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Form 5472 Reporting: What Hong Kong-Owned U.S. Businesses Need to Know

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For Hong Kong families, investing in the United States can provide access to attractive For Hong Kong businesses with U.S. subsidiaries or other U.S. entities, Form 5472 reporting may extend well beyond the company’s direct Hong Kong owner. Related companies, family members, affiliated entities, and businesses under common control can potentially come into the analysis. Understanding these relationships is an important part of meeting U.S. reporting obligations and avoiding substantial penalties.

Hong Kong companies expanding into the United States often focus first on operational matters – establishing a U.S. entity, opening bank accounts, hiring employees, entering contracts, or acquiring assets.

But establishing a U.S. presence can also create important federal tax reporting obligations.

One of these is IRS Form 5472, an information return that can apply when a U.S. corporation is at least 25% foreign owned and has reportable transactions with foreign related parties during the tax year. Certain foreign-owned U.S. disregarded entities are also subject to Form 5472 reporting under special rules. The penalties for not filing are severe. Even though the form is relatively short, the penalty is $25,000 per year, per form, for each non filing violation.

For a U.S. company owned by a Hong Kong business or individual, determining who must be reported is not always as simple as identifying the shareholder listed on the company’s records.

U.S. tax rules can extend the analysis to a much broader network of related individuals and businesses.

Form 5472 and Hong Kong Business Groups

At first glance, the ownership structure might appear straightforward: the Hong Kong parent owns the U.S. company, so the parent is the foreign owner relevant to the Form 5472 analysis.

But the reporting analysis may not end there.

If the Hong Kong parent also owns businesses elsewhere in Asia or other jurisdictions, those affiliates may qualify as related parties. Depending on the ownership structure, transactions between the U.S. company and those entities can potentially trigger additional reporting.

This becomes particularly important for Hong Kong-headquartered groups with multiple subsidiaries, holding companies, or family-owned entities.

A separate Form 5472 is generally required for each reportable related party with which the reporting corporation had reportable transactions. As a result, identifying the complete related-party network is a fundamental part of the compliance process.

Who Can Be a Related Party?

One category involves a person or entity that directly or indirectly owns at least 25% of the U.S. company’s stock by vote or value. The analysis considers the relevant ownership interests rather than simply looking at the name appearing on a shareholder register.

Another category covers relationships defined under various provisions of U.S. tax law. Depending on the circumstances, these rules can capture relationships involving:

  • Family members
  • Corporations and their controlling shareholders
  • Companies belonging to the same controlled group
  • Partnerships under common ownership
  • Trusts, beneficiaries, grantors, and other trust relationships
  • Estates and their beneficiaries
  • Other entities connected through specified ownership relationships

For Hong Kong family-owned businesses, these rules can be especially important because business interests may be spread among family members, holding companies, trusts, and affiliated entities.

The analysis therefore needs to look beyond the U.S. company itself and consider its relationship with its 25% foreign shareholder and the broader ownership structure.

Why Sister Companies Can Create Reporting Issues

One of the easier relationships to overlook involves sister companies. Suppose a Hong Kong parent company owns a U.S. subsidiary as well as operating companies in Hong Kong, Mainland China, Singapore, or other markets.

Those Asian companies may have no direct ownership interest in the U.S. subsidiary. The U.S. company may not own them either.

Nevertheless, the companies may still be related for U.S. tax purposes because they are connected through their common parent.

This matters when transactions occur between the U.S. business and its overseas affiliates.

For example, the U.S. company might pay a Hong Kong affiliate for management services, purchase products from another group company, receive financing from its parent, or reimburse expenses incurred by an overseas affiliate.

Transactions of this nature should be reviewed as part of the Form 5472 analysis.

For a Hong Kong business group with several overseas entities, what initially appears to be a filing involving one foreign shareholder can therefore become a broader reporting exercise.

Formal Ownership Is Not Always the End of the Analysis

Another potential mistake is assuming that related-party status depends entirely on formal share ownership.

U.S. tax rules can look beyond legal form when determining whether common control exists. Depending on the applicable rule and circumstances, direct and indirect control, the economic relationship between businesses, and the way parties act in practice can become relevant.

This means a Hong Kong-owned U.S. business should not necessarily conclude that no related-party relationship exists simply because an overseas company does not appear on its ownership chart.

The substance of the relationship may need to be considered alongside the formal corporate structure.

Constructive Ownership Can Change the Result

Constructive ownership, sometimes called attribution, adds another layer to the analysis.

Under applicable U.S. tax rules, a person can sometimes be treated as owning shares that are legally held by certain family members or related entities.

As a result, someone who appears to own less than 25% of a U.S. company based solely on direct ownership could potentially meet the relevant threshold after the attribution rules are applied.

This issue deserves particular attention in family-owned Hong Kong businesses. For example, shares in a family enterprise may be divided among siblings or held through several family-controlled companies. Looking at each person’s direct percentage separately may not provide the complete answer under U.S. constructive ownership rules.

Ownership should therefore be analyzed under the applicable U.S. attribution provisions before concluding that a shareholder falls below the Form 5472 threshold.

Transactions Between the U.S. Company and Hong Kong Affiliates

Identifying the related parties is only part of the process. The business must also determine whether it had reportable transactions with those parties during the relevant tax year.

For a Hong Kong-owned U.S. company, transactions requiring review may include payments or transfers involving:

  • Sales and purchases of inventory or other property
  • Management or administrative services
  • Consulting and professional services
  • Royalties and licensing arrangements
  • Interest and financing
  • Loans or advances
  • Rent and leasing arrangements
  • Capital contributions
  • Distributions
  • Expense reimbursements
  • Other monetary and nonmonetary transactions

Intercompany activity that may seem routine from an operational perspective can still have U.S. reporting implications.

