After the launch of the New Capital Investment Entrant Scheme (CIES) on 1 March 2024, the Hong Kong Government announced details of various enhancement measures to the CIES on 7 January 2025. These new measures will take effect from 1 March 2025.
As explained by the Secretary for Financial Services and the Treasury Mr. Christopher Hui, these new measures intend to encourage more investors to join the scheme and to create synergy between the CIES and the Hong Kong family office tax concession regime.
What are the enhancement measures?
-
Reducing the time period in relation to the net asset requirement
Previously, an applicant was required to demonstrate that he has net assets or net equity to which he is absolutely beneficially entitled with a market value of not less than HK$30 million throughout the 2 years preceding the application. This period has now been reduced to 6 months.
-
Allowing joint ownership of net assets with family members
When the CIES was first launched, only net assets or net equity held solely and beneficially in the name of the applicant could be taken into account for calculating the net asset requirement.
Going forward, net assets or net equity jointly owned by the applicant and his family members may be taken into account in calculating the net asset or net equity requirement for the relevant portion which is absolutely beneficially entitled by the applicant. In this context, “family members” has the same broad definition as under Hong Kong’s family office tax concession regime.1
-
Allowing permissible investment assets to be held through a family office structure
Investments made through a company that satisfies certain criteria will be counted towards the applicant’s eligible investment under the CIES. More specifically, the company must be:
-
incorporated or registered in Hong Kong;
-
wholly-owned by the applicant; and
-
a Family-owned Investment Holding Vehicle (FIHV) or Family-owned Special Purpose Entity (FSPE) as defined in the Inland Revenue Ordinance (IRO) under what is commonly referred to as the family office tax concession regime.
The revised Scheme Rules for the CIES also stipulates additional conditions which must be satisfied in order for the FIHV or FSPE to hold permissible investment assets. However, these conditions simply replicate some of the conditions of the family office tax concession regime rather than imposing any additional requirements. In particular, the FIHV must have at least two full-time employees in Hong Kong who carry out the activities of the FIHV, incur at least HK$2 million operating expenditure annually and be managed by an Eligible Single Family Office of the applicant’s family within the meaning of the IRO. The Eligible Single Family Office must manage assets specified under Schedule 16C of the IRO for the FIHV(s) of the family with a net asset value of not less than HK$240 million.
What are the implications of these new measures?
Currently, clients looking to obtain Hong Kong residence through investments are generally choosing between two options, either applying for an employment visa as an employee of the family office or applying through the CIES regime. The eligibility criteria for each regime are set out below for comparison.
| CIES | Employment visa |
| 1. Age: Must be at least 18 years old | 1. Job vacancy: there is a genuine job vacancy |
| 2. Nationality/residence status: foreign nationals, including Chinese nationals with permanent residency in a country outside of Hong Kong, residents of Macao, and Chinese residents of Taiwan | 2. Nationality/residence status: foreign nationals, overseas Chinese nationals and residents of Mainland China2 |
| 3. Minimum assets/equity: net assets or equity of not less than HK$30 million to which they have been beneficially entitled for at least 6 months years preceding the application | 3. Qualifications: the applicant should have a good education background, normally a first degree in the relevant field. In special circumstances, good technical qualifications, proven professional abilities and/or relevant experience and achievements supported by documentary evidence may also be accepted |
| 4. Minimum investment: HK$30 million in permissible investment assets: -
a minimum of HK$27 million must be invested in permissible assets including approved financial assets and real estate (capped at HK$10 million, for residential estate, it must be a single property transaction with a price of HK$50 million or above); and -
HK$3 million must be placed into a new CIES Investment Portfolio to be managed by the Hong Kong Investment Corporation Limited | 4. Offer of employment: the applicant has a confirmed offer of employment and is employed in a job relevant to his academic qualifications or work experience that cannot be readily taken up by the local work force |
| 5. Resources to support self and dependents: the applicant must demonstrate that he is capable of supporting and accommodating himself and his dependents without relying on any return of the permissible investment assets or any employment/business in Hong Kong | 5. Remuneration: the remuneration package is broadly commensurate with the prevailing market level for professionals in Hong Kong |
| 6. No adverse record: have no adverse immigration record and meet the normal immigration and security requirements | 6. No adverse record: there is no security objection and no known record of serious crime |
One immediate implication of the enhancement measures is that client looking to apply through the CIES now have more flexibility to include assets jointly held with family members. At the same time, these new measures also present an additional and attractive option for clients who are looking to reside in and set up family offices in Hong Kong.
In instances where clients interested in obtaining Hong Kong residence by setting up family offices in Hong Kong may not necessarily meet the requirements for an employment visa as an employee of the family office the new CIES regime enabling them to obtain residence through meeting the requirements under the new CIES regime provides a welcome alternative.