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香港特區中國國民在英國的繼承

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香港永久性居民可能在其他司法管轄區擁有資產。英國是近年來最常見的移民目的地之一。 

在英國和香港，死者遺產繼承法有許多共同的特點。  

死者立了覆蓋在英國遺產

如死者立了覆蓋在英國遺產的遺囑，則遺囑人最後遺囑中指定的遺囑執行人會通過英國當地遺囑認證部門申請遺囑認證，以處理死者在英國的遺產。遺囑執行人隨後須遵從遺囑分配死者的遺產。

死者沒有立覆蓋在英國遺產的遺囑

如果死者沒有立遺囑，遺產的繼承通常受成文法管轄，繼承您財產的人將根據無遺囑的法定規則管轄。一般來說，根據法例所列的類別，繼承人將是您最接近的遺屬，視乎死者的婚姻性質及死者是否有子女而定。有關詳細資訊，請參閱下表：

類詳細資訊
有配偶但無子女，父母或兄弟姐妹  配偶(或民事伴侶)將繼承所有遺產  
有配偶和子女配偶(或民事伴侶)將繼承：   所有個人物品 遺產的第一個£250,000 (如果死亡發生在2009年1月2日之前，則£125,000)剩餘部分的一半   子女將繼承遺產另外的剩餘一半。如果死者的子女已經死亡，他們原應繼承的遺產部分將平等地分配給他們的子女。
有配偶，無子女但有父母或兄弟姐妹配偶(或民事伴侶)將繼承：   所有個人物品£450,000和 剩餘部分的一半   其餘的一半由未亡父母或兄弟姐妹(如果死者沒有父母或父母已經死亡)。
無未亡配偶遺產將按以下優先順序繼承：   子女，孫子女，曾孫子女 父母 全血兄弟姐妹或其後代 半血兄弟姐妹或其後代 侄女和侄子 祖父母 全血的叔叔阿姨或其後代 半血的叔叔阿姨或其後代 政府     注意：後續類別的繼承權要等到前一類別的繼承權失去後才開始。
沒有親屬如果沒有尚存的親屬，遺產將被列為無產權財產(`‘bona vacantia’)並歸入政府。

免責聲明: 本文僅供參考。本文中的任何內容均不得詮釋為香港法律建議或向任何人提供的任何與此相關的法律建議。對於任何人因本文所含的內容而造成的任何損失和/或損害，高李嚴律師行不承擔任何責任。

平安三寶的各項要求

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與其他發達的城市一樣，香港也正面臨人口老化的問題。截至2021年，香港人口的年齡中位數為46.3歲1。根據政府統計處的人口推算，65歲及以上的長者人數佔全港人口的比例，將會由2022年的20.8%，逐步增長至2028年的25.3%，並進一步攀升至2069年35.1%2。持續上升的長者數目，意味著社會對各項安老及醫療服務的需求也將會進一步增加。

有見及此，政府一直致力向大衆推廣生死教育，力求打破圍繞死亡的禁忌，協助大衆以積極的態度看待死亡，並了解更多有關「平安三寶」的細節和重要性，即遺囑、持久授權書 (EPOA)、和預設醫療指示 (AD)。

「平安三寶」分別為:-

  • 遺囑（俗稱「平安紙」）：遺囑的執行主要受《遺囑條例》（第30章）所規限。遺囑的訂立旨在按照立遺囑人的指示，分配其身故後所遺留的資產。
  • 持久授權書 (EPOA) ：EPOA的執行、登記、權力範圍均受《持久授權書條例》（第501章）所規限。EPOA 的訂立主要依照授權人的意願，指定一名或多名受權人在其失去精神行爲能力時，管理其財政事務。
  • 預設醫療指示 (AD) ：雖然現時沒有具體的法例規定AD的執行和權力範圍。不過，醫院管理局 （醫管局）已發佈了一份建議的AD表格格式，並為其轄下的臨床醫生公佈了相關的指引。AD的訂立旨在解決病人是否接受維持生命治療。

為推廣「平安三寶」的使用，政府已每年資助及舉辦有關生死教育的講座，其中包括有關「平安三寶」的專題講座。香港公共圖書館每年均與團體合辦有關生死教育的講座，當中也包括就「平安三寶」的主題3。而社會創新及創業發展基金（社創基金）也會資助有關生死教育和「平安三寶」的相關項目4。籍此希望能夠預早備妥各方規劃，讓長者及其家人們能作更好的安排。

