Update on the HK-Germany DTA
We were recently invited to a high level discussion on the planned Double Taxation Agreement (DTA) between Hong Kong and Germany, an important topic for many of our readers. Organised by the German Consulate General in Hong Kong, the event brought together a hand-selected group of business leaders, representing German companies’ interests, and representatives of the German Federal Ministry of Finance. The aim of this meeting was to create an open forum for ideas exchange and feedback relating to the pending DTA. In particular, it was an opportunity to share with the Federal Ministry of Finance any concerns or advice that German companies may have regarding the DTA.
Hong Kong already has comprehensive DTAs in place with 32 countries, including Austria and Switzerland. A first round of discussions began in early 2014 to put in place a full-fledged DTA with Germany. The second round of negotiations are concluding today in Hong Kong and if successful, will still be subject to ratification. According to the German Federal Ministry of Finance, the aim of the DTA between Hong Kong and Germany is two-fold: “desiring to further develop their economic relationship, to enhance their cooperation in tax matters and to ensure an effective and appropriate collection of tax,…” and “intending to allocate their respective taxation rights in a way that avoids both double taxation as well as non-taxation…”
What the DTA means for German businesses
- Since several other major European countries have already signed a DTA with Hong Kong, Germany is currently at a disadvantage. Moreover, for Hong Kong to remain a competitive location vis-à-vis other countries such as Singapore, which already have agreements in place with Germany, a DTA would be beneficial.
- A DTA would help with cross-border tax transparency for German citizens with assets at home and abroad.
- In our opinion, a DTA with Germany would only strengthen Hong Kong’s standing as an attractive city for German businesses and individuals. Hong Kong is the gateway to China and Asia, offering a low tax regime, access to international capital markets, and its status as a RMB and transport hub. This, in combination with its sound rule of law and stable financial system, gives the city a distinct advantage over others. A DTA with Germany will only reinforce this standing.
Should you have any cross-boarder taxation concerns, feel free to email us at firstname.lastname@example.org. Via our Tax Advisory Service, we can assist you with your tax and compliance matters.