Trusts and private trust companies in Hong Kong in 2026: Cap. 29, the TCSP licence and the tax position

A Hong Kong trust is governed by the common law and by the Trustee Ordinance (Cap. 29), not by a dedicated trusts statute; the trust itself is not a legal person, and the taxpayer is the trustee. Hong Kong trust law took its present substance on 1 December 2013, when the Trust Law (Amendment) Ordinance 2013 came into force, and has not changed in substance since; the consolidated version of Cap. 29 is nevertheless dated 23 May 2025, because of consequential amendments made by the company re-domiciliation regime.

The key risk. The position of a private trust company (PTC) under the TCSP licensing regime in AMLO Cap. 615 has been posed by the regulator as a question and left without a substantive answer. A separate Companies Registry FAQ on trust companies (revised 9 May 2018) asks in terms whether a licence is needed by a company whose sole purpose is to act as trustee of a private family trust, “with or without fees”; the answer repeats the general test — “by way of business … to other persons” — and elaborates neither term for a PTC. There is no guidance elaborating the test, no published decision and no enforcement case, and no class of persons has been prescribed by regulation under section 53B(2). Yet acting as trustee of an express trust is expressly a trust service under Schedule 1, and carrying on that business without a licence attracts a level 6 fine (HK$100,000) and 6 months’ imprisonment. The question is unresolved — not resolved in the PTC’s favour.

Item	Position	Basis
Principal instrument	Trustee Ordinance, Cap. 29 (27 July 1934)	current consolidated version dated 23 May 2025
Last substantive reform	1 December 2013	Trust Law (Amendment) Ordinance 2013, Ord. No. 13 of 2013
Recognition of foreign trusts	the Hague Convention 1985 applies	Recognition of Trusts Ordinance, Cap. 76
Duration of a trust	unlimited for instruments taking effect on or after 1 December 2013	Cap. 257 as amended in 2013
General power of investment	none — a closed authorised list applies	s. 4 and the Second Schedule to Cap. 29
Exemption clauses	void so far as they cover fraud, wilful misconduct or gross negligence — both exoneration and an indemnity out of the trust property; MPF scheme trustees are carved out	ss. 41W(2)–(4)
Powers a settlor may reserve	investment and asset management functions only	s. 41X
Protection against forced heirship	movable property only, lifetime transfers only	s. 41Y
Registered trust company	capital HK$3,000,000, deposit HK$1,500,000, registration is voluntary	Part 8 of Cap. 29
Form required for registration	a public company; a private company does not qualify	the “specified company” definition
TCSP licence	required where trust services are carried on by way of business	AMLO Cap. 615, Part 5A
Register of trusts	Hong Kong has none	—
Estate duty	abolished from 11 February 2006	Ord. No. 21 of 2005
Capital gains, gift and wealth taxes	none	statement by the Financial Services and the Treasury Bureau
Profits tax rate on a trustee	follows the trustee’s own legal character: 16.5% or 15%	ss. 2 and 14 of Cap. 112
Revenue practice note on trusts	never issued	the DIPN index, numbers 1 to 63
A trust as an FIHV	pe­rmitte­d, a discretionary trust included	Schedule 16E, 0% rate
Assets held under trusts	HK$6,214 billion as at 31 December 2025	SFC AWMAS 2025 survey

What a Hong Kong trust is, and why it has no statute of its own

A Hong Kong trust is a creature of the common law, not of statute: the Trustee Ordinance (Cap. 29) does not define a trust, does not prescribe how one is created and does not register one. It supplies a trustee’s default powers and duties, and no more. A practical consequence follows, and it is worth grasping before any structuring begins: a Hong Kong trust cannot be “registered”. It has no number, no certificate and no public file, and its existence is proved by the trust instrument and by the conduct of the parties.

A second consequence follows too: a trust is neither a legal person nor a taxpayer. Legal capacity and tax personality belong to the trustee. That is why the question “at what rate is a trust taxed in Hong Kong” is the wrong question — the trustee is taxed, and the rate turns on the trustee’s own legal form.

The three layers of Hong Kong trust law

Hong Kong trust law sits in three layers, and they must not be conflated.

The first layer is common law and equity. The concept of the trust, the duty of loyalty, the no-conflict rule, the rule in Saunders v Vautier and the beneficiary’s remedies are all judge-made and are not reproduced in the statute. Cap. 29 assumes them; it does not replace them.

The second layer is the Trustee Ordinance (Cap. 29). Enacted on 27 July 1934 and modelled on the English Trustee Act 1925, it governs a trustee’s powers, appointment and removal, liability and remuneration, and — in Part 8 — the voluntary registration of trust companies. Its current consolidated version is dated 23 May 2025, but that date is misleading: it reflects not a reform of trust law but consequential amendments made by Hong Kong’s company re-domiciliation regime.

The third layer is the conflict of laws. This is where write-ups about Hong Kong almost invariably go wrong.

The Hague Trusts Convention does apply to Hong Kong

Hong Kong is covered by the Hague Convention on the Law Applicable to Trusts and on their Recognition 1985, and the implementing instrument is the Recognition of Trusts Ordinance (Cap. 76). The Convention entered into force for Hong Kong on 1 January 1992 by United Kingdom extension, and its application survived the change of sovereignty: by a notification received by the Hague Conference on 16 June 1997, China declared that the Convention “will continue to apply to the Hong Kong Special Administrative Region with effect from 1 July 1997”.

The confusion arises from how the Hague Conference tables are built. In the status table China appears as a Contracting Party under type “C” (continuation), while Hong Kong is absent from the separate table of United Kingdom territorial extensions — correctly so, because since 1997 it is no longer a UK extension. Commentary that reads only the second table treats Hong Kong’s absence as exclusion. That reading is wrong.

The confirmation from the Hong Kong side is direct. In the Department of Justice’s list of multilateral agreements applicable to the HKSAR, the Convention appears as entry 409 under private international law, carrying the marker for an instrument that does not apply to the Chinese Mainland but does apply to Hong Kong. In other words, China is a party to the Trusts Convention in respect of Hong Kong alone.

The structuring consequence: choosing Hong Kong law to govern a trust rests on a Convention framework as well as on the common law, and a foreign trust governed by the law of another Convention jurisdiction is recognised in Hong Kong under the Convention’s rules rather than at the court’s discretion.

What exactly has the force of law in Hong Kong

Cap. 76 has been in force since 30 March 1990 — the date it was brought into operation by L.N. 103 of 1990, two years before the Convention itself entered into force for Hong Kong. The Ordinance’s long title explains its function in a line: “To enable the Hague Convention on the law applicable to trusts and on their recognition to apply to Hong Kong”.

What has the force of law is not the Convention as a whole but those of its provisions reproduced in the Schedule to Cap. 76. Section 2(1): “The provisions of the Convention set out in the English text of the Schedule (specified provisions) have the force of law in Hong Kong”. The Schedule contains Articles 1 to 12, 14 to 18 and 22.

Article 13 of the Convention is not in the Schedule — and that matters. Article 13 is the provision giving a court a discretion to refuse to recognise a trust whose significant elements are connected with states that do not have the institution of the trust. Hong Kong has no such discretion: it was never enacted.

Section 2(3) extends the reach beyond the Convention itself: the specified provisions apply not only to the trusts described in Articles 2 and 3 — those created voluntarily and evidenced in writing — but also, so far as applicable, to any other trusts of property arising under the law of Hong Kong or by virtue of a judicial decision, whether in Hong Kong or elsewhere. That takes in constructive and resulting trusts, which the Convention itself leaves out.

Cap. 76 is not static: the current version is dated 24 August 2025. The changes were made by Ordinance No. 31 of 2025, which added section 1A defining the Convention, replaced sections 2(1) and 2(2) and amended the text of the Schedule.

Why the Convention does not protect against forced heirship

Here is the link that explains why Hong Kong needed section 41Y of Cap. 29 at all. Article 15 of the Convention expressly preserves the application of mandatory provisions of the law designated by the conflicts rules of the forum — and paragraph (c) of that list is “succession rights, testate and intestate, especially the indefeasible shares of spouses and relatives”.

In other words, the Convention does not displace forced heirship: it expressly reserves it. The Convention framework delivers recognition of the trust and certainty as to the governing law, not protection against succession claims. That protection comes in Hong Kong from a separate provision — section 41Y, discussed below — and it is considerably narrower than marketing descriptions suggest.

Article 15 also gives the court a practical direction: where recognition of a trust is prevented by a mandatory provision, “the court shall try to give effect to the objects of the trust by other means”. Article 16 preserves the overriding mandatory rules of the forum, Article 18 the public policy exception, and Article 22 applies the Convention to trusts regardless of the date on which they were created.

