Seychelles Company vs Hong Kong company: Both can serve well as offshore company, but choosing the right jurisdiction can be crucial long-term.
Introduction
When entrepreneurs want to open an offshore company, there are many options available such as:
- BVI offshore company
- Seychelles offshore company
- Hong Kong offshore company
- US LLC offshore company etc
But to choose the right jurisdiction, one should think it through as long-term it can have an impact on the business.
Whereas BVI and Seychelles are just offshore companies by nature, a Hong Kong and a US LLC are not typically regarded as an offshore company worldwide (which then in return comes with advantages and disadvantages).
Ih this article, we will focus on the comparison between Seychelles company and Hong Kong company and go through
- setup requirements of both
- banking and payment gateway options
- costs (setup, maintenance)
- yearly to-dos for business owners
- taxes
- summary of advantages and disadvantages
Further reading:
Read more about the comparison between a foreign-owned US LLC and a Hong Kong company.
Seychelles Company vs Hong Kong Company: Setup requirements
Before opening a company on the Seychelles or in Hong Kong, it is important to know about the prerequisites in order to know whether you are eligible for it or not.
Seychelles Company: Setup requirement
The setups requirement for Seychelles companies are:
- One director (of any nationality) and including passport scan and proof of address in English
- One shareholder – it can be the same person as the director
- A registered office address
- A registered agent to communicate with the authority
These requirements are very similar to those of a BVI company.
Further reading:
Read more about requirements of a BVI company and differences to other offshore setups.
Hong Kong Company: Setup requirement
Hong Kong has the same requirements as a company in the Seychelles, but there are two aspects that should be noted:
- A local secretary is mandatory in Hong Kong
- All nationalities are allowed to open a company, but not proof of address of all countries may be accepted.
Let us go through an example for the last one:
Due to the war between Russia and Ukraine, both Russia and Ukraine are on the list of sanctioned countries in Hong Kong.
If a Russian citizen opens a Hong Kong company, this is not a problem.
But if you live in Russia (regardless of your citzienship/passport), this is a problem.
So a Russian living in Thailand can open a Hong Kong company and bank account.
On the other hand, a German living in Russian may not open a Hong Kong company, let along a bank account (unless you have proof of address from a country different from Russia).
Seychelles Company vs Hong Kong company: Banking and Payment Gateways
A company without a business bank account is basically unusable.
This is why we as CPAs always advise our clients to check before opening a company about the banking infrastructure to prevent losing money.
Seychelles Company: Banking and Payment Gateway
As Seychelles company is a very well-known offshore company and that is all what it is used for, many famous bank and fintechs will not allow a business bank account with that setup such as:
It becomes even harder if you need an IBAN number for your customers instead of using SWIFT.
It is probably possible to use local banks on the Seychelles, but this may restrict you to limited banking infrastructure within Seychelles such as
- difficulty to transfer overseas
- difficult to use apps
- not solid banks with reputable history
Generally, it may not be the best option to do banking with customers and suppliers.
Also using payment gateways for an online store or E-commerce shop, is very hard as the biggest ones such as PayPal and Stripe cannot be used with a company on the Seychelles.
Hong Kong Company: Banking and Payment Gateway
Hong Kong companies have many payment gateways and banking options compared to Seychelles.
Just in terms of banking there are two different type of banks you can choose from:
- Traditional banks such as HSBC, DBS or
- Fintech banks such as Wise or Airwallex
Most of our clients choose fintech banks because of the fast setup (5 to 7 days) completely online and later on open a traditional bank account with HSBC (on-site meeting required) if needed.
Also Hong Kong not only offers many banking options, but fintech companies such as Wise and Airwallex allow you to open different currencies (USD, EUR, AUS Dollars) and on top of that you can have a account number from that specific country.
This means you can have an IBAN number for a Hong Kong company or a US bank account number for your Hong Kong company.
Further reading:
Read more about when to open a traditional or fintech bank account.
Seychelles Company vs Hong Kong company: Costs
An important factor for many are the costs for a business for setup and recurring basis.
Generally, one could say that the prices for Hong Kong are around double the prices for a company on the Seychelles.
The lower costs for Seychelles come with the lack of tax filling and auditing for companies without business within the Seychelles.
On the other hand, for a Hong Kong company the higher costs are justified by the yearly audits, tax filling and at the end of the year a proper tax certificate certified by the Hong Kong tax government and recognized internationally.
Let us look closer at the costs of each of them.
Seychelles Company: Costs
The costs to open a Seychelles company is usually around 1000 USD.
This amount of course depends on the agent and their prices.
Also keep in mind that some agents do not include in this price, the service for opening a bank account. Some of them do not even provide such a service.
Generally, as CPAs we recommend to always ask for the price including this service as having a company without a business bank account is almost useless for you – unless you just want it for your imprint on your website (there are interesting cases why people would do this).
The annual costs for a Seychelles company is usually around 800 USD per year.
This price is generally quite low amongst offshore companies. As explained, this is due to lack of tax filing and auditing.
Hong Kong Company: Costs
The costs for a Hong Kong company are twofold:
- setup costs: around 2000 USD
- annual costs (including tax filling, audit etc.): 3000 USD
But as usual it quite depends on:
- the agent or CPA you work with
- your annual revenue and the workload
- whether you want to apply for the 0% corporate tax (offshore label)
Make sure that they always help you with opening a bank account as many customers have come to us from other agencies that did not help them and we had to help them get through this.
If you want to know how we can also help you and whether it is possible at all for you, book a consultation call with our legal team.
Further reading:
Read more on how to choose the right provider to help you open a bank account in Hong Kong.
Seychelles Company vs Hong Kong company: Yearly To-Dos
For a Seychelles company there are not many to-dos per year due to the lack of:
- tax filling
- bookkeeping
- audit
Regardless of this the amount for the agent still has to be paid as hiring an agent to maintain the company is a requirement on the Seychelles.
In comparison to a Seychelles company, a Hong Kong company has more yearly to-dos such as tax filling and audit.
In case you also want to apply for the offshore label, then also forms need to be filled in and each 3 years these need to be discussed with the authorities.
In case you have a CPA in Hong Kong, there is not much you have to do unless to sign a few pages to confirm the decisions made by your CPA.
Further reading:
Read more about how to find a good accounting firm in Hong Kong.
Seychelles Company vs Hong Kong company: Taxes
The taxes for Seychelles company are for offshore businesses (no clients in Seychelles) always 0%.
This also applies for a Hong Kong company:
If your business has no clients and no employees in Hong Kong, it can also apply for the 0% offshore tax.
But here lies the big difference:
On the Seychelles the 0% are given by default, but in Hong Kong you have to actively apply for it and the government will strictly check all your documents.
This is also why many EU and North American countries are very careful doing business with Seychelles because it is known as a tax haven.
On the other hand, Hong Kong is an unknown tax haven because it actually has corporate tax (8.25 to 16.5%), but in practice you can end up with 0%.
This is why many of our clients choose a Hong Kong company.
Further reading:
Read more why international entrepreneurs choose a Hong Kong company.
Seychelles Company vs Hong Kong company: Advantages and Disadvantages
Seychelles have the clear advantage that it is
- cheaper
- less bureaucracy
but for a serious business with
- B2B customers (SaaS, agency model)
- E-Commerce with payment gateways
it will not be a suitable solution.
That is why the best two use cases for a Seychelles company are:
- Asset protection
- Crypto trading
A Hong Kong company has higher costs, but if you can bare that then it can provide everything a Seychelles company provides (asset protection, crypo trading) and more:
- reputation in front of B2B customers
- payment gateways for E-Commerce
- tax certificate for future usage