This is one reason Form 5472 compliance should be coordinated with the group’s accounting and transfer-pricing processes rather than addressed only when the U.S. tax return is being prepared.

Why Accurate Reporting Matters

Form 5472 carries significant penalties for noncompliance. A failure to file a required Form 5472, filing a substantially incomplete form, or failing to maintain required records can result in a substantial monetary penalty. Additional penalties may apply when a failure continues after notification by the IRS.

Where several related parties should have been reported, the exposure can increase because reporting requirements are evaluated separately.

For Hong Kong groups with numerous affiliates, this makes it particularly important to identify all potentially relevant entities before preparing the U.S. company’s annual filing.

Common Form 5472 Mistakes for Hong Kong-Owned Businesses

Several practical steps can reduce the risk of incomplete reporting:

  1. Look beyond the Hong Kong parent. Map the wider corporate group, including sister companies and other entities under common ownership or control.Review family ownership. For privately held and family-owned Hong Kong businesses, determine whether attribution rules alter the apparent ownership percentages.
  2. Consider existing trusts and holding companies. If shares are held through trusts, investment vehicles, or intermediate holding companies, the ownership analysis may require additional steps.
  3. Review intercompany transactions throughout the year. Payments between the U.S. entity and Hong Kong or other overseas affiliates should be identified and categorized rather than reconstructed at the last minute.
  4. Do not rely solely on the organization chart. Formal legal ownership is important, but it may not resolve every question concerning related-party status or control.
  5. Coordinate U.S. and Hong Kong finance teams. The information needed for Form 5472 may sit with accountants or finance personnel in Hong Kong rather than with the U.S. subsidiary.

A Practical Example

Consider a Hong Kong family that owns HK Holdings Ltd., which in turn owns a U.S. operating company.

HK Holdings also controls businesses in Hong Kong and Mainland China. During the year, the U.S. company purchases products from the Hong Kong affiliate, pays management fees to its parent, and receives an intercompany loan from another group entity.

It would be a mistake to review only the direct ownership of the U.S. company.

The broader group structure and each intercompany transaction need to be considered to determine which entities qualify as related parties and which transactions are reportable on Form 5472.

For larger Hong Kong groups, this exercise may need to extend across multiple levels of ownership and several jurisdictions.

Form 5472 FAQs for Hong Kong Businesses

1. Does a Hong Kong company with a U.S. subsidiary need to file Form 5472?

Potentially. Form 5472 generally applies to a 25% foreign-owned U.S. corporation that has reportable transactions with a foreign related party during the tax year. Special reporting rules can also apply to certain foreign-owned U.S. disregarded entities. The specific facts and entity classification should be reviewed.

2. Do transactions between a U.S. subsidiary and its Hong Kong parent need to be reported?

They may. Transactions between a U.S. reporting corporation and its foreign parent can fall within Form 5472’s reporting requirements. The nature and amount of the transactions should be reviewed under the applicable rules.

3. Can other companies owned by the Hong Kong parent be related parties?

Yes. Sister companies and other businesses within the same controlled group may qualify as related parties even when they do not directly own shares in the U.S. company.

4. Can family ownership affect Form 5472?

Yes. U.S. constructive ownership rules can attribute certain ownership interests between family members and through entities. This can affect whether a person is treated as meeting the relevant ownership threshold.

5. Does each foreign related party require a separate Form 5472?

Generally, a reporting corporation files a separate Form 5472 for each related party with which it had reportable transactions during the tax year. This makes identifying the complete related-party network particularly important for businesses belonging to larger international groups.

6. What are the penalites for not filing Form 5472?

Standard penalties are $25,000 per year, per form.

Review the Structure Before Filing

For Hong Kong businesses operating in the United States, Form 5472 compliance should not begin and end with the direct shareholder.

If you have questions about Form 5472 reporting for a Hong Kong-owned U.S. business, OLN’s US Tax Advisory Services team can help assess your ownership structure, related-party relationships, and U.S. reporting obligations. Contact us for guidance.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Investing in the U.S.: What Hong Kong Families Should Know

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For Hong Kong families, investing in the United States can provide access to attractive markets, diversification opportunities, and long-term wealth-building potential. But before capital is committed, it is important to consider how the investment will be owned and managed. The legal and tax structure chosen at the outset can significantly affect U.S. taxation, reporting obligations, liability, succession planning, and future flexibility.

For families and investors based in Hong Kong, a U.S. investment is rarely just a question of identifying the right asset. Whether the opportunity involves real estate, an operating business, private equity, or an investment portfolio, the way the investment is structured can be just as important as the investment itself.

This is particularly relevant for families whose assets, businesses, and family members may span Hong Kong, the United States, Mainland China, and other jurisdictions.

Decisions made before a transaction closes can have consequences for years – or even generations. A structure that appears straightforward today could create unexpected tax exposure, administrative requirements, or succession challenges later.

Start With the Ownership Strategy

There is no single structure that works for every investor entering the U.S. market. The appropriate approach depends on the investor’s circumstances, objectives, existing holdings, and connections to different jurisdictions.

Before selecting an entity or ownership arrangement, families should generally consider factors such as:

  • Hong Kong and other relevant tax residency considerations
  • The type and purpose of the U.S. investment
  • Long-term family and succession objectives
  • Potential exposure to U.S. estate tax
  • Existing trusts, companies, or family holding structures
  • Financing arrangements
  • The location and residency of family members and beneficiaries
  • Plans to sell, transfer, or pass the investment to future generations

These considerations are interconnected. A structure that is efficient for one family may be unnecessarily complicated – or potentially disadvantageous – for another.