The legal base: which instruments actually govern a Hong Kong trust

The framework around a Hong Kong trust has four circuits: trust law (Cap. 29 and Cap. 257), the conflict-of-laws circuit (Cap. 76), the regulatory circuit (AMLO Cap. 615 and the sectoral licences) and the tax circuit (Cap. 112 and Cap. 117). None of them absorbs the others, and a status in one confers no status in another.

Instrument	Date and status	What it governs for a trust
Trustee Ordinance, Cap. 29	27 July 1934; consolidated version 23 May 2025	a trustee’s powers and duties; appointment and removal; liability; remuneration; Part 8, registration of trust companies
Trust Law (Amendment) Ordinance 2013	Ord. No. 13 of 2013; passed 17 July 2013, gazetted 26 July 2013, in force 1 December 2013	the reform of Cap. 29 and Cap. 257: duty of care, exemption clauses, reserved settlor powers, force­d-hei­rship protection, perpetuities
Pe­rpetui­ties and Accumulations Ordinance, Cap. 257	new sections 3A, 3B and 3C inserted by the 2013 reform	abolition of the rules against perpetuities and against excessive accumulations for new trusts; the accumulation restriction for charitable trusts
Recognition of Trusts Ordinance, Cap. 76	Ord. No. 60 of 1989; in force from 30 March 1990 (L.N. 103 of 1990); consolidated version 24 August 2025	implements the Hague Convention 1985: the law applicable to a trust and the recognition of foreign trusts
Admi­ni­stration of Trust Funds Rules, Cap. 29A	made under s. 76 of Cap. 29; 27 July 1934; the only subsidiary legislation under Cap. 29	the procedure for paying trust money and securities into the name of the Official Trustee
AMLO, Cap. 615, Part 5A	added by Ord. No. 4 of 2018, in force 1 March 2018	licensing of trust or company service providers; acting as trustee is expressly included
Companies Ordinance, Cap. 622	in force	the form of a trust company; name approval; the significant controllers register
Securities and Futures Ordinance, Cap. 571	in force	SFC licensing; Type 13 depositary services; the trustee carve-outs
Banking Ordinance, Cap. 155	Supervisory Policy Manual module TB-1, 27 May 2022	HKMA supervision of the trust business of authorized institutions
Mandatory Provident Fund Schemes Ordinance, Cap. 485	in force	approval of pension scheme trustees
O­ccupa­tional Retirement Schemes Ordinance, Cap. 426	in force	trustee requirements for registered schemes
Inland Revenue Ordinance, Cap. 112	in force	profits tax; the trustee as the chargeable person; concessionary regimes; exchange of information
Stamp Duty Ordinance, Cap. 117	in force	duty on settling assets into trust and on a change of trustee
Estate Duty Ordinance, Cap. 111	applies only to deaths before 11 February 2006	estate duty, abolished by Ord. No. 21 of 2005

What is missing from that list

Hong Kong has no dedicated trusts statute, no private trust company statute, no non-charitable purpose trust statute and no register of trusts. Each of those absences is a fact in its own right, each bears on structuring, and none of them is an omission in this article.

The state of law reform deserves a separate note. The Law Reform Commission of Hong Kong has never examined trust law: its subject index of publications contains no report and no consultation paper on trusts, trustees, perpetuities or Cap. 29, the nearest adjacent topic being charities (consultation 2011, report 2013). The 2013 reform was run by the Financial Services and the Treasury Bureau, not by the Commission.

Between 2023 and 2026 the Government published no consultation, no bill and no policy statement on trust law.The only change to Cap. 29 in that period was consequential: the Companies (Amendment) (No. 2) Ordinance 2025, Ord. No. 14 of 2025, which came into operation on 23 May 2025, amended sections 2, 41Y, 68, 77 and 95 of Cap. 29 as a consequence of the new company re-domiciliation regime. That is what the date of the current consolidated version of Cap. 29 reflects. It is not a substantive reform of trust law, but it is wrong to say Cap. 29 has not been amended since 2013 — and sections 41Y and 77 must be read in their post-23 May 2025 form. The most recent substantive document in the reform conversation is the Law Society of Hong Kong’s submission “A Review of the Trust Regime in Hong Kong SAR” of 11 February 2022, made on the Society’s own initiative and never publicly answered by the Government. Hong Kong trust law in 2026 is, in substance, the law of 2013.

The 2013 reform: what it changed, and what it deliberately did not

The Trust Law (Amendment) Ordinance 2013 is the only substantive reform of Hong Kong trust law in ninety years, and it came into force on 1 December 2013. The Ordinance was passed by the Legislative Council on 17 July 2013, gazetted on 26 July 2013, and its commencement date was written into the text itself, by a committee stage amendment to clause 1(2) rather than by a separate commencement notice. There is no point looking for a commencement Legal Notice: there is none.

The reform touched two ordinances at once — Cap. 29 and Cap. 257 — and consists of seven substantive blocks.

What was introduced	Where it sits	Applies from
A statutory duty of care	s. 3A and the Third Schedule to Cap. 29	1 December 2013
Wider default powers: agents, nominees and custodians; insurance; remuneration; relaxed investment criteria	Part 4A (ss. 41A–41P), s. 21, Part 4B (ss. 41Q–41V), s. 4 and the Second Schedule	1 December 2013
Control of trustee exemption clauses	s. 41W	1 December 2013 for new trusts; 1 December 2014 for pre-existing trusts
Court-free change of trustee on the bene­ficia­ries’ directions	ss. 40A–40D	1 December 2013
Validity of powers reserved by the settlor	s. 41X	1 December 2013
Protection of lifetime transfers of movables against foreign inheritance law	s. 41Y	1 December 2013
Abolition of the rules against perpetuities and against excessive accu­mula­tions; the accumulation restriction for charitable trusts; preservation of the duration rule for non-cha­ri­table purpose trusts	ss. 3A, 3B and 3C of Cap. 257	instruments taking effect on or after 1 December 2013

The one-year deferral for existing trusts is the only transitional rule

The control of exemption clauses applies to trusts created both after and before commencement, but for pre-existing trusts it took effect a year later, on 1 December 2014. The Bills Committee Report puts it directly: the provision “applies to trusts whether created before or after the commencement of the enacted Bill, but in case of existing trusts, it will take effect one year after the commencement”. The purpose of the deferral was to give trustees of existing trusts time to prepare.

The other six blocks carry no transitional provision of that kind.

What the reform did not do — and this matters more than the list of what it did

Hong Kong deliberately declined to adopt the English general power of investment. The Second Schedule to Cap. 29 was kept as a closed list of authorised investments; only the criteria inside it were changed. The 2009 consultation paper records the choice expressly: the Government “favours retaining Schedule 2 substantially intact in view of the current financial crisis”.

No power to acquire land was created. Cap. 29 has no equivalent of section 8 of the English Trustee Act 2000: it confers powers of sale (ss. 13–14), renewal of leaseholds (s. 17) and raising money by sale or mortgage (s. 18), but no power to buy.

Non-charitable purpose trusts were not introduced. Hong Kong acquired no purpose trust statute in 2013 or since.

No statutory variation jurisdiction was created. Hong Kong has no equivalent of the English Variation of Trusts Act 1958; varying beneficial interests rests on the rule in Saunders v Vautier and on the court’s inherent jurisdiction.

The forced-heirship protection reached movable property only. That is an acknowledged weakness of the regime, and the Law Society of Hong Kong said so in 2022.

Part 8 on registered trust companies was not touched at all. A regime designed in the 1930s survived the reform intact — and survives still.

The section 3A duty of care: when it bites, and whether it can be excluded

Section 3A of Cap. 29 requires a trustee to exercise the care and skill that is reasonable in the circumstances, having regard to any special knowledge or experience the trustee has or holds out as having and, where the trustee acts in the course of a business or profession, to any special knowledge or experience reasonably expected of a person acting in that kind of business or profession. The provision sits in its own Part 1A, added by the 2013 reform.

Subsection (1), verbatim: “If the statutory duty of care applies to a trustee as provided in Schedule 3, the trustee must exercise the care and skill that is reasonable in the circumstances, having regard to— (a) any special knowledge or experience that the trustee has or holds out as having; and (b) if the trustee is acting in that capacity in the course of a business or profession, any special knowledge or experience that is reasonably expected of a person acting in the course of that kind of business or profession.”

Note the function words: the statute says “the care and skill”, not “such care and skill”. Material quoting the second version is reproducing the Bill, not the enacted text.

Subsection (2) fixes the relationship with the general law: where the statutory duty applies, it “has effect in place of any common law rules and equitable principles regarding the duty and standard of care owed by the trustee to the beneficiaries”. It displaces; it does not layer.

