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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Hong Kong: Royalties

Hong Kong domestic legislation charges withholding tax on royalties from patents, know-how, etc at a rate of 4.95% if paid to a company and 4.5% if paid to an individual. Higher rates apply if the recipient is connected to the payer.

The treaty provides for a reduction in source state taxation to 3%.

The reduced rate is not given if the royalty is effectively connected (see INTM153110 fifth sub-paragraph) with a permanent establishment which the United Kingdom resident recipient has in Hong Kong.