Common Ways to Structure U.S. Investments

1. Limited Liability Companies (LLCs)

LLCs are frequently considered when international investors acquire U.S. assets or establish business operations. Depending on the circumstances, they can provide liability protection, management flexibility, and relatively straightforward ownership arrangements.

However, Hong Kong investors should not consider the U.S. treatment of an LLC in isolation. The way an entity is characterized and treated in other relevant jurisdictions may differ from its treatment under U.S. law.

This becomes particularly important for internationally mobile families or those with assets and family members in several countries. The analysis should therefore consider the broader cross-border implications before an LLC is established.

2. Corporations

A corporation may be appropriate for certain U.S. business investments, particularly where a company expects to grow, bring in additional investors, or establish substantial operations.

Corporate structures can offer practical advantages from an operational and governance perspective, but they may also introduce additional tax and compliance considerations.

Hong Kong investors should therefore evaluate the benefits of a corporate structure in the context of both the U.S. investment and their wider international arrangements.

3. Trusts

Trusts can play an important role for Hong Kong families concerned with preserving and transferring wealth across generations.

Depending on the family’s circumstances and applicable laws, trusts may support succession planning, asset protection, family governance, and estate planning objectives.

For Hong Kong families with beneficiaries, trustees, settlors, or assets located in different jurisdictions, however, trust planning can become particularly complex. U.S. rules governing trusts may interact with the family’s existing structures and the laws of other jurisdictions in ways that are not immediately apparent. This may be true even if the U.S. involvement is by beneficiaries that do not yet have transactions with the trust.

4. Partnerships and Joint Ventures

Partnership and joint venture arrangements can be useful when several family members, investors, or business partners want to participate in the same U.S. opportunity.

This may be particularly relevant to Hong Kong investors pursuing U.S. real estate, private business, or other investment opportunities alongside family members or investment partners.

These structures can offer considerable flexibility, but issues such as management authority, allocation of profits and losses, reporting responsibilities, transfer rights, and exit provisions should generally be addressed from the outset.

Don’t Underestimate U.S. Compliance Requirements

Completing the investment is only the beginning. Once an investor owns assets or conducts business in the United States, a range of U.S. reporting and compliance obligations may apply.

Depending on the structure and circumstances, these can include:

  • U.S. federal income tax returns
  • State-level tax filings
  • Information reporting requirements
  • Applicable ownership or disclosure requirements
  • Trust-related reporting
  • Entity filings and maintenance
  • Other cross-border reporting obligations

Missing an applicable filing can result in penalties, additional professional costs, and unnecessary administrative difficulties.

A common challenge for international families is that their advisors may be located in different jurisdictions. A Hong Kong accountant, U.S. attorney, wealth advisor, trustee, and other professionals may each be providing advice from a different perspective.

Each recommendation may make sense independently while creating unintended consequences when combined with the family’s wider international structure.

Coordinating Hong Kong and U.S. Planning

For Hong Kong families investing in the United States, coordination between advisors can be particularly important.

A typical transaction may involve U.S. attorneys and accountants alongside Hong Kong legal, tax, trust, banking, or wealth management professionals. Families with connections to additional jurisdictions may require an even broader advisory team.

For example, an ownership structure selected for a U.S. real estate investment could affect the family’s estate planning. Financing arrangements could influence how an investment is held or eventually transferred. An existing family trust or holding company could create considerations that would not arise for an individual investor.

When these issues are identified before a transaction is completed, families generally have more options for addressing them. Discovering them after closing can make restructuring considerably more difficult and expensive.

Why Planning Before the Investment Matters

Ideally, cross-border planning should begin before purchase agreements are finalized, entities are established, or investment funds are transferred from Hong Kong or elsewhere.

Early planning gives families an opportunity to consider the investment from several perspectives at once. It can help them:

  • Choose an appropriate ownership structure
  • Identify potential U.S. and cross-border tax consequences
  • Coordinate personal, family, and business objectives
  • Prepare for ongoing U.S. reporting and compliance
  • Understand relevant options considering the U.S. and Hong Kong do not have a Tax Treaty
  • Integrate the investment with existing family structures
  • Reduce unnecessary administrative complexity
  • Preserve flexibility for a future sale, transfer, or succession

The objective is not simply to complete a U.S. transaction efficiently. It is to establish a framework that continues to make sense as the investment -and the family’s circumstances – evolve.

Think Beyond the Initial U.S. Investment

For many Hong Kong families, an investment in the United States forms part of a much broader international wealth strategy.

A U.S. property acquisition may eventually become part of a family’s long-term investment portfolio. An initial business investment could lead to additional U.S. operations or acquisitions. A trust or holding structure established today may influence how wealth is managed and transferred to the next generation.

International mobility also matters. Children may study or live in the United States, family members may relocate, and business interests may expand into new jurisdictions. Changes of this kind can affect planning assumptions that were appropriate when an investment was first made.

Effective cross-border planning therefore looks beyond the immediate transaction.

Families should consider how a prospective U.S. investment fits with their existing assets, business interests, family arrangements, succession objectives, and overall global footprint.

Frequently Asked Questions for Hong Kong Investors

1. What is the best structure for a Hong Kong investor buying assets in the U.S.?

There is no universally preferable structure. The appropriate choice depends on factors including the nature of the investment, the investor’s tax residence, existing companies or trusts, financing requirements, succession objectives, and the jurisdictions with which the family has connections, and keeping in mind there is no Tax Treaty between the U.S. and Hong Kong.