儘管「平安三寶」的概念已在社會上廣爲流傳，但須注意的是，在實質操作上，三者的執行、登記要求和涵蓋的事務範圍皆不盡相同。若大衆無法正確理解相關的法律要求，便很容易引起不必要的爭議以及麻煩。

因此，我們希望通過下列表格，一表闡述三者的分別，協助大衆進一步瞭解：

 遺囑（又稱為平安紙）  持久授權書預設醫療指示
表格形
式		沒有法律指定的範本，但律師草擬的遺囑將會考慮更多重要細節，例如更多後備安排以防止無人執行或承繼遺產。有指定法律規定樣本  沒有法律規定，可以用醫管局的指示文本
生效  當立遺囑人過世的時候授權書中指明的生效日期（一般為受權人有理由相信授權人正在失去精神行為能力的日期）當兩名醫生（病人的主診醫生和另外一名醫生）診斷病人處於下列任何一種情況：
1. 病人的病情到了末期；
2. 病人處於持續植物人狀況或不可逆轉的昏迷狀況；或
3. 病人處於其他晚期不可逆轉的生存受限疾病
財產事務執行人會按遺囑的指示把遺產分配受權人可以動用授權人的資產去：
c維持授權人的生活；
• 預防授權人的財產損失；
• 照顧受權人或其他人士的需要（如該些人士為授權人應合理地提供所需的人士）；及
• 向與授權人的親屬或有關連的人作出有限的季節性饋贈  		不適用
範圍以及限制立遺囑人亦可指定自己喪禮的安排• 授權人可隨意對授予受權人的權限附加任何限制
• 不牽涉授權人健康和福利相關的事宜		決定病者會否接受維持生命治療。 
注意：醫生和院方都不能執行安樂死，也不會執行非法指示。
簽署時的精神狀態神智清醒，有精神行為能力，自願作此指示，知道文書的性質和後果
簽署要求  兩位獨立見證人面前簽署。證人不必是律師一名醫生以及律師面前簽署（可同時在醫生以及律師面前簽署或在醫生面前簽署後，28天內在律師面前簽署）
 
1. 註冊醫生
• 必須核證及信納授權人在簽署持久授權書時，「是精神上有能力行事的」
 
2. 律師
• 必須核證「授權人看似是精神上有能力行事的」		兩個獨立見證人面前簽署：
1. 首名見證人
• 必須為註冊醫生，可選用一名不是其主診醫生或沒有診治過該作出者的醫生
 
2. 第二名見證人
• 必須年滿18歲
• 確認首名見證人已經解釋指示的性質和後果
見證人的獨立性  見證人不得為遺囑上的受益人，否則見證人不會獲得遺囑上的餽贈見證的醫生和律師不得為：
• 受權人
• 受權人的配偶；
• 與授權人有血緣或姻親關係的人；或
• 與受權人有血緣或姻親關係的人		兩名見證人不得為下述文書的受益人：
• 簽署人的遺囑；或
• 簽署人所持有的任何保險單；或
• 簽署人訂立的任何其他文書。
執行人/受權人的簽署要求  執行人並不需要正式簽署確認自己的委任。因此，一般建議立遺囑人應先跟執行人商議好  受權人需要在見證人面前簽署確認不適用
註冊要求  當遺囑人離世後，當執行人需要安排遺囑承辦時，執行人需要向法庭存檔遺囑的正本如受權人相信授權人精神上無能力行事或正變為精神上無能力行事，必須盡快把有關的持久授權書拿到高等法院註冊。
授權人可選擇是否希望自己或他人收到該持久授權書註冊的通知，以防止受權人濫用行使權。
其中一項有關授權人應否註冊持久授權書的考慮是，一旦註冊，該持久授權書的訂立，以及授權人及受權人的名字將成為公開資訊。		沒有註冊要求，但建議把正本的存放告知相熟的人，並把副本發給相熟的人。
撤銷一般而言，遺囑不會被撤銷，除非：
• 立遺囑人在簽署遺囑後，締結婚姻；
• 立遺囑人簽署另一份遺囑，藉以撤銷早前的另一有效的遺囑；
• 立遺囑人以有效地簽立遺囑的同樣方式簽立的遺囑撤銷書；或
• 立遺囑人有意撤銷該遺囑的情況下，自行或使他人在其面前依其指示將該遺囑毀滅		授權人在精神上仍有能力行事時，或在其康復後，可以主動撤銷持久授權書；否則，持久授權書只會在有限的理由下被撤銷，如：
• 受權人破產；
• 受權人或授權人死亡；以及
• 根據法院命令或指示		以書面方式制定    