A double standard: the professional is held to more

Section 3A operates on two levels. The first applies to every trustee and takes account of the actual knowledge and experience of the particular person, and of what that person holds out. The second applies only to a trustee acting in the course of a business or profession, and lifts the bar to what the industry would reasonably be expected to know.

The practical effect is direct: a lay trustee — a family member, a friend, a partner — is judged by a subjective standard, while a professional trustee is judged by an industry standard, whatever that professional actually knows. A private trust company staffed by professionals and acting in the course of a business falls into the second level.

Where the duty applies: the Third Schedule

The section 3A duty does not apply at large; it applies only in the circumstances listed in the Third Schedule to Cap. 29, headed “Application of statutory duty of care”. The Schedule is divided into Divisions with numbered paragraphs, the first paragraph of the first Division being tied to section 4 on investments.

The Schedule has five Divisions and the list is closed:

Division	When the duty arises	Paragraphs
1. Investment	exercising the power of investment under section 4(1) or any other power of investment, however conferred; exercising the powers under sections 5, 11(1)–(5), 12 and 41I; continuing to hold an investment that has ceased to be authorised, under section 7	1 and 2
2. Agents, nominees and custodians	entering into arrangements authorising an agent (s. 41B), a nominee (s. 41G) or a custodian (s. 41H), or under any other power; carrying out the duty to review them under sections 41M and 41N	3 and 4
3. Power to do other things	exercising powers relating to trust properties conferred by section 16, or any corresponding power	5
4. Insurance	exercising the power to insure property under section 21, or any corresponding power	6
5. Reversionary interests, valuations and audit	exercising the power under section 24(1) or (3), or any corresponding power	7

Two points in the Schedule’s own text change the picture. First, the formulas “or any other power of investment, however conferred” and “or any other power (however conferred)” carry the duty across to powers conferred by the trust instrument itself, not merely statutory ones. Widening the investment powers in the instrument does not automatically switch the duty of care off in respect of them.

Second, paragraph 2 says expressly that when investing in anything specified in Schedule 2 the trustee must discharge the statutory duty of care in addition to complying with that Schedule. Compliance with Schedule 2 is not a defence in itself.

Paragraph 4 spells out that “entering into arrangements” includes selecting the person who is to act, determining the terms on which they act and, where asset management functions are being delegated, preparing a policy statement under section 41F.

One detail of the provision’s history: the committee stage of the Bill removed the reference to section 6 from the Third Schedule; it is indeed absent from the current text.

The duty is a default, not a mandatory rule

The statutory duty of care is a default, and the excluding provision sits not in the Schedule but in section 3A itself.Subsection (3): the duty does not apply “if, or in so far as, it appears from the instrument creating the trust or an enactment that the duty is not meant to apply”. The formula “if, or in so far as” allows both a complete exclusion and a partial one, power by power.

For trusts created before 1 December 2013 there is a separate mechanism. Subsection (4) allows the duty to be excluded by a deed executed by the settlor if of full capacity, by all the settlors where there are several, or — where none of the persons creating the trust is of full capacity — by the sole beneficiary absolutely entitled to the trust property, being either an individual of full age and capacity or a body corporate whose constitution does not prohibit it.

The drafting consequence: if the parties want to soften or refine the standard of care, that is done by an express clause in the instrument — and such a clause operates independently of section 41W, because 41W limits relief from liability for a breach already committed rather than the definition of the standard itself.

A trustee’s default powers: a closed investment list, and everything else

A Hong Kong trustee’s default powers are narrower than most people assume: Cap. 29 confers no general power of investment, and the permitted investments are set out as a closed list in the Second Schedule. This is the principal difference between Hong Kong and post-2000 England, and between Hong Kong and the offshore jurisdictions, and it has to be dealt with when the trust instrument is drafted, not afterwards.

Power	Where it sits	Position
Investment	s. 4 and the Second Schedule	a closed list; there is no general power
Supplementary investment powers	s. 11	in force
Bank deposits and payment of calls	s. 12	in force
Acquisition of land	none	there is no equivalent of s. 8 of the English Trustee Act 2000
Sale of trust property	ss. 13–14	in force
Renewal of leaseholds	s. 17	in force
Raising money by sale or mortgage	s. 18	in force
Insurance	s. 21	widened by the 2013 reform
Valuation and audit	s. 24	in force
Delegation by power of attorney	s. 27	restricted by the 2013 reform
Appointment of agents, nominees and custodians	Part 4A, ss. 41A–41P	introduced by the 2013 reform
Remuneration and expenses	Part 4B, ss. 41Q–41V	introduced by the 2013 reform
Maintenance of a minor and accumulation of income	s. 33	untouched by the reform
Advancement of capital	s. 34	untouched by the reform
Protective trusts	s. 35	untouched by the reform

Investments: what the reform changed inside the list

The 2013 reform left the architecture alone but relaxed the criteria within the Second Schedule. The market capitalisation threshold for eligible listed shares was cut from HK$10 billion to HK$5 billion, the dividend record requirement was relaxed to a dividend paid in any three of the five preceding years, and structured products were expressly excluded from authorised investments — the exclusion sits in a new paragraph 7A and reaches paragraphs 1, 2, 4, 5, 6 and 7 of the Schedule.

The list itself has seven items, and it is worth knowing in full, because an investment outside it is a breach of trust:

•          paragraph 1 — shares and debentures of companies: shares must be listed on a recognized stock market or specified stock exchange, the issuer’s market capitalisation must be at least HK$5,000,000,000, and a dividend must have been paid in any three of the five preceding years; debentures must meet the credit rating specified in the Table to the Schedule;

•          paragraph 2 — debt securities issued or guaranteed by the Government of Hong Kong, the Exchange Fund or a wholly government-owned company and, outside Hong Kong, by governments, central banks or equivalent agencies of countries meeting the specified rating, and by multilateral agencies listed in Part 4 of Schedule 1 to Cap. 571;

•          paragraph 3 — unit trusts and mutual funds authorised by the SFC as collective investment schemes under section 104 of Cap. 571;

•          paragraph 4 — deposits with an authorized institution;

•          paragraph 5 — certificates of deposit, bills of exchange, promissory notes and short-term (under one year) debt securities issued or guaranteed by an authorized institution or an exempted body;

•          paragraph 6 — first legal mortgages of property situated in Hong Kong held under a Government lease with an unexpired term of at least fifty years;

•          paragraph 7 — derivatives traded on a recognized market or specified exchange.

Paragraph 7 is the most restrictive and is routinely overlooked: derivatives are permitted for hedging purposes only, and only in accordance with the written advice of an SFC-licensed corporation or a registered financial institution, obtained expressly on three matters — the nature and extent of the risk of diminution in the value of the assets concerned and the suitability of the instruments chosen, the potential loss from acquiring and holding the derivatives and the risk of it occurring, and the suitability of using derivatives to protect the fund against those risks generally.

Note an asymmetry that often surprises: a trustee has no default power to acquire land, but does have a default power to lend against a first legal mortgage of Hong Kong property.

One detail for anyone tracking change: section 4(3) empowers the Financial Secretary to amend the Second Schedule by order published in the Gazette. The list can move without a statutory amendment, and it should be checked before any long-horizon structuring.

The drafting conclusion is unambiguous: investment powers must be conferred expressly and widely in the trust instrument. Section 4 cannot carry a diversified portfolio; it was never designed to.

Agents, nominees and custodians

Part 4A, introduced in 2013, gave a Hong Kong trustee a default power to engage agents, nominees and custodians for the first time. It is built in four Divisions: application, agents, nominees and custodians, and review and liability.

The operative provisions: section 41B, the power to appoint agents; 41C, who may act; 41D, linked functions; 41E, terms of appointment; 41F, special restrictions where asset management functions are delegated; 41G and 41H, nominees and custodians; 41I, bearer securities; 41J, who may be a nominee or custodian; 41K, terms; 41L to 41O, the duty to review appointees and liability for them; and 41P, the effect of exceeding the powers.

Note how this locks into the duty of care: appointing an agent and reviewing that agent are expressly among the circumstances the Third Schedule brings within section 3A. Appointing an external asset manager and forgetting about them is a breach in its own right.

Insurance, delegation and remuneration

Before 2013 section 21 covered only fire and typhoon, carried a monetary cap, and allowed premiums to be paid out of income alone. The reform widened it to loss or damage caused by any event, removed the cap, and permitted premiums to be paid out of income or capital.

Section 27 allows an individual trustee to delegate by power of attorney for up to twelve months, on written notice to the co-trustees. The reform added a safeguard: where there is more than one trustee, delegation must not result in only one attorney or one trustee administering the trust — unless that attorney or trustee is a trust corporation.

