BVI company vs Hong Kong company

BVI company vs Hong Kong company – a very rarely discussed topic, but very relevant for business owners who want to open an offshore company.

TL;DR: Executive summary

If you want a company for only:

asset protection
crypto trading
B2C business

and you care about privacy (your name should not appear online with the company) – then a BVI company may be best.

If you want a company in particular for:

B2B business or E-commerce
reputation in front of EU and US clients
asset protection
PayPal and Stripe

and don’t mind your name being publicly searchable, then a Hong Kong company may be the best fit for you.

Introduction

This article is for business owners who

know they want an offshore company
have researched whether an offshore company can help them to reach their goal (tax benefits etc.)
have tax residency that suits an offshore company (Portugal, Cyprus, Thailand etc.)

Usually business owners choose an offshore company such as BVI or a HK company to reduce taxes for their online business (marketing, IT, etc.).

If you are unsure whether and when an offshore company can be of use for you, you can read more about how self-employed profit from an offshore setup.

In case you want to discuss your individual situation and need tailored advice, feel free to book a consultation call with our legal team to advise you whether and when the best moment for you is to open an offshore company.

We will compare both setups in this article in terms of:

setup requirements
banking and payment gateway options
costs (setup, maintenance)
yearly to-dos for business owners
taxes
summary of advantages and disadvantages

BVI company vs HK company: Setup requirements

We will compare both company setups BVI company and Hong Kong in terms of requirements to be able to set it up.

BVI company setup:

Apart from money, any BVI company has certain requirements to be able to set it up:

Documents:
1. Passport copy (just a scan of your passport)
2. Proof of residency (utility bill etc.) that is no older than 3 months
3. Business plan (optional)
One director: This would in most cases be you
One shareholder: If it is just you, then this would also be you as director and shareholder can be the same.
Office address in BVI

The duration for BVI company usually takes around 1 to 3 days.

Hong Kong company setup:

Hong Kong is 90% identical to BVI company but with only three differences:

A local secretary (from Hong Kong) is mandatory
The office address does not need to be a physical one. It can be a virtual office address
If you like in a country such as Russia or North Korea, opening a company can become difficult (you can have the nationality of those countries, but cannot live there)

The duration is the same as for a BVI company.

We are often able to open a company for our clients within 24 hours depending on the business case.

BVI company vs HK company: Banking and payment gateways

BVI company bank accounts:

It becomes increasingly difficult to open bank accounts with a BVI company.

As BVI companies do not hold a good reputation in public, banks are very cautious of opening bank accounts, let along granting credit or debit cards.

So your favorite bank accounts and fintech companies such as

Wise
Revolut
Airwallex

may not be available.

Payment gateways are of this very moment not available in BVI such as

PayPal
Stripe

This is one reason why for most E-commerce, SaaS and online course sellers, a BVI company would not be of much use.

Hong Kong company bank accounts:

In Hong Kong you have very large tools of banks that you can use from fintech to traditional banks.

Fintech such as:

And even traditional banks such as:

HSBC
DBS

Rumors has it that it is nearly impossible to open a business account for Hong Kong company as a non-resident, but this is not true.

We are helping our customers daily to open those. It is true that you need good network and knowledge how approach this topic.

We have helped 1000s of clients to successfully open a bank account in Hong Kong. If want us to guide you through the process, feel free to book a call with us.

Also, both PayPal and Stripe can easily be used in Hong Kong as a non-resident.

BVI company vs HK company: Costs

In terms of costs a BVI company is less costly (regardless of agent) due to less overhead:

no secretary required (mandatory in HK)
no annual filling, taxation and audit required (mandatory in HK and audit needs to be done by a CPA)

In general, a BVI company should be around 800 to 2000 USD for setup and around 1500 USD for annual fees.

A HK company is the same for the setup costs, but the maintenance cost will probably amount to approximately 2500 USD per year due to higher regulation.

So, we can see that the reputation of a Hong Kong company comes with more costs in the backend.

We always make a fixed price all-inclusive offer for our customers, so they can budget better for their company.

When you are ready, book a call with our legal team for a team member to guide you through.

BVI company vs HK company: Yearly maintenance

BVI company: Yearly maintenance

For a BVI company, there is not much of annual maintenance and to-dos neither for the agency that helped you set it up, nor for you as a business owner.

The reason is simple:

There are no taxes by default in BVI and thus also no bookkeeping and no tax filing.

It is similar to the UAE before they introduced the 9% corporate tax.

Regardless of this fact, you still have to pay the annual fee for an agency partner as this is a requirement by the government to have such agency for communication.

Hong Kong company: Yearly maintenance

For a Hong Kong company, there are a couple of to-dos each year:

Annual renewal of company details: This is a simple form to update company information or confirm that the company information has not changed. If you work with a service provider, they will handle this with you. You would just need to sign it.
Tax filing: Tax filing is done by your service provider with the help of a tax accountant.
Audit: This is done by CPA or tax accountant to confirm.
Offshore application: If your company fulfills the offshore tax requirements, then you would apply for it as well.

If you work with a CPA firm like us, these tasks are all handled by us and we sent you once a year some files to sign.

BVI company vs HK company: Taxes

BVI companies do not impose any corporate taxes and the reason why most business owners chose it before.

Hong Kong is a tiny bit different:

In general, there are flat taxes from 8.25 to 16% corporate taxes.

But for companies who have no substance in Hong Kong (no employees, no clients), they can apply for the offshore exempt and receive 0% corporate tax.

So it ends up to the same low tax for foreign business owners just as BVI, but most people are not aware of this.

BVI company vs HK company: Advantages and disadvantages

To conclude our article, we can say that if privacy of data and very low cost is very important to you then a BVI company may be the best option for you.

If you can bare a bit of more cost and data privacy (your name being public with your company information) is not of an issue for all other use cases a Hong Kong company would be more suitable.
If you are still unsure, feel free to get in touch with us and we evaluate whether a Hong Kong company suits your needs.

BVI company vs Hong Kong company: A full comparison for you to make the RIGHT decision!

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