如有疑問，煩請聯繫本行長者法律服務團隊共同主管律師胡海倫律師和本行律師袁向凡律師。

1 政府統計處：<《香港人口趨勢1991-2021》現已出版 [2022年12月29日]>，香港特別行政區政府統計處網頁，2022年12月29日，https://www.censtatd.gov.hk/en/press_release_detail.html?id=5338，2024年6月24日讀取。

2 香港特別行政區新聞：<立法會六題：應對人口老化的措施>，香港特別行政區政府網頁，2023年3月22日，https://www.info.gov.hk/gia/general/202303/22/P2023032200177.htm，2024年6月24日讀取。

3 香港特別行政區新聞：<立法會六題：訂立「平安三寶」>，香港特別行政區政府網頁，2023年6月28日，https://www.info.gov.hk/gia/general/202306/28/P2023062800356.htm，2024年6月24日讀取。

4 香港特別行政區新聞：<立法會六題：訂立「平安三寶」>，香港特別行政區政府網頁，2023年6月28日，https://www.info.gov.hk/gia/general/202306/28/P2023062800356.htm，2024年6月24日讀取。

免責聲明：本文僅供參考。本文中的任何內容均不得詮釋為香港法律建議或向任何人提供的任何與此相關的法律建議。對於任何人因本文所含的内容而造成的任何損失和/或損害，高李嚴律師行不承擔任何責任。

Ten Common Handwritten Will Mistakes

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Handwritten wills i.e., holographic wills are valid in Hong Kong and in most jurisdictions around the world. Perhaps the most famous holographic will was that of Napoleon Bonaparte, who seemingly had plenty of time on his hands while exiled on the island of St Helena in 1821. He wrote a whopping five long pages and numerous codicils by hand, which was the requirement under French law for a valid will, in the absence of a notary. After praising his loved ones and lashing out at each of his political enemies, he bequeathed to over 7,500 beneficiaries the contents of his entire estate, down to a pair of slippers. The beneficiaries were not only his immediate family members but everyone from his General Montholon (2 million francs) to regular soldiers (100 francs each) in his army. It took the executors of his will 40 years to complete their tasks. 

Handwriting your own will is likely to be easier than the task that Napoleon undertook, but here are some of the more common (but not all of the) pitfalls to avoid:

1. Not appointing a willing executor

There will be no one to execute your wishes in this instance and this will lead to administrative delays. The beneficiary entitled to your residuary estate has first priority to apply to be your executor by virtue of rule 19 of the Non Contentious Probate Rules in Hong Kong where there is no named executor willing to take on this role. Your residuary estate is the whole sum of your estate after deduction of your debts, taxes, funeral, legal and administrative expenses and distribution of your cash and specific gifts to your beneficiaries.

2. Being too specific or not being specific enough

You may bequeath your Rolex Explorer II watch to your son but you own two Rolex watches at the time of your death, none of which is the Explorer II. You may state clearly “I bequeath my grand piano to my cousin.” but it transpires that you have three cousins (who coincidentally all play the piano up to grade 8 level) at the time of your death. These are examples of gifts that are too specific or not specific enough.

3. Not updating your will 

If you marry, divorce, enter into a committed relationship or any combination thereof, there may be significant impacts on the validity of parts of your will. Some committed relationships that may be recognised under overseas laws are not recognised in Hong Kong. It is important to review your will at regular intervals in order to take stock of significant changes in your relationships and assets.

4. Writing only one will when you have substantial assets in another jurisdiction

The legal concept of domicile may be different from your birthplace, nationality and/or jurisdiction where you have permanent residency. Your domicile at the time of death affects your will. You may write a will in Hong Kong that can be overridden due to laws in another jurisdiction that do not allow you to leave out certain beneficiaries, for instance. It is important to consider the laws of the countries where your substantial assets are located.

