US Company Formation from Hong Kong (2026): US LLC or C-Corp When There Is No US–Hong Kong Tax Treaty

Hong Kong businesses have sold into the USA for generations, but most did it through a Hong Kong limited company invoicing American buyers. What has changed is who wants a US company and why. Hong Kong e-commerce sellers want a US entity for US marketplaces, dollar payments and a US bank account. Design and tech studios in Kwun Tong and Wan Chai want to contract with American clients as a US vendor. And startups that hope to raise from US funds are told to form a Delaware corporation.

All of this can be done from Hong Kong without a trip to the USA. One fact drives almost every structuring decision, and it is not one Hong Kong founders usually expect: there is no comprehensive income tax treaty between the USA and Hong Kong. Add Hong Kong's territorial tax system, which taxes profits by where they are earned rather than where the company is registered, and the usual advice written for Europeans or Indians does not fit.

In short: anyone living in Hong Kong can own 100% of a US LLC or C-Corporation, formed remotely. There is no US–Hong Kong tax treaty, so dividends, royalties and most related-party interest paid from the USA to Hong Kong carry the full 30% US withholding tax. A single-member US LLC with no US operations usually pays no US income tax, but if you run it from Hong Kong, its profits from work done in Hong Kong are generally Hong Kong-sourced and liable to Hong Kong profits tax (8.25% on the first HK$2 million for a corporation). A US company with a place of business in Hong Kong must also register as a non-Hong Kong company within one month. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can form a US company from Hong Kong

US states do not restrict who may own a company. Hong Kong permanent residents, people working in Hong Kong on employment or talent visas, and Hong Kong companies can all own a US LLC or corporation outright, and an individual owner can be its only manager or director. No US visa, Social Security number or US address is needed, and you do not have to visit. The company needs a registered agent in its state, which is included for the first year in every UCB formation (see registered agent explained).

The company gets its Employer Identification Number (EIN) from the IRS without an SSN or ITIN (see EIN for non-residents). For identity, US banks want a passport: an HKSAR passport, a BN(O) passport or another national passport. A Hong Kong identity card on its own is not enough. For proof of address, use a recent utility bill or bank statement in English. Most Hong Kong banks and utilities issue those in English anyway.

Why the missing treaty matters

Most countries' residents can rely on a tax treaty with the USA to cut US withholding tax. Hong Kong residents cannot. The China–US treaty does not extend to Hong Kong, and Hong Kong and the USA have only a tax information exchange agreement and an intergovernmental FATCA agreement, neither of which reduces tax.

The US domestic rates therefore apply to money flowing out of a US company to Hong Kong:

• Dividends from a US corporation: 30% withheld.
• Royalties paid from the USA, for example for a brand or software licensed by a Hong Kong company: 30%.
• Interest: 30% on a loan from a shareholder owning 10% or more. Interest to unrelated lenders can qualify for the portfolio interest exemption.
• Branch profits tax: 30% on top of corporate tax, where a foreign corporation (including a Hong Kong company owning a US LLC) has US-connected profits it does not reinvest.

None of this matters for a business that never pays anything out of the USA. A disregarded LLC that has no US-connected income and just passes its profit to its owner pays no US tax at all. It matters a great deal for a US corporation, and for any plan to keep profits in the USA and later move them to Hong Kong.

Hong Kong's territorial tax and a US company

Hong Kong charges profits tax only on profits arising in or derived from Hong Kong, from a trade, profession or business carried on in Hong Kong. Where a company is registered does not decide its tax. What decides it is where the operations that produce the profit take place. Profits tax is two-tiered:

• Corporations: 8.25% on the first HK$2 million and 16.5% above.
• Unincorporated businesses: 7.5% and 15%.

Only one entity in a group of connected entities can use the lower tier.

For Hong Kong tax, a "corporation" includes a company incorporated or registered under laws elsewhere, so a US LLC is generally taxed as a corporation in Hong Kong, not as a partnership or as its owner's sole proprietorship.

Apply the source rules to a US company run from Hong Kong and the results are clear in most cases:

• Services performed by you in Hong Kong, such as design, development, consulting or marketing, generally produce Hong Kong-sourced profits, even if every client is in the USA and every payment lands in a US bank account. The US company is carrying on a business in Hong Kong through you.
• Trading profits depend on where the contracts of purchase and sale are effected. Negotiating and concluding them from an office in Hong Kong points to a Hong Kong source.
• Profits from operations genuinely carried out in the USA by US staff, from a US office or warehouse, are generally offshore and outside Hong Kong profits tax. An offshore claim is made in the profits tax return, and the Inland Revenue Department may ask for detailed evidence.

So a US company is not a way to make Hong Kong business income "offshore". It can make US business income clearly American, which is a different thing.

Hong Kong does not tax dividends received by individuals, and it has no capital gains tax. What an individual takes out of a US company, after the company has been taxed, generally reaches you in Hong Kong without further Hong Kong tax.