2. Should a Hong Kong family use an LLC or a trust for a U.S. investment?

The two structures serve different purposes. An LLC may be useful for liability protection, management, and ownership flexibility, while a trust may have a greater role in succession, wealth preservation, and estate planning. Depending on the circumstances, more than one entity or structure may form part of the overall arrangement.

3. Do Hong Kong investors have U.S. tax and reporting obligations?

Potentially, yes. The requirements depend on the type of investment, ownership structure, activities conducted in the United States, and other circumstances. Obligations can include federal and state tax filings, information returns, trust reporting, entity filings, and other applicable disclosures. Additionally, without a proper structure, U.S. assets could be subject ot the estate tax.

4. Why should Hong Kong investors plan before transferring funds to the U.S.?

Decisions about ownership and structure can be considerably easier to implement before an investment is completed. Reviewing the U.S. tax, legal, succession, and compliance implications in advance can help avoid unnecessary restructuring and preserve greater flexibility later.

5. Why is cross-border coordination particularly important for Hong Kong families?

Hong Kong families may have assets, companies, trusts, beneficiaries, or family members across several jurisdictions. A decision that works well from a U.S. perspective may have different consequences elsewhere. Coordinating U.S. and Hong Kong advisors – and advisors in any other relevant jurisdictions – helps ensure that the investment is considered as part of the family’s overall wealth and succession strategy. OLN has a dedicated US Tax Advisory Services practice in Hong Kong. Contact us for guidance.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Hong Kong Succession Guide – What Happens to Hong Kong Assets When a Mainland Entrepreneur Passes Away

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When a mainland Chinese entrepreneur dies, leaving assets in the Hong Kong SAR, the assets do not automatically transfer to family members. The Hong Kong SAR has its own legal system and probate process, which must be followed before assets can be accessed or distributed to the deceased’s heirs. This article briefly explains the Hong Kong SAR legal process to distribute a deceased’s assets.

First step: Are there assets in Hong Kong?

The first step would be to determine which assets fall within the legal jurisdiction of the Hong Kong SAR. These assets may include bank accounts held with Hong Kong banking institutions, shares held in Hong Kong companies, real property (real estate) held in Hong Kong and/or securities traded on the Hong Kong Stock Exchange. The administration of the above types of assets would be dealt with through the Hong Kong court process and Hong Kong law will generally govern Hong Kong real estate, regardless of the deceased’s nationality or place of residence.

The legal authority to deal with the deceased’s Hong Kong assets is granted by the High Court of Hong Kong either in the form of a grant of probate (if the deceased left a valid will naming an executor who is willing to act) or a type of letters of administration, if the deceased left no will, the will is invalid or no executor is able to act.

Did the deceased leave a Will?

If the deceased left a Will, the Hong Kong court will need to decide whether the Will is valid under Hong Kong law and whether it covers Hong Kong assets. Hong Kong recognises Wills executed in accordance with the law of the place of execution or the deceased’s domicile. If the Will was executed in the People’s Republic of China (“PRC”), issues that sometimes arise include the differences in formal requirements between the two jurisdictions, lack of clarity over asset coverage and the absence of an appointed executor. If an executor is named in the Will, the executor (usually with the help of his/her Hong Kong solicitor) applies for probate in Hong Kong.

What if the deceased left no Will or an invalid Will?

If the deceased left no Will or an invalid Will, this is deemed an intestacy and the deceased’s estate will be distributed in accordance with Hong Kong’s intestacy rules pursuant to the Intestates’ Estates Ordinance Cap 73.

Who are the heirs in an intestacy?

Very broadly speaking, the surviving spouse (with a fixed statutory legacy in specific situations) and children take priority and extended family members such as parents and siblings inherit only if closer relatives do not exist.  A suitable family member (often the surviving spouse or an adult child) applies for Letters of Administration in order to administer the estate.

What are the documents generally required of PRC heirs?

PRC heirs are typically required to present the following documentation – death certificate issued by mainland Chinese authorities, resident identity cards of the deceased and heirs, hukou registration records to prove family relationships, marriage or divorce documents if applicable and notarial certificates confirming identity and kinship. In practice, Hong Kong courts usually require these documents to be notarised by a notary public in the PRC and properly authenticated (for example, via current apostille/legalisation arrangements).

What if probate proceedings have already been completed in the PRC?

Even if probate proceedings have already been completed in the PRC, it is not possible to apply for recognition of these probate documents in Hong Kong. Unfortunately the PRC is not listed as a country under Hong Kong’s statutory resealing regime as the listed countries are all common law regimes. A fresh application in Hong Kong is required.

Are there estate duties and estate taxes in Hong Kong?

Estate duties have been abolished in Hong Kong for deaths occurring after 11 February 2006 and there have never been estate or inheritance taxes. However, tax issues may arise in the PRC and other applicable jurisdictions.

What are some practical challenges faced by PRC heirs?

As a result of the numerous complications mentioned above, some common challenges faced by PRC heirs include delays due to incomplete documentation, difficulty proving family relationships where hukou registration records differ from actual family relationships, translation (from Chinese to English) as well as notarisation requirements and disputes over the validity or interpretation of Wills (the latter complication is not unique to PRC heirs but occurs across all jurisdictions).

It is important to note that if the deceased was domiciled in the PRC, PRC succession law may be relevant in deciding who inherits movable assets in Hong Kong, although the Hong Kong court issues the grant and supervises the administration.

What is the expected timeline?

A straightforward probate application in Hong Kong takes a few months to complete. Complex cross-border estates take longer, particularly where there is no will, documents must be obtained from mainland authorities and/or heirs are in dispute about their entitlements.

Does planning ahead help?