5. Writing wills in every jurisdiction you have assets in but inadvertently revoking some of the wills

You may have carefully considered all your worldly assets and handwritten your wills in accordance with where your assets are located. One common pitfall is not making reference to your other international wills, such that your last will and testament referring to your assets in Canada may inadvertently revoke your prior last will and testament referring to the distribution of your assets in Hong Kong.

6. Improper execution of the will

In Hong Kong, two witnesses are required when you sign your will. They and their spouses may not be your beneficiaries. Your executor may be a witness to your will but again, this executor should not be a beneficiary if such executor is to be a witness to your will. In the absence of proper execution, the court must be satisfied that there is no reasonable doubt your purported will satisfies your testamentary wishes.    

7. Forgetting to appoint guardians including temporary guardians for your minor children

If both parents pass away, minor children without appointed guardians will become wards of the Social Welfare Department. It is important to consider appointing temporary guardians who reside in Hong Kong in the event that permanent guardians are overseas, again to avoid having children becoming wards of the Social Welfare Department during the time it takes permanent guardians to arrive in Hong Kong.

8. Forgetting to include back up beneficiaries, executors and guardians

No one knows with certainty when their time will come. It is entirely possible to outlive one’s beneficiaries, executors and/or appointed guardians, especially the longer that one lives. Some care needs to be taken to think through some possible alternatives in the event that these persons predecease you or refuse to act as your executor or as guardians of your children.

9. Keeping the will in your own safety deposit box at the bank

This is a very safe place to keep your will but is it too safe? In Hong Kong, singly and jointly held safety deposit boxes require a “Certificate for Necessity of Inspection of Bank Deposit Box”  issued by the Home Affairs Department before a deceased’s safety deposit box may be inspected. A bank official and two public officers authorised by the Secretary for Home Affairs must be present during the inspection. Keeping one’s will in one’s own bank safety deposit box (even jointly held) leads to administrative delay and this should be weighed against the security afforded by a bank safekeeping your will.

10. Not signing your will

Many people take the time to carefully put together a will and then trip up on the final step – they omit to sign the will properly or put off signing the will. This may be due to any number of reasons – not prioritising this important final step (life often gets in the way) or even due to an inability to find witnesses for the will. Unfortunately, an unsigned will is an invalid will.

The legal requirements for a validly written will are both easy and difficult to fulfill – easy in the sense that a handwritten will showing intention and capacity signed by an adult which is properly witnessed is a legal document in Hong Kong, yet difficult because there are some common pitfalls that many a do-it-yourselfer has failed to avoid.

Beat Napoleon Bonaparte and have your will professionally drafted. To celebrate the inauguration of our groundbreaking Elder Law Practice (the first of its kind in Hong Kong), we are proud to relaunch our hugely popular FreeWill initiative, an opportunity for Hong Kongers to have their wills prepared for a nominal donation to a registered charity. To find out more, visit our FreeWill campaign page.

Disclaimer: This article is for reference only. Nothing herein shall be construed as legal advice, whether generally or for any specific 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.

Handling Second-layer Recipients in Fraud Cases – Defence Concerning Underground Banking (地下錢莊/地下钱庄)

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Introduction

In typical fraud cases, victims would find it difficult to trace the defrauded money because often case, the first-layer fraudsters would have dissipated fund elsewhere in a nano second, leaving their own bank balance with close to nothing. Victims therefore have to also sue the second-layer recipients to recover the lost fund. The fund transfers from the victims to the second-layer recipients, however, are not a direct one. Problem arises if the second-lawyer recipients come forth and defend the claim by arguing that they are equally innocent and their receipt of money was deriving from legitimate underlying transactions with the first-layer fraudsters.  

One of the most often cited defence by PRC second-layer recipients is that they engage service of Underground Banking (地下錢莊/地下钱庄) whereby they send money to a stranger in the PRC and in return obtain money from another stranger in Hong Kong. This explains why they would receive money from certain person not even their acquaintance as this is essentially the modus operandi of Underground Banking. It could be entirely credible that these second-layer recipients do not know the first-layer fraudsters personally (notwithstanding that they do transact with them) and that these second-layer recipients are truly irrelevant to the fraud scheme. In light of the prevalence of email and identity scam these years, such fact pattern and defence has become a common occurrence. Does that then mean that the victims’ claims against these second-layer recipients would be defeated?