US LLC formation from Hong Kong

How the US taxes it

A single-member LLC owned by a non-resident is disregarded for US federal income tax. If you work from Hong Kong and the LLC has no US office, staff or dependent agents, its income is generally not effectively connected with a US trade or business, and no US federal income tax is due (see effectively connected income explained). The LLC files Form 5472 with a pro forma Form 1120 every year. The penalty for missing it is $25,000 (see Form 5472 explained).

Because a disregarded LLC is not a corporation for US tax, its profit passing to you is not a "dividend" and attracts no 30% withholding. For a Hong Kong resident, this is the main US advantage of an LLC over a corporation.

How Hong Kong taxes it

The LLC is generally treated as a corporation carrying on business in Hong Kong, and its Hong Kong-sourced profits are chargeable at the corporate two-tier rates. It needs a business registration with the Inland Revenue Department, and it files profits tax returns like any other business in Hong Kong.

A Hong Kong dollar example

These are illustrative figures, not a client case. The Hong Kong dollar is pegged near HK$7.8 to the US dollar.

Mei is a freelance product designer in Wan Chai whose clients are mostly American start-ups. She forms a Wyoming LLC, opens a US account and invoices US$120,000 a year. After US$20,000 of software and contractor costs, the LLC's profit is US$100,000, about HK$780,000.

In the USA, the LLC files Form 5472 and a pro forma 1120, and owes no federal income tax.

In Hong Kong, the design work is done in Wan Chai, so the profit is Hong Kong-sourced. As a corporation under the two-tier system, the LLC pays 8.25% on HK$780,000, which is HK$64,350. Mei then takes the money out free of further Hong Kong tax.

Had she invoiced as a sole proprietor, the unincorporated rate of 7.5% would have given HK$58,500. A Hong Kong limited company would have paid the same HK$64,350 as the LLC. The tax barely changes. What the LLC changes is the commercial side: US clients and US payment platforms that prefer a US counterparty, and a US account in her company's name.

US C-Corp formation from Hong Kong

How the US taxes it

A C-Corporation pays 21% federal tax on its worldwide profits, plus state income tax where it does business, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents).

For a Hong Kong owner, the problem is the second layer. A dividend to a Hong Kong individual or company is withheld at 30%, with no treaty to reduce it.

• Combined US tax: US$100,000 of corporate profit pays US$21,000 corporate tax. Paying out the remaining US$79,000 costs US$23,700 more in withholding, a combined 44.7% before any state tax.
• Hong Kong tax: none on the dividend, but it also gives no credit, because it has nothing to credit against.

When a C-Corp still makes sense

A corporation makes sense when the second layer is never paid, or when something else outweighs it:

• Raising from US investors. Venture funds invest in Delaware C-Corporations, and the founders' payoff is usually a sale of shares rather than dividends. See raising US investment as a foreign founder.
• Reinvesting in the USA. A US subsidiary that keeps its profits to grow US operations pays 21% and nothing more until it distributes.
• Ring-fencing liability. Contracts and staff in the USA sit in a US company, separate from the Hong Kong business.

The common Hong Kong group structure

Many Hong Kong businesses already trade through a Hong Kong limited company. The cleanest US structure for them is usually a US C-Corporation owned by the Hong Kong company, operating as a genuine US subsidiary. Take an illustrative case: a Kwun Tong electronics trader adds a Delaware subsidiary with a warehouse and sales staff in New Jersey.

The subsidiary pays US tax on its US profit. Its purchases from the parent must be priced at arm's length, because the transfer price decides how much profit lands in each place (see US subsidiary for a foreign company). On a well-priced arrangement, much of the margin can legitimately stay in Hong Kong, where it is taxed at Hong Kong rates, rather than being paid up later as a 30%-withheld dividend.

A Hong Kong company that receives dividends from a US subsidiary also needs to check Hong Kong's foreign-sourced income exemption (FSIE) regime. Since 2023, foreign-sourced dividends, interest, IP income and disposal gains received in Hong Kong by an entity in a multinational group are taxable unless an exception applies. A Hong Kong company with a single US subsidiary is already a multinational group for this purpose. Dividends from a US subsidiary usually qualify for the participation exception (a holding of 5% or more for at least 12 months, with the US rate passing the subject-to-tax test), but this should be confirmed with a Hong Kong tax adviser.

What to avoid: a Hong Kong company owning a single-member US LLC

Because a single-member LLC is disregarded in the USA, a Hong Kong limited company that owns one is treated by the IRS as carrying on the LLC's business itself. If that business is US-connected, the Hong Kong company files a US corporate return, pays 21% and can owe the 30% branch profits tax on profits it does not reinvest. Hong Kong meanwhile treats the LLC as a separate corporation. If the US business will have US operations, use a corporation. If it has none, ask whether a US entity is needed at all, or whether the Hong Kong company can sell to US customers directly.

When the US company must register in Hong Kong

Hong Kong founders often miss this step. If a US LLC or corporation establishes a place of business in Hong Kong, it must register as a registered non-Hong Kong company with the Companies Registry within one month. That includes using an office or share-office in Hong Kong as its business base. It must also obtain a business registration certificate from the Inland Revenue Department.