Part 4B gave Hong Kong, for the first time, a statutory right to remuneration for a professional trustee where the trust instrument is silent. Its structure: section 41S, remuneration under the trust instrument; section 41T, remuneration otherwise than under the instrument; section 41U, a trustee’s expenses; section 41V, the remuneration and expenses of agents, nominees and custodians.

The conditions in section 41T can now be stated exactly, and they split trustees into two groups. A trust corporation is entitled to reasonable remuneration out of trust funds with nobody’s consent. A trustee that is not a trust corporation but acts in a professional capacity is entitled only if it is not the sole trustee and each of the other trustees has agreed in writing that it may be remunerated.

The second condition is common to both groups and sits in subsection (2): the section 41T entitlement arises for a trustee of a charitable or non-charitable trust only where the entitlement to remuneration is not provided by the instrument creating the trust or an enactment and is not expressly prohibited by their terms. Note that charitable trusts are not excluded from section 41T — the 2012 proposal to exclude them did not survive into the enacted text.

Subsection (4) disposes of a common objection: a trustee is treated as entitled to remuneration even if the services provided are capable of being provided by a lay trustee. Subsection (7) defines “reasonable remuneration” as the remuneration reasonable in the circumstances for those services and, for a trustee that is an authorized institution under the Banking Ordinance, as that institution’s reasonable charges for providing them.

Exemption clauses: what section 41W prohibits

Section 41W of Cap. 29 prohibits the terms of a trust from relieving a trustee of liability for a breach of trust arising from the trustee’s own fraud, wilful misconduct or gross negligence. The section is headed “Trustee is not exempted from liability for breach of trust”. It was introduced by the 2013 reform and sits in its own Part 4C.

The prohibition has two paragraphs, and the second matters more than the first. Subsection (3), verbatim: “The terms of a trust must not— (a) relieve, release or exonerate a trustee from liability for a breach of trust arising from the trustee’s own fraud, wilful misconduct or gross negligence; or (b) grant the trustee any indemnity against the trust property for the liability”.

Paragraph (b) closes the obvious way round: it is prohibited not only to exonerate the trustee but also to give the trustee an indemnity for that liability out of the trust property. An indemnity clause drafted as a right to recoup losses from the fund is void exactly as a direct exoneration is.

Subsection (4) restates the same pair from the other side: “A term of a trust is invalid to the extent to which it purports to” do those things. Subsection (3) speaks to the draftsman as a prohibition; subsection (4) supplies the consequence — the term is invalid to the extent to which it so purports, not in its entirety.

The provision is addressed to the paid professional, not to every trustee

Section 41W applies to trustees acting in a professional capacity and receiving remuneration, not to trustees generally. Subsection (1) says so directly: the section applies to a trustee who “(a) acts in a professional capacity; and (b) receives remuneration for the trustee’s services provided to, or on behalf of, the trust”. The two conditions are cumulative: an unpaid professional is outside the prohibition, and so is a remunerated lay trustee.

What “professional capacity” means is defined not in the section but by subsection (7)’s reference to section 41R(1): a trustee acts in a professional capacity if the trustee acts in the course of a profession or business consisting of, or including, the provision of services in connection with the management or administration of trusts generally, a particular kind of trust, or any particular aspect of it, and the services provided to the trust fall within that description. The same provision defines a lay trustee as a person who is not a trust corporation and does not act in a professional capacity.

The carve-out almost nobody writes about: MPF scheme trustees

Subsection (2) takes an approved trustee of a registered scheme under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) outside the prohibition altogether. The words are: “This section does not apply to an approved trustee of a registered scheme under the Mandatory Provident Fund Schemes Ordinance (Cap. 485)”.

The logic is clear enough: MPF trustees already sit under a separate MPFA prudential regime, and any control on exemption clauses for them belongs there rather than in Cap. 29. The practical conclusion runs against the common statement: it is wrong to say the section 41W prohibition covers every remunerated professional trustee in Hong Kong — one substantial category is excluded by the statute itself.

A conflict between sources that matters when quoting

The 2012 consultation paper described the proposal as barring exoneration for “fraud, wilful misconduct or reckless act” — a reckless act, not gross negligence. The 2010 conclusions, the Bill, the LegCo Brief, the Bills Committee Report and the enacted section all say gross negligence.

The third element of the triad changed between drafts. Any material quoting the 2012 wording as the law is wrong.

The transitional rule and what it means in practice

Section 41W applies to trusts created both after and before 1 December 2013, but it began to apply to pre-existing trusts on 1 December 2014. Subsection (6) puts it exactly: for a trust created before the commencement date the section “has effect in respect of the trust on the expiry of 1 year after that date” and “does not affect the liability for anything done by a trustee of the trust within that 1-year period”. The one-year deferral was intended as preparation time, and it also rules out retrospective effect for anything done inside that year.

A consequence often missed follows: an exemption clause in a trust instrument drafted before 2013 did not survive.It ceased to operate, so far as it is caught, from December 2014, and there is no acquired right here.

What section 41W does not do

Section 41W does not displace the court’s discretion to relieve a trustee of personal liability. Section 60 of Cap. 29, headed “Power to relieve trustee from personal liability” — Hong Kong’s analogue of section 61 of the English Trustee Act 1925 — preserves the court’s power to excuse a breach committed honestly and reasonably. Section 41W voids contractual clauses; it does not bind the court.

The practical consequence for a professional trustee: the protection lies not in the wording of the clause but in the quality of the decision record. A clause will not survive gross negligence, whereas minutes showing that a decision was taken honestly and reasonably open the door to section 60.

Powers a settlor may reserve: the narrow rule in section 41X

Section 41X of Cap. 29 provides that a trust is not invalidated by reason only of the settlor reserving powers of investment or asset management functions, and that a trustee who has acted in accordance with the exercise of such a power is not in breach of trust. The section is headed “Reserve power of settlor” and sits in Part 4D.

The statutory text, verbatim. Subsection (1): “A trust is not invalid only because of the person creating the trust (the settlor) reserving to the settlor any or all powers of investment or asset management functions under the trust.”Subsection (2): “If a power or function referred to in subsection (1) has been reserved by the settlor, a trustee who acts in accordance with the exercise of the power or function is not in breach of the trust.”

Two further subsections are usually left out, and they govern how the section works in time. Subsection (3): if a trust was declared invalid by the court before 1 December 2013, subsection (1) does not revive it. Subsection (4): subject to that, where the validity of a trust — whenever created — is questioned, the court “may take into account subsection (1) in determining the validity”. The section therefore reaches pre-reform trusts, but as a factor in the court’s assessment rather than as an automatic cure.

The list of reservable powers is closed — and short

Section 41X permits the reservation of investment powers and asset management functions. Nothing else. The Law Society of Hong Kong’s 2022 review states the boundary directly: the section “permits reservation of ‘investment and asset management functions’ to the settlor”.

Hong Kong did not reproduce the broad offshore lists. Section 41X contains no power to revoke, no power to appoint and remove trustees, no power to direct distributions, no power to vary the terms of the trust and no power to appoint or remove a protector. In several offshore statutes such lists run to half a page; in Hong Kong they do not exist.

This is the point at which marketing material about Hong Kong systematically overstates the jurisdiction’s position. “In Hong Kong a settlor can retain control of the trust” is not an accurate description of section 41X: a settlor can retain control of the investments, which is a different thing.

What happens to powers outside section 41X

Reserving wider powers is not prohibited by section 41X — it is simply not protected by it. The validity of a trust in which the settlor has reserved, say, a power of revocation or a power to direct distributions falls to be judged at common law rather than under the statute, and the risk there is the classic one: the more control the settlor keeps, the stronger the argument that the trust is a sham or that the property never really left them.

The structuring conclusion: broad reserved powers in a Hong Kong trust need their own legal opinion, not a citation of section 41X. The narrow set — investment and asset management — is protected by statute; everything else is protected only by the quality of the instrument and by how the parties actually behave.

How this connects to the private trust company

Here is the link that produces the PTC in so many family structures. Where a family needs control beyond the reach of section 41X, the statutory route is closed — so instead of reserving powers to the settlor, control is moved up to the trustee. The family owns the private trust company, appoints its board, and decisions are taken inside that board rather than on the settlor’s instructions.

Structurally that is cleaner: the powers belong to the trustee and are exercised as fiduciary powers, not as personal rights retained by the settlor. Which is exactly why the licensing question about PTCs is not a technicality but the central issue: the whole construction depends on the answer.

Protection against forced heirship: section 41Y and its central weakness

Section 41Y of Cap. 29 protects a lifetime transfer of movable property into a trust expressly governed by Hong Kong law against foreign forced-heirship rules: such a transfer cannot be set aside, varied or rendered ineffective by a foreign law of inheritance. In the bilingual text of the Bill the section is headed “Transfer of movable property not affected by foreign law of inheritance”.