For PRC citizens with assets in Hong Kong, advance planning can significantly reduce complications in the probate process. Many have opted to execute separate Hong Kong wills to cover their Hong Kong assets to streamline the legal process in Hong Kong, appointed executors familiar with Hong Kong laws and maintained clear records of bank accounts, shareholdings, property and other assets.

Conclusion

The passing of a loved one is one of the most difficult times in a person’s life. With the benefit of advance legal planning, heirs will be able to navigate the complicated process of probate more smoothly and avoid unnecessary stress during a time of immense grief. And with a properly drafted will, one can generally choose who should inherit one’s assets, without regard to fixed intestacy rules in Hong Kong.

In conclusion, it is advisable to seek professional legal advice if one’s estate involves Hong Kong assets.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Reproductive Technology in Hong Kong – Legal Framework, Ethics and Emerging Judicial Trends

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(This article was published in the August 2026 Issue of the Hong Kong Lawyer)

Introduction

Louise Joy Brown, born in Manchester on 25 July 1978, was the world’s first baby conceived via in vitro fertilisation (“IVF”). Eight years later, Hong Kong’s first IVF baby was born in December 1986 at a private hospital in Happy Valley. His birth at the time was so controversial that his parents declined to reveal his and their identities, as well as his birthdate. As reported in the South China Morning Post, the Catholic Church had condemned the procedure as “an artificial manoeuvre to create life”.

Today it is estimated that 57 IVF babies are born every hour globally. Technological advancements over the years have rendered IVF procedures more mainstream, safer and success rates much higher.

Meanwhile in Hong Kong, the total fertility rate has been below the replacement level of 2.1 for decades, and even plunged to a record low in 2025. The HKSAR government’s recent efforts to reverse this trend include a one-off cash allowance of $20,000 for babies born between 25 October 2023 – 24 October 2026, increased child tax allowance, a “families with newborns allocation priority scheme” for public housing, increased childcare centres, increased quota for  IVF treatment within the public medical system and a new tax deduction for medical expenses related to assisted reproductive services.

In December 2025, the Human Reproductive Technology (Licensing) (Amendment) Regulation 2025 L.N. 160 of 2025 removed the previous 10-year statutory limit on own-use gamete and embryo storage. This is a significant change that aligns with modern international norms and advances reproductive autonomy.

Another area of reform that has been debated is updating the Human Reproductive Technology Ordinance, Cap 561 (“HRTO”). Enacted in 2000, the HRTO is the principal legislation that governs human reproductive technology (“RT”) procedures in Hong Kong. The HRTO at present effectively ringfences access to RT procedures (other than egg freezing) to “parties to a marriage”. Same sex marriage is not yet recognised under Hong Kong laws, leaving access to infertile, married heterosexual couples. Commercial surrogacy is also prohibited under the HRTO.

Principal Legislation

The HRTO preamble states that it is an ordinance “to regulate reproductive technology procedures, and the use, for research and other purposes, of embryos and gametes; to confine the provision of reproductive technology procedures to infertile couples subject to any express provision to the contrary in any code; to regulate surrogacy arrangements; to establish a Council on Human Reproductive Technology; and to provide for matters incidental thereto or connected therewith”.

Regulatory Body and Licensing

Pursuant to the HRTO, s.5, the Council on Human Reproductive Technology (“CHRT”) is the statutory body charged with a number of statutory functions under the HRTO, including licensing and policy-related duties..

Definitions

Reproductive technology procedures are defined in the HRTO as,

“…a medical, surgical, obstetric or other procedure (whether or not it is provided to the public or a section of the public) assisting or otherwise bringing about human reproduction by artificial means, and includes—

(a) in vitro fertilization;

(b) artificial insemination;

(c) the obtaining of gametes;

(d) manipulation of embryos or gametes outside the body;

(e) a procedure specified in a notice under subsection (2)(a)(ii) to be a reproductive technology procedure; and

(f) a gender selection achieved or intended to be achieved by means of a procedure which falls within this definition,

but excludes a procedure specified in a notice under subsection (2)(b)(ii) not to be a reproductive technology procedure;”.

The HRTO does not define infertility. There is a general reference in the preamble to confining reproductive technology procedures to infertile couples. The World Health Organization defines infertility as “a disease of the male or female reproductive system defined by the failure to achieve a pregnancy after 12 months or more of regular unprotected sexual intercourse” and this is a generally accepted definition for practical purposes.

Code of Practice and Professional Standards

Pursuant to the HRTO, s.8, the CHRT shall issue and maintain a Code of Practice on Reproductive Technology and Embryo Research (“Code”), which sets out detailed guidelines for RT service providers and embryo researchers. The Code first came into effect on 1 August 2007. 

The preamble of the Code states that while it provides guidance and minimum standards to safeguard the health and interests of service users and to protect the welfare of children born via RT, professionals concerned should still follow the codes of practice and professional ethics of their own disciplines, which the Code does not supersede.

Eligibility

The HRTO, s.15(5) restricts RT procedures being provided to persons who are parties to a marriage. Read in conjunction with the preamble to the HRTO and the Code paragraph 4.2 which refer specifically to infertile couples, in general only infertile married couples are treated in practice as able to avail themselves of RT procedures except this shall not apply to surrogate mothers pursuant to section 15(6) or couples who are permitted to use embryo sex selection for medical conditions e.g., to avoid serious sex linked diseases, pursuant to section 15(3) and as specified in Schedule 2 of the HRTO.

Since the preamble of the HRTO and Chapter IV of the Code state that RT procedures should only be made available to infertile couples, RT procedures for social or non medical reasons are not generally permitted except in very limited circumstances.

