Tax considerations for US or UK citizens moving to Hong Kong

What do US or UK citizens who live in Hong Kong or plan to move there need to be aware of and plan for?

If you’re a US citizen living outside the US, you will still need to file US tax returns and pay US tax on your worldwide income. Similarly, for UK citizens, if you’re a non-resident who owns UK property or has sources of income in the UK, you may still need to file UK tax returns, even if you have moved abroad. You will need to get to grips with your tax filing requirements in your home country and add the tax filing and payment deadlines to your calendar to avoid exposure to penalties.

As well as compliance, you should consider whether your investments are tax favourable assets. Some investments can bring with them large tax bills, so seek advice before you buy!

If you’re moving to Hong Kong for work, will you be on a local contract or paid through your home country payroll? There are pros and cons either way so you should seek advice to find out what this could mean for you, before signing on the dotted line.

If you’re setting up your own business in Hong Kong, selecting the right structure is important in achieving the best tax result and minimising tax filing requirements, so you should loop in an adviser before you set up shop to get the most out of this new opportunity.

Are you familiar with the cost of living in Hong Kong? This may be higher than in your home country so find out how much you can expect to pay before you move - especially accommodation, which is notoriously expensive!

What are the advantages of speaking with an expatriate tax expert when moving abroad?

Your tax affairs are likely to be even more complex when you move abroad so the helping hand of an expert adviser can take away the burden, to leave you to enjoy your new home and embrace the culture. Even if you do have all of your tax filings up to date, there can be various opportunities for saving tax that you may not be aware of.

An expatriate tax expert will make sure that you do not miss those opportunities in your home country and in Hong Kong. You will probably find that working with a tax adviser based in the same or similar time zone has some advantages over retaining an adviser located in your home country. Communication will be simpler; they will understand the tax issues faced by those living abroad and they are likely to have the necessary understanding of the local tax regimes that may impact you.

What are the key tax priorities to consider in the current uncertain times?

• Tax residence – if you are unable to travel, this could affect your residence status for tax purposes.
• Immigration status - if you stay abroad longer than planned, you may be in breach of your visa conditions.
• Government support schemes – you may be entitled to financial support or reliefs from tax filing deadlines under various government schemes.

The US and UK governments have released various guidance on the relief available for those affected by the above, so if you’re in this situation, be sure to find out what you are eligible for. If you’re stuck overseas, make sure you hold on to your passport with your original entry/exit dates, flight records, and anything else that proves your stay was extended due to the impact of COVID-19.

Article first published in the June 2020 issue of Finance Monthly (page 36).

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