The mechanism is subtler than it is usually described, and it works through capacity. Subsection (2): a person who during his or her lifetime transfers movable property to be held on trust is regarded as having the capacity to do so if the person has capacity under any of three laws — the law applicable in Hong Kong; the law of the person’s domicile or nationality; or the proper law of the transfer. Subsection (3): a law relating to inheritance or succession of a foreign jurisdiction does not affect the validity of the transfer of movable property to be held on trust if the transferor had capacity under subsection (2). Subsection (4) excludes renvoi: the reference to law in each of the three limbs does not include that system’s choice of law rules.

So the protection does not forbid a foreign court from applying its forced-heirship rules — it removes the most common line of attack, a denial of the transferor’s capacity, and then cuts off the effect of succession law on the validity of the transfer directly.

Two conditions

The provision operates only where both conditions in subsection (1) hold together.

First, the trust is expressly governed by Hong Kong law — “the trust is expressed to be governed by Hong Kong law”. An implied or inferred choice is not enough.

Second, every trustee is connected with Hong Kong throughout — “at all times when the trust is in force”. In the current text the test has four limbs, not three:

•          (i) an individual who ordinarily resides in Hong Kong;

•          (ii) a body corporate incorporated or established in Hong Kong;

•          (iia) a re-domiciled company;

•          (iii) a body corporate incorporated or established outside Hong Kong that is not a re-domiciled company, the central management and control of which is in Hong Kong.

Limbs (iia) and (iii) took their present form in 2025: they were added and amended by section 99 of the Companies (Amendment) (No. 2) Ordinance 2025, Ordinance No. 14 of 2025, which came into operation on 23 May 2025.Before that, limb (iii) was drawn more broadly and carried no reference to re-domiciled companies. Any material reproducing the three-limb test of 2013 is describing a version that no longer exists.

The central weakness: movable property only

Section 41Y does not reach immovable property. The Law Society of Hong Kong said so directly in February 2022: “The ‘firewall provision’ in the HK Trustee Ordinance is currently limited to anti-forced heirship claims in relation to moveable property”.

For a family from a forced-heirship jurisdiction the consequence is practical: shares, partnership interests, deposits, securities portfolios and debts are protected; real estate is not. Hong Kong or foreign real property needs either an intermediate holding company whose shares are settled instead — so that what is transferred is movable property — or a different structure altogether.

The second weakness: lifetime transfers only

The provision addresses lifetime transfers, not testamentary dispositions. A trust created by will falls outside section 41Y.

How this compares with the competition

Offshore jurisdictions with developed firewall provisions protect movable and immovable property alike, extend the protection to a wider range of claims, and often exclude foreign law from questions of trust validity outright. The Hong Kong provision of 2013 is markedly narrower, and that is acknowledged inside Hong Kong: extending section 41Y beyond movable property is one of the Law Society’s 2022 recommendations.

The Government has not answered those recommendations publicly. The only change to section 41Y since 2013 is the technical one discussed above: the 2025 re-domiciliation amendment. The scope of the provision — movable property, lifetime transfers — is unchanged, and the Law Society’s recommendation to extend it to immovable property has not been taken up.

Changing the trustee without going to court: sections 40A–40D

Sections 40A to 40D of Cap. 29 let the beneficiaries change the trustee without applying to court — but only where all the beneficiaries are of full age and capacity and, taken together, are absolutely entitled to the trust property.The 2013 reform gave Hong Kong a statutory analogue of sections 19 to 21 of the English Trusts of Land and Appointment of Trustees Act 1996, turning the rule in Saunders v Vautier into a procedure.

The block is built as follows:

•          section 40A — appointment and retirement of trustees on the beneficiaries’ directions;

•          section 40B — appointment of a substitute for an incapacitated trustee;

•          section 40C — provisions supplementary to sections 40A and 40B;

•          section 40D — the application of sections 40A and 40B.

The condition that excludes most family trusts

Section 40A(1) sets two conditions, and the first is usually left out. The mechanism operates only where (a) no person is nominated by the trust instrument or an enactment for the purpose of appointing new trustees, and (b) the beneficiaries meet the absolute-entitlement requirement. That requirement is stated in the alternative: either the sole beneficiary is absolutely entitled to the trust property and is an individual of full age and capacity or a body corporate whose constitution does not prohibit it, or all the beneficiaries taken together are absolutely entitled and each of them answers the same description.

The first condition alone takes most professionally drafted trusts out of the section: if the instrument names a protector or anyone else with power to appoint trustees, section 40A does not apply at all.

That condition is satisfied less often than people expect. In a discretionary trust with an open class of beneficiaries that includes unborn descendants, nobody is absolutely entitled to the property, and the class taken together is not absolutely entitled either. The section 40A mechanism therefore does not reach the typical family discretionary trust.

The practical conclusion: a family that wants a workable mechanism for changing trustees has to write one into the trust instrument — usually as a protector’s power, or as a power of appointment vested in a named person. Sections 40A to 40D cannot be relied on in a discretionary structure.

The mechanics of retirement

The beneficiaries give a written direction: to a trustee, to retire; or to a sole trustee, to all the trustees for the time being, or failing them to the personal representative of the last surviving trustee, to appoint the person named in the direction as a trustee.

A trustee directed to retire must execute a deed of retirement — “must make a deed declaring the trustee’s retirement” — subject to the three conditions in section 40A(3): reasonable arrangements are made to protect the retiring trustee’s rights; after the retirement there remain either a trust corporation or at least two persons as trustees; and either another person is being appointed in the retiring trustee’s place, or the continuing trustees consent to the retirement by deed. The third condition is routinely omitted, and without it the retirement cannot be completed.

That minimum-composition requirement is a real constraint: one sole individual trustee cannot be replaced by another sole individual trustee through this route, unless the incoming trustee is a trust corporation.

Scope: section 40D and the three ways to switch the mechanism off

Section 40D disapplies sections 40A and 40B in four situations, and they matter more than the mechanism itself.

First, subsection (1): the sections do not apply where a contrary intention is expressed in the trust instrument or an enactment. A single clause in the instrument is enough to switch them off.

Second, subsection (2): for a trust created before 1 December 2013 the mechanism is switched off by a deedexecuted by the settlor if of full capacity, or by all the settlors of full capacity where there are several. Subsection (3): such a deed is irrevocable. Subsection (4) fixes the consequences: the deed does not affect anything already done in compliance with a direction, but an outstanding direction ceases to have effect.

Third, subsection (5): sections 40A and 40B do not apply to the appointment and retirement of a personal representative. The succession field is excluded entirely.

Section 40B runs on a separate trigger — the mental incapacity of a trustee within section 2(1) of the Mental Health Ordinance (Cap. 136), and only where no person is entitled, willing and able to appoint a replacement under section 37(1). There the direction goes not to the trustees but to the attorney acting under an enduring power of attorney, or to the committee of the estate.

Section 40C governs the form of a collective direction: it is given either by a single joint instrument or by separate instruments from each beneficiary, in which case each must specify the same person; and any beneficiary may withdraw their direction in writing before it is complied with.

What remains with the court

The court’s inherent jurisdiction to remove a trustee is preserved. The 2012 consultation paper records it expressly: “The new power does not affect the inherent jurisdiction of the court … to remove a trustee”.

A common citation error is worth warning against here. It is sometimes said that the court removes a trustee under section 60 of Cap. 29. That is wrong: section 60 is headed “Power to relieve trustee from personal liability” and is a relief provision, not a removal provision. Statutory appointment of trustees by the court belongs to section 43; removal belongs to the inherent jurisdiction.

Perpetual trusts: what exactly the reform did to Cap. 257

Since 1 December 2013 a Hong Kong trust may last indefinitely: the rule against perpetuities and the rule against excessive accumulations were abolished for instruments taking effect on or after that date. The abolition was effected by new sections of the Perpetuities and Accumulations Ordinance (Cap. 257), inserted by the Trust Law (Amendment) Ordinance 2013.

The text of section 3A is short and can be quoted. Subsection (1): “The rule against perpetuities (or remoteness of vesting) and the rule against excessive accumulations have no effect in relation to an instrument to which this Part applies (as provided in section 3(1A)).” Subsection (2): “A trust (whether created by an instrument or otherwise) may continue in existence for an unlimited period unless the terms of the trust provide to the contrary.”

Two details of subsection (2) are lost in paraphrase. First, it speaks of a trust “whether created by an instrument or otherwise”, so it reaches trusts that do not arise from a document. Second, the reference is to the terms of the trust, not of the instrument: unlimited duration is the default, and a fixed term requires an express provision.

The allocation between the new sections follows from the headings in the gazetted Bill, and it is worth knowing precisely, because secondary sources routinely get it wrong.