Specific Exclusions and Exceptions

Single persons, cohabiting heterosexuals who are not married and same sex couples are not eligible to receive RT procedures as the HRTO generally limits treatment to persons who are parties to a marriage as interpreted under current laws (the Code paragraph 4.1 note 12).

Within that framework, the HRTO allows for narrowly defined exceptions such as under section 15(7) which allows the continuation of an RT procedure where the couple was married at the time gametes or an embryo were first placed in the woman’s body, even if the marriage has subsequently ended. Another example is embryo sex selection to avoid serious sex linked diseases. Schedule 2 (and its amendment) of the HRTO specifies the sex linked diseases for which embryo sex selection is permitted.

While it appears that those who are legally allowed to avail themselves of RT procedures in Hong Kong are adequately protected and supported, those who do not fit within the current legal framework (such as singles, unmarried heterosexual couples, same sex couples) remain effectively excluded, regardless of their reproductive circumstances and Hong Kong’s alarming birth rate.

​The HRTO and the Code restrict the provision of RT procedures, in general, to infertile, married heterosexual couples. Same sex couples and single persons are excluded from the vast majority of RT procedures under current legislation.

Commercial transactions in (the buying and selling of) embryos, gametes and surrogacy are prohibited. Hence, only altruistic donations of embryos, gametes and surrogacy arrangements are permitted although reimbursement of legitimate expenses is allowed, in accordance with the HRTO, s.16 and s.17. Appendix II of the Code sets out guidelines on reimbursing donors.

Emerging Judicial Trends

While legislation has been updated at a slow pace, case law sits at the intersection of law, evolving ethics and current public policy. In Re A and Another HKCFI 1749; 5 HKLRD 366 (HCMP 1571/2018, Au-Yeung J, 14 October 2019), the court had extended the statutory 6 month time limit in the Parent and Child Ordinance Cap 429 s.12(2) and retrospectively approved commercial surrogacy payments despite the illegality of commercial surrogacy arrangements in Hong Kong because 1) the applicants acted in good faith without moral taint or intent to defraud, 2) the payments were not so disproportionate as to offend public policy and 3) the A & B v E ** HKCFI 3143** (HCMP 731/2023…) parental order was in the best interests of the children vis-a-vis their lifelong welfare and legal identity. Au-Yeung J applied and elaborated the same analytical framework in A & B v E HKCFI 3143 (HCMP 731/2023, Au-Yeung J, 4 December 2023).

The above two cases, together with CS v SW HKCFI 2326 (HCMP 1731/2023, Au-Yeung J, 25 September 2024) and HSC v T; HSC v D HKCFI 770 (HCMP 706–707/2025, Au-Yeung J, 2 February 2026) form an emerging body of case law that points to Hong Kong courts granting parental orders and approving commercial surrogacy payments made in good faith, always with an overriding concern for the lifelong welfare of the child. In the latter case, the court again granted parental orders and approved separate commercial surrogacy payments for two oral surrogacy arrangements made in Shenzhen with two surrogates and extended the deadline of the statutory 6 month time limit in the Parent and Child Ordinance Cap 429, s.12(2). The lifelong best interests of the two children were considered. Rather than deliberately committing a breach, the commissioning parents had unfortunately acted without obtaining proper legal advice and had been ignorant of the law.

Surrogacy and Legal Parenthood

Surrogacy arrangements fall within the purview of the HRTO. The preamble of the HRTO sets out its mandate to “to confine the provision of reproductive technology procedures to infertile couples subject to any express provision to the contrary in any code”. Pursuant to the Code paragraph 12.2(b), a RT procedure may only be provided if the wife in that marriage is unable to carry a pregnancy to term and no other treatment option is practicable. In accordance with the Code paragraph 12.7, counselling by a multi-disciplinary team must be provided to all parties in the surrogacy arrangement, including the husband of the surrogate, if any.

Surrogacy is only permitted in altruistic circumstances and not on a commercial basis. Pursuant to the HRTO, s.17, there is a prohibition on surrogacy arrangements on a commercial basis. The Code paragraph 12.1 cross references the prohibition.

No surrogacy arrangement is enforceable by law under the HRTO, s.18 and as set out per the Code paragraph 12.6. As well, all parties to a surrogacy arrangement should be informed that the surrogacy arrangement is not enforceable.

The Code paragraph 12.8 sets out the suitability criteria by which commissioning couples and their surrogates must be assessed, taking into account their physical, mental and social well being. The surrogate must be at least 21 years of age (the Code paragraph 12.4).

The Parent and Child Ordinance Cap 429, s.9 states that the woman who gives birth is treated by law as the child’s mother (and if she is married and her husband has consented, he is treated by law as the child’s father) despite any surrogacy agreement that is in place. Section 12(2) prescribes that a commissioning couple must apply to the court within six months of their child’s birth for a parental order, and the court may make such a parental order provided all the conditions of subsections 12(1) – (7) have been met.

In the case of HC v WYH HKCFI 1157 (HCMC 3/2023, Chu J, 30 April 2024), the parties were married but subsequently separated. The issue before the court was whether the lack of parental orders or adoption orders (the two children in question were born out of commercial surrogacy arrangements made in California) were obstacles to the Family Court making orders in the best interests of the children as they were “children of the family”.

The court ruled that the statutory definition of “child of the family” as set out in section 2 of the Matrimonial Proceedings and Property Ordinance Cap 192 is broad and autonomous and children born of commercial surrogacy arrangements fall within the definition (without adoption or parental orders in place), giving the court jurisdiction to make custody and maintenance orders in divorce proceedings.

