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Investing in Europe - enjoying Double Tax Agreement (DTA)

Background
  1. Mr. A is investing in European company, such as a French company (F Ltd);
  2. F Ltd performs well and will remit different type of payment to Mr A every year - such as dividend, interest and royalty etc. ;
The arrangement
  1. Mr. A forms a Hong Kong company (H Ltd) as 100% shareholder;
  2. H Ltd is 100% shareholder of a Luxembourg company (L Ltd);
  3. L Ltd is 100% shareholder of French company - the F Ltd;
  4. Payment from F Ltd reaches Mr. A via L Ltd and H Ltd.
Benefit
  1. H Ltd and L Ltd is regarded as "Twin-Company" - there is double tax agreement between HK and Luxembourg;
  2. Luxembourg company also enjoys local tax benefit in Europe;
  3. Withholding tax payable
    by French company    		If no Twin-Company structureIf used Twin-Company structure
    Dividend 25% 0%
    Interest 16% 0%
    Royalty 33% 0%
  4. The income received by L Ltd and H Ltd is tax free - according to their respective tax rules.

See also :

FAQs > Hong Kong Company - Private Limited Company > Tax Filing > Double Taxation - Introduction

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AbacusHKCPA - Certified Public Accountants base in Hong Kong (HK) - ACCA, HKICPA, providing services of

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