Section of Cap. 257	Heading as gazetted in the Bill	What it does
3A	“Rule against perpetuities etc. have no effect”	abolishes both the rule against perpetuities and the rule against excessive accumulations for instruments taking effect on or after the commencement date
3B	“Restriction on accumulations for charitable trusts”	preserves a restriction on the accumulation of income for charitable trusts
3C	“Rule as to duration of non-cha­ri­table purpose trust not affected”	expressly leaves the duration limit for non-cha­ri­table purpose trusts in place

A common error is to treat section 3B as the provision abolishing the rule against excessive accumulations. It does not: section 3A abolishes both rules, and section 3B is restrictive and concerns charitable trusts only.

The abolition operates prospectively only

Trusts created before 1 December 2013 remain under the old regime. The former Cap. 257 rules continue to apply to them, with the “wait and see” mechanism and the option of a fixed perpetuity period of eighty years.

That has a direct consequence for existing structures: a family trust established in Hong Kong in, say, 2008 still has a limited duration, and the abolition cannot be used to “extend” it. Whether unlimited duration can be reached by transferring the property to a new trust is a question to be answered case by case, and it runs into the law on powers and into the tax consequences of the transfer.

The exception for charitable trusts

For charitable trusts the rule against excessive accumulations survives in a relaxed form: a duty or power to accumulate income ceases to have effect at the end of a period of twenty-one years beginning on the first day when the income must or may be accumulated. That is what section 3B(2) of Cap. 257 provides.

There is an express exception to that limit which is almost never written about. Section 3B(3): the twenty-one-year rule does not apply where the terms of the instrument provide for the duty or power to accumulate income to cease on the death of the settlor, or on the death of one of the settlors, as determined by name or by the order of their deaths. Tying accumulation to the settlor’s life therefore takes a charitable trust outside the twenty-one-year limit.

Subsection (4) supplies the consequence when the period expires: the income to which the duty or power would have applied goes to the person who would have been entitled to it had there been no such duty or power, or is applied for the purposes to which it would then have had to be applied. Subsection (5) makes clear that the section applies whether or not the accumulation extends to income produced by investing income previously accumulated.

The exceptions Hong Kong actually kept

The English Perpetuities and Accumulations Act 2009 preserved the rule for a number of cases, notably options over land and certain pension arrangements. The Hong Kong list of exceptions is shorter, but it is not empty, and it sits not in section 3A but in section 3(1A) of Cap. 257 — the application provision.

Exception	Wording of section 3(1A)	What it means in practice
Wills executed before the reform	Part 2 “does not apply in relation to a will executed before that date”	a will signed before 1 December 2013 stays under the old regime even where the testator died after that date
Special powers of appointment	Part 2 applies to an instrument made in the exercise of a special power of appointment only if the instrument creating the power takes effect on or after 1 December 2013	a trust created today in exercise of a power contained in a 2005 instrument inherits the old perpetuity regime

The first exception is a practical trap in succession planning: the date the will was executed, not the date of death, fixes the applicable regime. The second is a trap for existing structures: exercising an old power of appointment does not open the door to unlimited duration.

There is no Hong Kong equivalent of the English exceptions for pension schemes or options over land in the text of Cap. 257.

What the abolition does not give you

Abolishing the rule against perpetuities does not abolish the rule against inalienability, which limits the duration of trusts for non-charitable purposes — and that is not an inference but the express content of section 3C, headed “Rule as to duration of non-charitable purpose trust not affected”. And since Hong Kong has no non-charitable purpose trust statute, unlimited duration is available to trusts with beneficiaries but not to trusts established for a purpose.

That matters for PTC structures: offshore, the shares in a private trust company are typically held by a purpose trust, and that construction has no statutory footing in Hong Kong. A Hong Kong PTC structure has to solve the share-ownership question another way — through a family holding company, or through a trust with beneficiaries.

Section 3C is short enough to quote in full: “This Part does not affect any rule of law that limits the duration of non-charitable purpose trusts.” The direction is unambiguous — the duration rule survives — but no source setting out how it is applied by Hong Kong courts after 2013 could be located, and the working out of it should be treated as open.

The registered trust company: Part 8 of Cap. 29, and why it is not what people assume

Registration as a trust company under Part 8 of Cap. 29 is voluntary, requires a public company with HK$3,000,000 of paid-up capital and a HK$1,500,000 deposit, and does not replace the TCSP licence. It is a regime from the 1930s that the 2013 reform did not touch at all, and its purpose differs from what people usually go looking for.

The Government’s 2009 consultation paper describes the original purpose directly: “Part VIII of TO was not intended to be regulatory”. When Part VIII was enacted in the 1930s the aim was not to cure a defect in the common law’s protection of settlors or beneficiaries, but to create a special class of corporate trustee able to act as executor of a will or to obtain a grant of administration where the deceased died intestate. Registration was voluntary precisely because a registered trust company was offered as an alternative to a private trustee, not as a required status.

What the applicant must be

Requirement	Position
Form of applicant	a specified company: a company incorporated in Hong Kong or a re-domiciled company, but not a private company
Issued share capital	not less than HK$3,000,000
Paid-up capital	not less than HK$3,000,000, bona fide fully paid up in cash
Deposit	not less than HK$1,500,000
Where the deposit sits	an authorized institution, a bank’s subsidiary finance company, or a bank guarantee
In whose name	the Director of Accounting Services
Financial standing	the company must be able to meet its obligations inde­pende­ntly of the deposit
Directors	section 77 requires only that the board be duly appointed in accordance with the articles of asso­ciatio­n; the at least two directors requirement follows from the company being a public company under Cap. 622, not from Cap. 29
Objects	restricted to those set out in section 81
Application fee	HK$11,250
Certificate fee	HK$840
Time to certificate	normally 10 working days after the application, or after the deposit is confirmed, whichever is later

What registration gives you

Section 81 restricts a registered trust company’s objects, and that list explains what the regime is for. The list has four paragraphs, and the first is usually quoted incompletely: paragraph (a) is to accept and execute the offices of executor, administrator, trustee, receiver, receiver and manager, assignee, liquidator, guardian of the property of infants, committee of the estates of lunatics, “or other like office of a fiduciary nature”.

The other three paragraphs describe services rather than offices, and are almost never mentioned: (b) acting as attorney or agent for the collection, receipt and payment of money, for winding up estates and for the sale or purchase of any movable or immovable property; (c) acting as agent for the management and control of movable and immovable property for the owners, or for executors, administrators or trustees; and (d) acting as investing and financial agent, receiving money in trust for investment, negotiating loans of all descriptions, lending money on the security of any property or without security, and advancing money to protect any estate, trust or property entrusted to the company.

The practical point: the objects of a registered trust company are wider than “acting as trustee”, and take in a full agency and financial-agency business in relation to estates and trust funds. Section 81(1) nevertheless sets a ceiling: the objects may be some or all of those listed, “but shall not exceed the following”.

The key privilege is not a trust privilege but a probate one: a company cannot ordinarily take a grant as executor or administrator; a registered trust company can.

There is a second, modern function. A corporate trustee of a registered occupational retirement scheme under Cap. 426, if incorporated in Hong Kong or re-domiciled to Hong Kong, must be a registered trust company. Here Part 8 turns from a voluntary status into a condition of market access. On the re-domiciliation mechanism itself, see our guide to company re-domiciliation to Hong Kong in 2026.

A third function is regulatory. Paragraph 1.3.18 of the SFC Licensing Handbook relieves a trust company registered under Part VIII of Cap. 29 from Type 1 licensing where it acts as agent for a collective investment scheme to distribute application forms, redemption notices, conversion notices and contract notes, or to receive money and issue receipts on behalf of its principal. That carve-out is addressed expressly to registered companies and does not extend to unregistered ones.

What registration does not give you, and what is not an offence

Failing to register under Part 8 is not an offence. Cap. 29 contains no prohibition on acting as a trustee for reward without registration. The voluntariness of the regime is recorded in the 2009 consultation paper and in the 2010 conclusions: “Currently, the registration regime for trust companies is a voluntary one”.

What is compulsory is something else — the TCSP licence. The Companies Registry answers the question put by a company already registered under Cap. 29 without ambiguity: “Yes, your company is required to apply for a TCSP licence from the Registrar to carry on a trust or company service business in Hong Kong”. The two regimes are independent and cumulative.

The criticism from within Hong Kong is blunt. The Law Society of Hong Kong, 2022: “The TCSP registration system, or the registration as a trust company under the HK Trustee Ordinance, have no fit and proper consideration as to the standards of professionalism of the trustees, or any consumer / investor protection elements.”