As the Mainland practices foreign currency control, it is not uncommon for individuals in the Mainland to use underground banking for their outward remittance needs. While commonly used, such practice is inherently illegal under the relevant PRC administrative regulations and administrative measures on foreign exchange. Victims facing such defence raised by the second-layer recipients may therefore counter-argue in response that the use of underground banking itself constitutes an “illegality” and thus should not be given effect.

The Case Laws

OLN acted for the victim in the fraud claim Taihei Dengyo Kaisha Ltd v. Zhao Yizhe and another [2024] HKDC 222. The Plaintiff was a victim of an elaborate email scam, whereby after its funds were induced to be deposited into a fraudster’s account (first layer bank account), part of the funds were then dissipated from the first layer bank account to the second-layer recipient (i.e. 1st Defendant in the present case)). To recover the funds, the Plaintiff started a civil claim against the 1st Defendant based on the different causes of action including unjust enrichment and tracing.

In response to the Plaintiff’s unjust enrichment claim and tracing claim, the 1st Defendant raised the aforesaid defence concerning the use of Underground Banking, arguing that she received the funds due to her purchase of HKD with RMB through an exchange agent in the Mainland, and such constituted (1) defence of bona fide purchaser and (2) defence of change of position.

In the Plaintiff’s application for summary judgment against the 1st Defendant, the District Court has confirmed that in analyzing the issue of illegality, a distinction has to be made between domestic illegality and foreign illegality, and that the Court has different approach in handling the two types of illegality.

In view of the frequency of litigation in Hong Kong involving cross-border elements, especially regarding PRC law, this is a much welcome decision in confirming the Court’s readiness to grant judgment at summary stage where the defence concerns a transaction illegal under PRC law, and should discourage unmeritorious defences going to trial.

Summary Judgment

The District Court confirms that in respect of foreign illegality, the Court of Final Appeal decision in Ryder Industries Ltd v Chan Shui Woo [2015] 18 HKCFAR 544 (“Ryder”) is the highest authority in Hong Kong on how it affects the enforceability of contracts.

In respect of foreign illegality, the Court’s task is to identify which type of illegality the case falls within as follows:

  • Type 1: the contract is unenforceable under its proper law (whether chosen by the parties or otherwise)
  • Type 2: the performance of the contract requires or necessarily involves conduct which is illegal under the laws of the place where it is required to be performed
  • Type 3: the contract could have been performed in a legal manner but the real objective and intention of the parties at the time of concluding the contract necessitates them to perform by some act which is illegal by foreign law
  • Type 4: the actual performance of a contract may violate foreign laws, even though not required or initially intended, but nonetheless lead to the unenforceability of the contract before a Hong Kong court, regardless of its proper law

Following Ryder, if the transaction is identified as a Type 1, Type 2 or Type 3 case, the contract will not be given effect. If, on the other hand, it is a Type 4 case, the Court should make a judgment as to whether comity should require it to give effect to the contract or deny its enforcement by evaluating the seriousness of the illegality and the important policies which may underlie the impugned foreign law.

The Court found that as the 1st Defendant’s purchase of Hong Kong Dollars through the agent “necessarily” contravened PRC law as the very essence of the transactions was to circumvent PRC currency exchange controls, the transactions fall squarely within the Type 2 case. The Court was required to refuse enforcement of the contract, and the defence of change of position and bona fide purchaser would not therefore be available.

The Court also acknowledged that despite the issue of foreign illegality being a complicated and developing area of law, as Hong Kong case authorities have fairly established that it is illegal under PRC law to engage underground banking and there is no material dispute on the PRC law in the present case, the Court failed to see what utility can be gained for the restitution claim to go to trial.

The Court therefore granted summary judgment in favour of the Plaintiff against the 1st Defendant for the unjust enrichment claim for the amount of the sums received and a declaration that the 1st Defendant held the sums received on trust and/or constructive trust.