In the case of CS v SW HKCFI 2326, HCMP 1731/2023 (25 September 2024, Au-Yeung J), the court ruled that the children’s best interests and the need for secure lifelong legal status with their de facto parents outweighed the serious breaches of Cambodian, Thai and Hong Kong laws regarding commercial surrogacy and a delay of over 4 years beyond the statutory limit specified in the Parent and Child Ordinance Cap 429 s.12(2).

Sanctions and Enforcement

Breaching the HRTO may be a criminal matter and may lead to fines, imprisonment and regulatory sanctions including the loss of professional licences for practitioners and researchers.

Conclusion

Hong Kong’s legal framework in respect of RT was enacted a quarter century ago. The December 2025 removal of the 10-year limit on gamete and embryo storage was a welcome modernisation although the foundational framework for eligibility and access to RT remains the same.

The more significant developments have come from the judicial rather than legislative front – the four seminal cases discussed above have established that the courts will grant parental orders and approve commercial surrogacy payments made by commissioning parents where they acted in good faith (often in ignorance of their legal positions), the payment amounts were not disproportionate and the child’s best interests were taken into account.

The gap between what the HRTO prohibits and what courts have been willing to regularise is widening. Children born into this tenuous legal environment deserve legal certainty beyond what the courts have been able to grant. Hong Kong’s record low birth rate should tilt economic and social policy towards inclusive legislative reforms that follow judicial developments. Until then, those who are being denied access to RT procedures in Hong Kong will continue to search overseas for solutions.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

New Rules, New Risks: Navigating China’s 2027 Trademark Law

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On 26 June 2026, the Standing Committee of the 14th National People’s Congress passed a landmark revision of the Trademark Law of the People’s Republic of China, which will come into force on 1 January 2027. This marks the first comprehensive overhaul since the law’s introduction in 1983, expanding the framework from 8 chapters and 73 articles to 9 chapters and 87 articles.

More significantly, the revision reflects a fundamental shift in legislative philosophy – from a system that primarily encouraged registration to one that emphasizes genuine use and market order. For brand owners operating in or entering China, the transition period leading up to 2027 is strategically important.

Key Legislative Shifts

The revised law introduces several structural changes that will directly impact trademark filing and enforcement strategies.

1. Stricter Controls on Malicious Filings

The new law explicitly prohibits trademark applications filed without intent to use and exceeding normal business needs. To enforce this, the authorities have introduced quantitative examination criteria in updated guidelines:

  • Applying for 50 or more trademarks within 12 months without a clear commercial rationale
  • Filing 10 or more trademarks across unrelated industries in a single batch
  • Targeting well-known names, internet trends, or generic industry terms

Applications meeting these thresholds may be rejected at the examination stage, and applicants risk being placed on regulatory watchlists. This signals a decisive move against trademark hoarding and bad-faith filings.

2. Increased Liability for Deceptive Use

The law now classifies misleading use of registered trademarks as a punishable offence. This includes branding strategies that rely on wordplay or presentation likely to confuse consumers.

Penalties may reach up to five times the illegal gains, capped at RMB 250,000. Failure to rectify violations within a prescribed period may result in revocation of the trademark registration.

3. Recognition of Digital Use

Trademark “use” is now expressly extended to online and digital environments. Acceptable evidence includes:

  • E-commerce listings and online storefronts
  • Social media accounts and promotional content
  • Livestreaming and digital marketing activities
  • NFTs and digital collectibles displaying the mark

This clarification significantly lowers evidentiary uncertainty for online businesses and aligns the law with modern commercial practices.

4. Expanded Protection for Unregistered Well-Known Marks

Foreign brand owners entering China may benefit from enhanced protection even prior to registration. The revised law allows recognition of well-known trademark status, which can be invoked to support invalidation or opposition actions against bad-faith filings across different classes.

Enhanced Regulatory Oversight

The revised law also strengthens enforcement mechanisms and imposes greater compliance obligations.

1. Proactive Revocation for Non-Use

Authorities are now empowered to initiate revocation actions against trademarks that have not been used for three consecutive years, without requiring a third-party challenge. This increases the risk of maintaining defensive or unused registrations.

2. Earlier Evidence Cut-Off

The evidentiary window for proving use has shifted to the three years preceding the alleged infringement, rather than the commencement of legal proceedings. This limits the effectiveness of last-minute or “token” use.

3. Shortened Opposition Period

The opposition period has been reduced from three months to two months, requiring more efficient trademark monitoring and faster decision-making by brand owners.

4. Increased Liability for Trademark Agencies

Trademark agencies that knowingly assist in bad-faith filings may face administrative penalties, including suspension or revocation of their business licences. This is likely to improve overall filing quality and professional accountability.

New Types of Protection and Procedural Changes

The revision also introduces protections for emerging forms of branding and tightens procedural strategies.

  • Dynamic trademarks, including animated logos and sequential marks, are now explicitly recognised
  • Limitations have been placed on delaying tactics in examination and litigation, reducing opportunities for procedural abuse
Practical Implications for Brand Owners

The 2027 Trademark Law signals a transition from a volume-driven filing strategy to one focused on substantiated commercial use. Businesses should:

  • Review existing portfolios to identify unused or vulnerable marks
  • Ensure consistent and well-documented use, particularly in digital channels
  • Reassess filing strategies to avoid excessive or unjustified applications
  • Strengthen monitoring systems to meet shorter opposition timelines

For example, a company that previously filed broad defensive applications across multiple unrelated classes may now face rejection or regulatory scrutiny. A more targeted, use-based filing strategy supported by evidence will be essential.

Conclusion

China’s revised Trademark Law represents a decisive move toward a more disciplined and use-oriented trademark system. The emphasis is no longer on securing as many registrations as possible, but on demonstrating genuine commercial use and maintaining orderly competition.

