is prompting the move now?

Two converging developments have accelerated inbound enquiries on our capital-relocation desk in the first half of 2025. First, Hong Kong's inward company re-domiciliation regime – which commenced in 2025 and allows an eligible non-Hong Kong company to re-domicile to Hong Kong while preserving its legal identity – has made the structural pathway more direct than the legacy route of incorporating a fresh entity and transferring assets. Second, the Pillar Two minimum top-up tax, effective for fiscal years beginning on or after 1 January 2025 for in-scope groups with consolidated revenue at or above EUR 750 million, has prompted holding-company reviews across the corridor. Groups below that threshold are also taking stock, anticipating that substance requirements will tighten further.

The result is a concentrated window. Groups that deferred restructuring decisions through 2023 and 2024 are now moving. The sequencing errors we observe in practice tend to cluster around two points: triggering a tax-residency change before the operational steps are ready, and misreading what the Inland Revenue Ordinance's management-and-control test actually requires on the ground.

Who is affected across the Mainland–Hong Kong corridor?

The structural trigger is not limited to large conglomerates. In our cross-border practice, we regularly advise mid-market groups where the Mainland holding entity was established historically as an expedient rather than a considered structure. Those entities often hold interests in Hong Kong operating companies, offshore vehicles, or both – making the re-domiciliation question live even for groups that have never examined it.

The Inland Revenue Ordinance taxes profits on a territorial basis. A company incorporated outside Hong Kong can nevertheless become Hong Kong tax-resident if central management and control is exercised in Hong Kong. That is a double-edged position: it is the mechanism that makes a re-domiciled or relocated holding company eligible for Hong Kong's treaty network and the two-tier profits-tax rate – 8.25% on the first HK$2,000,000 of assessable profits, 16.5% above – but it also means that a group operating informally from Hong Kong may already have an unmanaged tax-residency exposure on the Mainland side.

The foreign-sourced income exemption regime, in force from 1 January 2023 as amended, adds a further layer. A relocated holding company receiving dividends, interest, or gains from offshore entities must satisfy economic-substance conditions in Hong Kong or face Hong Kong tax on income that would otherwise have been exempt. The substance test is not onerous for a genuine holding company – but it must be documented before income flows, not after.

What to do now

Three immediate actions are worth addressing before any filing is made or any board resolution is passed.

First, map the current management-and-control position honestly. Where are the directors resident? Where are board decisions actually taken? Where are the books held? If the answer is already "Hong Kong" in practice, the tax-residency consequence may have crystallised without a formal move. That position needs to be assessed before triggering the re-domiciliation mechanics.

Second, verify eligibility for the inward re-domiciliation regime. Not every non-Hong Kong company qualifies. The regime has eligibility conditions – including requirements around the company's home jurisdiction and its existing legal form – and those conditions should be confirmed against the current commencement rules before the re-domiciliation route is presented to the board as available.

Third, consider the Mainland exit side. A Mainland-incorporated entity dissolving or de-registering triggers its own regulatory and tax clearance sequence under Mainland rules. That sequence runs in parallel with – but does not automatically synchronise with – the Hong Kong steps. Groups that treat the two sides as a single administrative process routinely encounter delays at the Mainland clearance stage that hold up the Hong Kong completion.

We work alongside locally licensed Hong Kong firms and allied counsel admitted in the relevant Mainland jurisdictions to coordinate both sides of the corridor. The internal-link resources below address related structural positions – migrating an offshore holding company to a Hong Kong base, and the capital-relocation questions that arise for family-office principals moving between jurisdictions.

For a preliminary read on your holding-company position and the re-domiciliation sequence, email info@lockhartyip.com.

Related practices and resources

• Capital Relocation – the full cross-border relocation practice
• Migrating an offshore company to a Hong Kong base – offshore-to-HK holding structure migration
• Singapore–Hong Kong family office relocation – jurisdiction comparison for family-office principals

Speak with Lockhart & Yip

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

Related

• Capital Relocation
• Migrating Offshore Company Hong Kong Base
• Singapore Hong Kong Family Office Relocation Singapore

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