Key Takeaways

  • Regarding the issue of illegality, a distinction has to be made between domestic illegality and foreign illegality, as the Court would adopt different approaches regarding the enforceability of the underlying transaction.
  • Although foreign illegality remains a complicated and developing area of law, where Hong Kong case authorities have fairly established the relevant foreign illegality in issue and there is no material dispute regarding the foreign illegality in question, the Court may still be prepared to grant judgment at the summary stage.
  • Aside from a litigation standpoint, for individuals residing in Mainland who have outward remittance needs, whilst using underground banking or money exchange (地下錢莊/地下钱庄) may seem convenient, it is nonetheless an illegal practice in Mainland. More importantly, it carries the risk that there is no safeguard regarding the source of funds, and the funds received may well stem from innocent parties and be clawed back through legal proceedings.

Anna Chan, Kacy Lam and Dexter Yuen acted for the Plaintiff.

The full Judgment can be viewed here.

Oldham, Li & Nie Partner Wins the Private Client Lawyer of the Year at the 2024 Asia Legal Awards

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We are delighted to announce that our partner and head of Private Client practice, Anna Chan, won the Private Client Lawyer of the Year at the 2024 Asia Legal Awards ceremony.

Anna received this prestigious title in recognition of her deep knowledge and expertise to guide clients through even the most complex contentious and non-contentious matters.

Anna Chan, OLN Partner, wins Private Client Lawyer of the Year at the 2024 Asia Legal Awards

The results were announced on 14 March 2024 at a ceremony in Singapore attended by Anna Chan and Martin Tse, Senior Associate.

In addition, Anna Chan was shortlisted in Litigator of the Year and Oldham, Li & Nie in Boutique Law Firm of the Year categories.

The Asia Legal Awards, hosted by Law.com International, a leading global media platform, honours the most outstanding legal practitioners, firms and transactions in Asia.

To learn more about Asia Legal Awards, see the complete lists of this year’s winners.

Budget 2024/25: Updates on Stamp Duty on Property Transactions in Hong Kong

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In the 2024/25 Budget (the “Budget”) delivered by the Financial Secretary of the HKSAR on 28 February 2024, a number of tax measures were proposed. Most notably, all demand-side management measures for residential properties have been cancelled with immediate effect, meaning that no (i) Special Stamp Duty (“SSD”), (ii) Buyer’s Stamp Duty (“BSD”) or (iii) Ad Valorem Stamp Duty (“AVD”) at 7.5% under Part 1 of Scale 1 of Head 1(1A), First Schedule of the Stamp Duty Ordinance (Cap. 117) (“SDO”) needs to be paid for any residential property transactions starting from 28 February 2024.

Property market in 2023

As illustrated in the Budget, insofar as a residential property is concerned, the market sentiment has become very cautious since the middle of 2023 in view of the rising interest rates and uncertainties in the external environment. In 2023, residential flat prices fell by 7% and the number of residential property transactions declined by 5% to a low level of around 43,000.

Cancellation of all “spicy measures”

It is under the backdrop of the property market’s weak performance that all “spicy measures”, including the SSD, BSD and AVD at 7.5% under Part 1 of Scale 1 were cancelled with immediate effect on 28 February 2024.
However, residential property purchasers would still have to pay AVD at the rate under Part I Scale 1 but such rate has been amended to be same as those of AVD under Scale 2 of Head 1(1A), First Schedule of the SDO (i.e., the rate for the sale and purchase of non-residential property on or after 26 November 2020) with effect from 28 February 2024, by way of the Public Revenue Protection (Stamp Duty) Order 2024 as discussed below.
In other words, for residential property transactions, AVD ranging from HK$100 to 4.25% of the stated consideration or the value of the property (whichever is higher) will be levied. The AVD rates immediately before and after 28 February 2024 are set out below:

Rate at Part 1 of Scale 1 from 25 October 2023 to 27 February 2024: Flat rate of 7.5%

Rate at Part 1 of Scale 1 on or after 28 February 2024:

Amount or value of the consideration or value of the property (whichever is higher)Rate at Part 1 of Scale 1
ExceedsDoes not exceed
 HK$3,000,000HK$100  
HK$3,000,000HK$3,528,240HK$100 + 10% of excess over HK$3,000,000
HK$3,528,240HK$4,500,0001.5%  
HK$4,500,000HK$4,935,480HK$67,500 + 10% of excess over HK$4,500,000
HK$4,935,480HK$6,000,0002.25%  
HK$6,000,000HK$6,642,860HK$135,000 + 10% of excess over HK$6,000,000
HK$6,642,860HK$9,000,0003.00%  
HK$9,000,000HK$10,080,000HK$270,000 + 10% of excess over HK$9,000,000
HK$10,080,000HK$20,000,0003.75%  
HK$20,000,000HK$21,739,120HK$750,000 + 10% of excess over HK$20,000,000
HK$21,739,120 4.25%  

Procedurally speaking, the Government will introduce the Stamp Duty (Amendment) Bill 2024 (the “Bill”) to the Legislative Council following the delivery of the Budget. In the meantime, to enable property purchasers to benefit from the said measures as soon as possible, the Chief Executive has exercised his statutory power to make the Public Revenue Protection (Stamp Duty) Order 2024 (the “Order”) under the Public Revenue Protection Ordinance (Cap. 120) to give full force and effect of law to the Bill before its enactment as long as the Order remains in force.

Potential impacts on the property market

All “spicy measures”, which aimed at curbing speculation and stabilizing housing prices, often deterred potential buyers due to the high additional costs involved in property transactions. With the removal of the “spicy measures”, we anticipate that the residential property market will experience a surge in activity. With the potential buyers having higher affordability, it is expected that the demand for residential flats will increase and property prices will potentially be driven up in the short term.

In particular, given that the BSD (which targeted purchasers who are non-Hong Kong permanent residents) is now removed, more foreign and Chinese investors might be attracted to invest in Hong Kong residential properties. Moreover, the abolishment of the SSD (which targeted reselling of residential properties within 24 months of acquisition) is likely to further stimulate the local second-hand property market.

Holding residential properties by corporate vehicles

One point to note is that the removal of “spicy measures” might prompt some potential purchasers (in particular, properties on the expensive end of the spectrum) to purchase residential properties through limited companies which are established for the sole purpose of holding the properties. When it comes to selling the properties, instead of selling the properties directly, property owners can sell the entire shares of the companies which hold the properties, to the purchasers.

The obvious advantage of using this strategy is that the stamp duty for the sale and purchase of shares of a limited company in Hong Kong is currently only 0.2% of the stated consideration or the value of the company (which essentially is the value of the property when the property is the only asset of the company), whichever the higher.

For example, if an individual decides to purchase a residential property valued at HK$7,000,000 after 28 February 2024, the calculations of stamp duty payable under different situations are as follows:

  • If the purchaser purchases the residential property directly, the stamp duty payable would be HK$7,000,000 x 3% = HK$210,000
  • If the residential property is held by the seller through a limited company whose only asset is the property, and the purchaser acquires the entire shares of the company, the stamp duty payable would be HK$7,000,000 x 0.2% = HK$14,000

Although the savings in stamp duty can be quite considerable by using the abovementioned strategy, it should be noted that:

  • Transfer of shares in a limited company involves more complicated procedures as compared to ordinary property transactions. Most notably, lawyers will be more heavily engaged in such equity transactions for procedures such as (i) due diligence to ensure that the company has not, amongst others, incurred any liabilities, and (ii) drafting the share purchase agreement including various representations, warranties and indemnity, to protect the interest of the purchaser. Hence, the associated legal fees would most likely be higher than that incurred in an ordinary property transaction.
  • After acquiring the company, the purchaser would have to pay annual maintenance costs to the company secretary and accountant for, among others, filing annual returns, convening annual general meetings, preparing audited accounts and doing tax filings to fulfill the statutory requirements.
  • Owing to legal complexity and risks as explained in point (1) above, banks usually do not offer mortgages for property transactions camouflaged by share transfers. Purchasers therefore need to be prepared to pay 100% of the purchase price of the company/property by the time the transaction is completed. A bridging loan might be required in the circumstances.

In view of the high associated costs that may be incurred in a share purchase transaction as discussed above, normally speaking, only residential properties of a relatively high value will justify the use of a limited company to hold the property.

If you have any question regarding the topic discussed above, please contact our partner Victor Ng at victor.ng@oln-law.com or our senior associate Barbara Kwong at barbara.kwong@oln-law.com for further assistance.

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.