Taxation in Jersey

[john_1122]

If I open an account in Jersey, would I need to pay more taxes than in Hong Kong on the dividends and capital appreciation of my stocks, bonds, funds, etfs?

[traineeinvestor]

Not sure if I understand the question? Unless you are carrying on a business of investing, there is no HK taxes on dividends, capital gains or interest for individual investors ... at least, that's my understanding. If I'm wrong then I've probably been shortchanging the HK IRD for the last 28 years.

If your question is directed at non-resident withholding taxes levied at source, I assume the answer would depend on what (if any) double tax treaties are in place.

[shri]

Three or more levels of taxes to consider for dividends?

WHT, local and global income depending on the source of the income, where it is located and your country tax laws?

No clue about Jersey or Cap gains.

[john_1122]

Uh? Yes. In Hong Kong there are no taxes on dividends and capital gains. Would it be the same in Jersey, for someone residing in Hong Kong (or another country)? Or would one need to pay taxes on dividends and capital gain?

In some countries there are taxes on dividends and capital gain. For example if you open an account in Switzerland you need to pay 30% of taxes on your dividend (most of which you get back if you are a resident of Switzerland, but not if you are not a resident).

[Kowloon72]

https://geoexpat.com/forum/155/threa...ml#post3724902

"I have two question about HSBC expat.

1) It's based in Jersey, and my understanding is that in Jersey there is a tax on dividends.

But if I live in HK I will pay taxes according to HK rules, right? For example if I buy shares of Link Reit I won't pay a tax on the dividend, if I buy UCITS I pay 15% taxes, etc.?

Do I need to fill in a form to get back some of the taxes that I pay in Jersey (if these are more than I would pay in HK)?

2) One can have an expat premier account with a salary of GBP 100,000 a year. But what if one takes a pay cut or stops working? Do they check yearly if you still have that salary, and if you no longer have it, they ask you to put in 50,000 or they charge the GBP 35 fee?"

"I think you're a bit muddled there. Dividends are usually taxed at source. A US stock market ETF UCITS like IUSA will be subject to 15% witholding tax whether you hold it with HSBC Jersey or IB in Hong Kong. There won't be any extra tax applied in Jersey.

Shares in Link will not be subject to witholding tax wherever you hold them, and FWIW I think HSBC expat only allows for US and UK sharedealing anyway. Likewise stocks or ETFs that are UK based like Shell or a FTSE 100 tracker will be paid without any witholding tax wherever you hold them.

US stocks and ETFs listed in the US like VOO and QQQ, or in HK like 3140, are subject to 30% witholding tax wherever you hold them."

If you're opening a HSBC Expat account, then you should take tax advice from the relevant body/authorities where you are based. It's my understanding that you will pay tax on your investments as per the tax laws where you are resident. So a HK resident with a HSBC Expat account should not need to pay tax on capital gains or dividends, apart from dividend withholding tax deducted at source on stocks from certain countries.

[greenmark]

Assuming you are a UK citizen, resident in Hong Kong.

HSBC Expat InvestDirect investments are not held in Jersey but in the UK. They are liable for UK taxes.

As a HK resident, Capital Gains Tax on non-property investments held in the UK are nil. But you need to realise these capital gains in the tax year before you move back to the UK. If you sell just before you move back then you can still be liable for the CGT if they are in the same tax year. ie don't sell in May and move back in June.(Note that this applies to any investment, regardless of whether it is in the UK or if it investments you hold with a broker in HK).

As a Hong Kong resident, Investment Dividends earned in the UK can be classified as Excluded Income, which means that there is zero tax liability. If you declare any excluded income, then you lose any personal allowance for any other income you might receive from UK.

This is pertinent if you have property or REITs income from the UK. The property income is taxable. You then have a choice of two things:
- Add the dividend income to your property income, claim the £12500 personal allowance and pay taxes anything above that, OR
- Declare the dividend income to be excluded income. That gives you zero tax liability on the investment income. BUT if you do so then you lose your personal allowance, so you pay taxes in full for all your rental income.

I'm not a professional tax advisor.

[greenmark]

Assuming you are a UK citizen, resident in Hong Kong.

HSBC Expat InvestDirect investments are not held in Jersey but in the UK. They are liable for UK taxes.

As a HK resident, Capital Gains Tax on non-property investments held in the UK are nil. But you need to realise these capital gains in the tax year before you move back to the UK. If you sell just before you move back then you can still be liable for the CGT if they are in the same tax year. ie don't sell in May and move back in June.(Note that this applies to any investment, regardless of whether it is in the UK or if it investments you hold with a broker in HK).

As a Hong Kong resident, Investment Dividends earned in the UK can be classified as Excluded Income, which means that there is zero tax liability. If you declare any excluded income, then you lose any personal allowance for any other income you might receive from UK.

This is pertinent if you have property or REITs income from the UK. The property income is taxable. You then have a choice of two things:
- Add the dividend income to your property income, claim the £12500 personal allowance and pay taxes anything above that, OR
- Declare the dividend income to be excluded income. That gives you zero tax liability on the investment income. BUT if you do so then you lose your personal allowance, so you pay taxes in full for all your rental income.

I'm not a professional tax advisor.

Just to add one more thing. If you are taking dividend income into an accumulating fund ETF, those are "notional dividends" and still need to be declared as dividends. The notional dividends need to be deducted once when you sell out when you calculate the Capital Gains.

[pin]

Don't forget any potential IHT liabilities.