How many such companies there are

The Companies Registry generates a list headed “Trust Companies registered under section 78(1) of the Trustee Ordinance (Cap. 29)” and updates it monthly; the Hong Kong Trustees’ Association republishes it monthly.

The verifiable historical figures: 70 companies as at 30 September 2012 and 73 as at 1 March 2013. Later monthly files exist but are protected against direct download, and the current number of registered trust companies could not be confirmed from any accessible source. Do not extrapolate from 2013 to 2026.

Part 8 does not end at section 89: it runs to section 109. Sections 82 to 89 describe the capacity of a registered trust company — acting as executor (82), applying for probate and administration (83), the procedure as to petitions (84), the appointment of a company as trustee (85), joint tenancy (86), acting as agent (87), exemption from giving security (88) and the duty to keep trust funds separate (89). Then come the investment of trust funds (90) and of the company’s own funds (91), the prohibition on loans to officers (92), borrowing (93), investigation by an inspector (95), the special rules on winding up (96), the personal liability of officers (97), offences (98), the bar on acting as guardian or committee (99), the restriction on holding shares in a trust company (100), restraint of a voluntary winding-up or disposal (101), the liability and powers of the company (102), the rule that registering the company as a shareholder is not notice of a trust (103), unclaimed money to be paid into court (104), fees (105), the registration of banking corporations (106 to 108) and indemnity (109).

There is one continuing obligation in this block, and it sits not in sections 82 to 89 but in section 77 itself. Subsection (4A): a registered trust company “shall after its registration and for so long as it carries on any business or executes any office included in the objects set out in section 81(1) comply with the requirements set out in subsection (2)”. The HK$3,000,000 of capital and the HK$1,500,000 deposit are therefore not entry conditions but conditions to be maintained for as long as the company operates.

Section 89 supplies the second continuing obligation and states it strictly: all money, property and securities received or held by the company in a fiduciary capacity “shall always be kept distinct from those of the company and in separate accounts”, marked for each particular trust, “so that at no time shall trust moneys form part of or be mixed with the general assets of the company”, and every investment must be designated so that the trust it belongs to can be identified at any time.

The private trust company: what it is, and why a family sets one up

A private trust company (PTC) is a company formed to act as trustee of one family’s trusts and to provide trust services to nobody else. Hong Kong law knows no such form as a separate category: a PTC is an ordinary company under the Companies Ordinance (Cap. 622) with a particular job, not a particular status.

The first practical consequence follows: in Hong Kong you cannot “establish a PTC” — you establish a company and appoint it as trustee. There is no certificate, no register and no document evidencing PTC status.

Why a family wants its own trustee

The motives for a PTC recur across family structures and barely vary by jurisdiction.

Control without the risks of reserved powers. As set out above, section 41X of Cap. 29 protects only the reservation of investment powers and asset management functions. Where a family needs influence over distributions, the class of beneficiaries or strategy, it is safer to move that decision inside the trustee’s board than to reserve powers to the settlor.

Competence in awkward assets. A professional trustee takes on an operating business, a concentrated single-company holding, collections, real estate across several jurisdictions and hard-to-value assets reluctantly, if at all. A family’s own company accepts them, because the people deciding are the people who understand them.

Continuity and privacy. Replacing an external trustee is a project — handover, compliance re-onboarding, cost. Inside a PTC the board changes and the party to the trust does not.

Predictable cost. An external trustee’s fee is usually tied to the value of the assets; a PTC’s cost is tied to its own operating model.

How the structure is usually built

Element	Role	The Hong Kong specifics
The family trust	holds the assets	Hong Kong law; unlimited duration if the instrument took effect on or after 1 December 2013
The PTC	trustee of the trust	an ordinary private company under Cap. 622
The PTC’s board	takes the trustee’s decisions	fiduciary duties; section 3A applies to the listed powers
The owner of the PTC’s shares	makes the structure “orphan”	a non-cha­ri­table purpose trust has no statutory footing in Hong Kong
A protector or committee	signs off on key decisions	by the trust instrument only; there is no statutory office of protector
The family office	asset management and admi­nistra­tion	no licence required where no services are provided to third parties

The point at which Hong Kong departs from the offshore jurisdictions is the fourth row. In the Cayman Islands, the British Virgin Islands, Jersey and Guernsey the PTC’s shares are traditionally held by a trust for a non-charitable purpose, which takes the family out of the ownership chain and orphans the structure. Hong Kong has no purpose trust statute, so the ownership of the PTC’s shares has to be solved another way: through a family holding company, through a trust with beneficiaries, or by combining the structure with an offshore element.

That choice has to be made deliberately: who owns the PTC’s shares determines who appears on the PTC’s own significant controllers register — see below.

What a PTC does not do

A PTC creates no tax advantage in itself. It does not change a rate, does not take income out of charge and is not a concessionary regime. The tax outcome turns on something else — on whether the structure qualifies as an FIHV, and on the source of the income.

A PTC is not a substitute for competence. The section 3A duty of care is measured against a professional standard where the board acts in the course of a business or profession, and the section 41W control on exemption clauses is addressed precisely to paid professionals. A PTC board staffed by remunerated external professionals is caught by both.

A PTC does not buy privacy from information exchange. CRS classification turns on what the entity does, not on the trustee’s form — there is a separate section on this below.

The licensing perimeter such a company falls into is covered separately, in the guide to the Hong Kong TCSP licence in 2026: who must hold one, how the fit-and-proper test works, and what customer due diligence duties a licensee takes on.

Does a private trust company need a TCSP licence? The question Hong Kong has never answered

Acting as trustee is expressly a trust service under Schedule 1 to AMLO Cap. 615, and carrying on that business without a licence is a criminal offence. The Companies Registry has put the private trust company question squarely — and answered it with a formula that returns to the same test instead of resolving it. That is not a hedge: the verbatim question and answer are set out below.

The key to the question sits not in paragraph (d) but in the chapeau of the definition. Schedule 1, Part 1: “trust or company service” means “the provision, in Hong Kong, by a person, by way of business, of one or more of the following services to other persons”. The three limiters — in Hong Kong, by way of business and to other persons — are part of the statutory definition itself, not a regulator’s gloss.

The list then follows, and paragraph (d) covers “acting, or arranging for another person to act— (i) as a trustee of an express trust or a similar legal arrangement; or (ii) as a nominee shareholder for a person other than a corporation whose securities are listed on a recognized stock market”. The Registry’s May 2025 Guideline explains the term: “‘Express trust’ refers to a trust clearly created by the settlor, usually in the form of a document e.g. a written deed of trust”.

Which gives the point that matters for a PTC: the argument is not about whether acting as trustee is a trust service — it is — but about whether it is provided “by way of business” and “to other persons”. Both expressions are in the statute; neither is defined by it.

The sanction for carrying on the business unlicensed sits in section 53F: a fine at level 6 and 6 months’ imprisonment. Level 6 under Schedule 8 to Cap. 221 is HK$100,000, and the Registry’s own Guideline states that figure in terms.

What the statute says about exemptions

Section 53B sets out a closed list: the Government; an authorized institution; a licensed corporation that operates a trust or company service business ancillary to the corporation’s principal business; an accounting professional; a legal professional; and a person of a class or description prescribed by regulation.

A private trust company is not on that list. The sixth item is a referring provision: section 53B(2) empowers the Secretary for Financial Services and the Treasury to prescribe exempt classes by regulation.

No such regulation exists, and that can be stated directly rather than as an absence of finding: Cap. 615 has no subsidiary legislation at all. On the official legislation portal no instrument in the form Cap. 615A, 615B and so on resolves — by contrast, the subsidiary instruments under Cap. 622 and Cap. 571 resolve normally. In the eight years Part 5A has been in force, the section 53B(2) power has never been used.

What the Companies Registry has published about PTCs

The one document in which the regulator describes the private trust company construction is a separate sheet, “Frequently Asked Questions — Trust Companies”, on the TCSP portal, last revised 9 May 2018. It contains two questions on the point, and both are put almost in the words a client uses to describe the structure.

Question 4, verbatim: “Is a trustee of private trusts or bare trusts required to apply for a TCSP licence?” Answer, verbatim: “If the trustee provides trust services in Hong Kong by way of business to other persons, the trustee is required to obtain a TCSP licence”.

Question 5, verbatim: “Is a company required to apply for a TCSP licence in the following scenarios: (a) the sole purpose of the company is to act as a trustee of a private family trust with or without fees; or (b) the company only acts as a custodian trustee which holds the trust assets on behalf of another person?” Answer, verbatim: “If the company, by way of business, provides in Hong Kong a trust or company service to other persons, the company is required to apply for a TCSP licence”.

Note what the regulator actually did. It reproduced the private trust company scenario — including the words “with or without fees”, so the unremunerated case is expressly covered — and then, instead of answering on the merits, returned the general test: “by way of business” and “to other persons”. Neither term is elaborated for a PTC. The question is officially posed and officially unresolved.