Registration brings yearly filings in Hong Kong, an authorised representative and the company's accounts. If you are running a US LLC from your home or an office in Hong Kong, discuss this with a Hong Kong company secretary before you start invoicing. A US company with no place of business in Hong Kong, whose owner simply lives there, is a different case, but the tax position still follows where the work is done.

Mainland Chinese nationals living in Hong Kong

Many people now in Hong Kong under talent or employment schemes are mainland Chinese nationals. If you are still considered tax resident in mainland China, for example because your household registration and family are there, mainland rules also apply:

• China taxes residents on worldwide income.
• China has outbound investment registration requirements for residents who own foreign companies.

Mainland and Hong Kong residence are separate tests, and the Hong Kong position above does not settle the mainland one. Check it with an adviser who handles both.

Banking and payments

Hong Kong is not sanctioned, and residents of Hong Kong are accepted by many US banks and fintechs that open accounts remotely. Expect more questions than a resident of Singapore or the UK would get, especially where owners, suppliers or customers are in mainland China. A few platforms do not onboard Hong Kong at all. Applications go best with:

• A specific business description.
• An English website showing real products or services.
• Identical company details on the state record, EIN letter and application.
• A US business address with your own suite number rather than the registered agent's address.

Hong Kong banks are used to US dollar wires, and a US dollar account in Hong Kong is ordinary. Thanks to the currency peg, moving money between the two carries less exchange risk than for almost any other founder in this series. See US business bank accounts for non-residents, why banks reject non-resident applications and Stripe for non-residents.

Which state

For a Hong Kong-run online business or service company, Wyoming is the usual LLC state, with New Mexico as the cheapest alternative. Delaware is for a corporation that will raise investment. A US subsidiary with a warehouse or staff should be formed in, or registered in, the state where they are. New Jersey, California, Texas and New York are common for Hong Kong traders. See best state for non-residents and the state selector.

What it costs

State fees and the first-year registered agent are included. Hong Kong-side costs are separate: business registration, profits tax returns, and registration as a non-Hong Kong company if needed. See what a US LLC costs every year.

Visas and moving to the USA

Holders of an HKSAR passport are not eligible for the E-1 or E-2 treaty visas, because Hong Kong is not a treaty territory for them. A Hong Kong resident who holds another eligible nationality may be. Other routes, such as the L-1 for a manager transferring from a Hong Kong company to its US subsidiary, depend on the facts and need an immigration lawyer. Once you move to the USA, the US company's profits become US taxable income for you.

Common mistakes

• Assuming a US company makes Hong Kong profits offshore. Work done in Hong Kong is generally Hong Kong-sourced, whoever invoices.
• Forming a C-Corp and planning to pay dividends to Hong Kong. With no treaty, the 30% withholding comes on top of 21% corporate tax.
• Lending to your US corporation and charging interest without realising that interest to a 10% shareholder is withheld at 30%.
• Owning a single-member LLC through a Hong Kong company for a US business with real US operations, which exposes the Hong Kong company to US branch profits tax.
• Running the US company from an office in Hong Kong without registering it as a non-Hong Kong company and obtaining business registration.
• Skipping Form 5472 because the LLC owed no US tax.

Frequently asked questions

Is there a tax treaty between the USA and Hong Kong? No comprehensive income tax treaty. Dividends, royalties and related-party interest from the USA to Hong Kong are withheld at 30%.

Will my US LLC pay tax in Hong Kong? If you run it from Hong Kong, its profits from work done in Hong Kong are generally Hong Kong-sourced and taxed at Hong Kong's corporate rates. Profits from genuine US operations are generally offshore.

Will my US LLC pay US tax if I work from Hong Kong? Usually not, with no US office, staff or agent. It still files Form 5472 and a pro forma 1120 every year.

LLC or C-Corp for a Hong Kong owner? For a service or online business run from Hong Kong, usually an LLC, because a C-Corp's dividends to Hong Kong carry 30% US withholding. A C-Corp is right for raising US investment, or for a US subsidiary that reinvests in the USA.

Can my Hong Kong limited company own the US company? Yes. For a US business with US operations, use a US corporation as the subsidiary, price transactions with it at arm's length, and check Hong Kong's FSIE rules for any dividends it receives.

Does my US company need to register in Hong Kong? If it establishes a place of business in Hong Kong, yes, as a registered non-Hong Kong company within one month, plus business registration.

Do I need an ITIN? Not to form the company or obtain its EIN. See what is an ITIN and who needs one.

How UCB can help

We handle US company formation from Hong Kong remotely: the state filing, EIN, registered agent, US business address and bank application, and then the yearly federal return through our US tax filing service. Hong Kong profits tax, business registration and any non-Hong Kong company registration are handled by your Hong Kong accountant or company secretary, and we supply the US documents they need. If your plan would trip over the missing treaty, for example a C-Corp paying regular dividends to Hong Kong, we will point it out before you form. See our formation, EIN and bank account package ($348) and the country guide.

Setting up a US company from Hong Kong? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.