Brand owners who proactively adapt their strategies – by aligning registrations with actual business activities and strengthening evidence of use – will be better positioned to protect and enforce their rights in this evolving legal landscape.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Family Offices in Hong Kong: Tax Concessions, Re-domiciliation, and Proposed 2026 Reform

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Hong Kong stands out as a premier destination for family offices, offering a unique blend of business-friendly policies, robust legal frameworks, and strategic advantages.

1. Business-Friendly Tax Regime

Hong Kong imposes low and simple taxes with no VAT, capital gains, dividend, or inheritance taxes. As at June 2026, Hong Kong holds 58 comprehensive avoidance of double taxation agreements, with another 16 under negotiation.

2. Robust Legal System

The city operates under a Common Law framework, providing strong rule of law and investor protection.

3. World-Class Financial Services

As a leading global hub for private banking, asset management and professional advisory services, Hong Kong offers tailored solutions for HNWIs and families.

4. Skilled Talent Pool

Hong Kong is home to a highly skilled, multilingual workforce.

5. Government Support

The Hong Kong government actively supports family offices through initiatives like FamilyOfficeHK under InvestHK and tax concessions for single-family offices.

6. Strategic Location

Hong Kong serves as a gateway to Mainland China and the Asia-Pacific region.

Re-Domiciliation of Family Offices

As of May 2025, non-Hong Kong incorporated companies, including family offices, can re-domicile to Hong Kong under a new statutory regime. This allows family offices to relocate their operations while retaining their legal identity and continuity. The streamlined process involves an application to the Companies Registry, with approvals typically granted within two weeks.

Key highlights:

  • The family office retains all assets, rights, obligations, and legal standing post-transfer
  • The family office obtains the same rights as family offices incorporated in Hong Kong
  • A fixed application fee (HK$6,050 electronically / HK$6,725 in hard copy)
  • Upon approval, the family office becomes a Hong Kong-incorporated entity and must deregister in its original jurisdiction within 120 days

Regulatory and tax implications:

  • Tax continuity is preserved – profits tax applies only to income sourced in Hong Kong
  • Relief and credits are available to avoid double taxation during transition
  • No stamp duty is triggered by re-domiciliation

Tax Concessions for Family-owned Investment Holding Vehicles (FIHVs)

Hong Kong’s Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023 introduced a 0% profits tax concession for qualifying FIHVs.

Who qualifies:

  • ≥ 95% beneficial interest held, in aggregate, by one or more than one member of the family (charities ≤ 25%, outsiders ≤ 5%)
  • Normally managed and controlled in Hong Kong, outsourcing is permissible
  • Holds ≥ HK$240 million specified assets (shares, stocks, bonds, debentures, etc.)
  • Carries on all core income-generating activities in Hong Kong with ≥ 2 qualified full-time staff and ≥ HK$2 million local operating spend
  • Not a business undertaking

What’s covered:

  • Transaction in specified assets (qualifying transactions): trading securities, FX, private-company shares, derivatives, etc.
  • Transactions incidental to the carrying out of qualifying transactions (receipts capped at 5% of total receipts)

Practical steps to obtain tax certainty:

  1. Map ownership to confirm ≥ 95% family control (with any charity/unrelated shareholding within limits).
  2. Elect for the concession – once, in writing – before filing the first relevant tax return.
  3. Verify substance annually: head-count, spend, and asset NAV.
  4. Monitor transactions for the 5% incidental threshold and private-company anti-avoidance triggers.
  5. Maintain documentation (family tree, group chart, management agreements, NAV calculations) ready for audit or advance-ruling submission.

Legislative Update: 2026 Preferential Tax Regimes Bill

  • On 12 June 2026, Hong Kong gazetted the Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026.
  • The Bill proposes to expand Hong Kong’s preferential tax regimes for:
    • funds;
    • Family-owned Investment Holding Vehicles;
    • carried interest.
  • Expanded qualifying asset classes
    • The 0% profits tax concession would be expanded to cover additional asset classes, including:
      • digital assets;
      • gold and other precious metals;
      • specified commodities;
      • carbon credits;
      • private credit.
  • Broader eligible fund structures
    • Eligibility would be extended beyond traditional open-ended fund structures to include:
      • certain “fund-of-one” structures;
      • wholly-owned investment vehicles;
      • pension funds;
      • charity funds.
  • Carried interest tax relief
    • The Bill would enhance tax relief for performance-linked returns, including carried interest, for private equity and venture capital funds.
    • This is intended to strengthen Hong Kong’s competitiveness as a private capital and asset management hub.
  • Removal of 5% incidental threshold
    • The existing draft memo states that the concession covers transactions in specified assets and that receipts from incidental transactions are capped at 5% of total receipts.
    • The Bill proposes to remove this 5% incidental threshold, giving family offices greater flexibility in treasury, cash management and interest-earning activities.
  • Interaction with non-tax incentives
    • Hong Kong’s Capital Investment Entrant Scheme provides a residency pathway for individuals making a qualifying HK$30 million investment, including at least HK$3 million into a government-managed investment portfolio.
    • The scheme may also allow family members to be included, facilitating relocation alongside the family office structure.

Anti-Avoidance Measures

Hong Kong has implemented anti-avoidance measures to ensure that tax concessions are not abused. These measures include tests for immovable property, holding periods, and control and short-term asset tests.

Anti-Avoidance Measures

With its favourable tax regime, robust legal system, world-class financial services, skilled talent pool, and strong government support, Hong Kong is the ideal location for family office. Whether you are looking to establish a new family office or re-domicile an existing one, Hong Kong offers the perfect environment for long-term wealth planning and growth. Please contact us for further information.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.