A second check covered every other publication the regulator has issued, and the result is unambiguous.

Document	Does it mention a PTC, a family trust or a trustee example?
“Trust Companies” FAQ on the TCSP portal, revised 9 May 2018, 6 questions	yes: questions 4 and 5(a) describe a trustee of a private trust and a company whose sole purpose is to act as trustee of a family trust; the answer repeats the “by way of business … to other persons” test
TCSP licensing FAQ, revised 1 June 2023, 17 questions	no occurrence of “trustee”, “express trust”, “family trust” or “private trust company”
Guideline on Licensing of TCSPs, May 2025, 16 chapters	no: neither “by way of business”, nor “private trust company”, nor “family trust”, nor “intra-group”
Guideline on Licensing of TCSPs, March 2018	no
Registry presentations of 2018 and 2020	no: neither trustees of express trusts nor the “by way of business” test is discussed
Enforcement section of the TCSP portal	no published trust-related case
Written reply LCQ5 of 25 June 2025 on family offices	TCSPs mentioned only as one of the DNFBP categories
Written reply LCQ18 of 22 April 2026 on family offices	no mention of trusts, trustees, PTCs or licensing
Financial Secretary’s remarks, Wealth for Good Summit, 24 March 2026	no mention of trusts or trustees

The “by way of business” test, applied to a PTC

The only published analytical tool is question 7 of the Registry’s FAQ. The answer opens with the general formula: “According to case law, the question of whether the provision of a service amounts to the carrying on of a business is a question of fact to be answered upon a consideration of all the circumstances”. Four factors follow: the person (a) “undertakes one or more of the activities of a TCSP”; (b) “advertises or publicizes his business activity or receives referrals from other companies”; (c) “aims to make a profit when he carries out the activity”; (d) “carries out the activity with reasonable or recognizable continuity”.

What follows is this author’s legal analysis, not the position of the Companies Registry.

Factor	A typical single-family PTC	Comment
(a) undertakes a TCSP activity	yes	acting as trustee of an express trust is named in Schedule 1
(b) advertises or receives referrals	no	a PTC does not go to market and takes no outside clients
(c) aims to make a profit	no, where no fee is charged	charging a fee changes the answer
(d) reasonable or recognizable continuity	yes	a trusteeship is by its nature open-ended

The honest way to state the result: a PTC satisfies two of the four factors, and they are the two that describe the nature of the activity rather than its commerciality. The professional view — that a genuine single-family PTC which does not hold itself out, charges no fee and acts for nobody outside the family is not carrying on the business “by way of business” — is a defensible reading of the Registry’s own factors. But the Registry has never published it, and the factors are neither exhaustive nor weighted.

The intra-group carve-out in question 8 probably does not reach a PTC

Question 8 of the FAQ addresses a member of a corporate group and gives three conditions: “you are a member of a group of companies”; “there is no receipt of service fee in respect of the company services provided by you to other members of the group”; “you provide company services to other members of the group only but not to any other person”.

Note the subject matter: the answer says company services, not trust services and not trust or company services.That is a textual observation, not an interpretation.

It follows that extending question 8 to a PTC is extrapolation, not application of published guidance. There is a second difficulty: in the typical structures a PTC renders its service to a trust, and a trust is not a company and not a member of a group, so the first and third conditions are not met on the words used.

A PTC’s defence is built on the question 7 analysis, not on the question 8 carve-out. Material that presents question 8 as the PTC’s answer overstates what the Registry has published.

What actually moves a PTC towards the licensing threshold

The same four factors yield a practical guide — and this too is analysis, not the regulator’s position:

•          charging a fee for acting as trustee engages factor (c) directly;

•          acting for more than one unrelated family engages both (c) and (b);

•          any public positioning — a website, a service deck, tendering for mandates — engages (b);

•          serving third-party trusts or companies takes the structure out of the PTC analysis altogether.

How to put this to a client honestly

The position of a private trust company under the TCSP regime is unresolved: the one document that poses the question answers it with the general test, and there is no guidance elaborating that test for a PTC, no published decision and no enforcement case. The licensing market itself is large and active: the Companies Registry’s statistics put 7,412 TCSP licences in force at 30 June 2026, with 333 new licences granted in the first half of 2026; for comparison, its 2024-25 annual report recorded 6,899 licensees at 31 March 2025 and 824 new licences during that year.

There is one practical conclusion for a family: this question is settled not by appeal to “market practice” but by a fact-specific analysis of the particular structure and, where the assets are substantial, by a written legal opinion.Getting it wrong is a criminal exposure, not an administrative one. Where that analysis concludes a licence is needed, the route from there — the applicant requirements, the fit-and-proper test, the fees and the ongoing duties — is set out in the separate guide to the Hong Kong TCSP licence.

The other licences: the SFC, the HKMA, the MPFA and pension schemes

Acting as a trustee is not itself a regulated activity under the Securities and Futures Ordinance: Schedule 5 contains no “trustee” type of regulated activity. An SFC licence becomes necessary not because of a status but because of what the trustee actually does. A full account of the regulated activities themselves, and of the responsible-officer and capital requirements, is in the separate guide to SFC licences Types 1 to 9 in Hong Kong.

Regime	When it reaches a trustee	Basis
SFC Type 13 — depositary services for relevant collective investment schemes	only a depositary of an SFC-au­tho­rised scheme at the top of the custodial chain	Cap. 571, Schedule 5
SFC Type 9 — asset management	where portfolio management becomes a separate or distinct business of the trustee	SFC Licensing Handbook, para. 1.3.20
SFC Types 4, 5, 6 and 9	not required where the advice or services are wholly incidental to discharging the trustee’s duty	para. 1.3.19
SFC Type 1	not required for a trust company registered under Part VIII of Cap. 29 acting as agent for a collective investment scheme	para. 1.3.18
HKMA module TB-1	the trust business of authorized insti­tutio­ns and their subsidiaries	Cap. 155, s. 7(3)
MPFA approved trustee	MPF schemes	Cap. 485, s. 20(1)
ORSO	trustee of a registered occupational retirement scheme	Cap. 426

What the SFC actually says about trustees

The SFC Licensing Handbook of July 2025 contains four paragraphs addressed directly to trustees, and they are worth knowing verbatim.

Paragraph 1.3.19, the incidental exemption: “As a trust company, you are not required to be licensed for Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) or Type 9 (asset management) regulated activity if you provide such investment advice or services wholly incidental to your discharge of your duty as a trustee.”

Paragraph 1.3.20, the boundary for Type 9: “If a trustee company acting as trustee of a discretionary trust has appointed an appropriate person to manage the portfolio or in practice acts on professional advice in carrying out its duties as trustee, it would not be required to be licensed. However, if the provision of portfolio management services becomes a separate or distinct business of the trustee company, it is unlikely that the trustee company could rely on the wholly incidental exemption and it would have to apply for a licence for Type 9 regulated activity.”

Paragraph 1.4.25, the family office attached to a trust: “For example, a family appoints a trustee to hold its assets of a family trust, and the trustee operates a family office as an internal unit to manage the trust assets, the single family office will not need a licence because it will not be providing asset management services to a third party.”

Paragraph 1.4.26 is the other side of the same rule, and it should be read together with 1.4.25: it addresses a company or family office “set up as a business to manage assets which include securities” — that is, it points towards licensing rather than away from it. Citing 1.4.26 as further comfort for family offices is a common misreading.

The working rule for a PTC follows: while asset management serves only the trustee’s own trust and rests on an appointed manager or on professional advice, no Type 9 licence is needed; once management becomes a business line in its own right, one is.

The unevenness of the drafting deserves a note. Paragraph 1.3.18 is expressly confined to a trust company registered under Part VIII of Cap. 29, while paragraphs 1.3.19 and 1.3.20 are framed more loosely as “a trust company” and “a trustee company”. Whether the SFC intends the looser paragraphs to reach unregistered trustees, PTCs included, is not stated in the Handbook.

Type 13 does not reach a private family trust

Type 13 covers the depositary of an SFC-authorised collective investment scheme sitting at the top of the custodial chain. The Handbook adds exemptions for registered MPF schemes and their constituent funds, and for approved pooled investment funds.

This is a public-funds regime. A private trust company holding one family’s assets is nowhere near it.

Type 13 took effect on 2 October 2024. That date is supported by an SFC circular and by law firm commentary; it could not be obtained from a government commencement notice, and it is stated here with that qualification.

The HKMA: module TB-1 and the list of trustees

Supervisory Policy Manual module TB-1, “Regulation and Supervision of Trust Business”, was issued on 27 May 2022 as a statutory guideline under section 7(3) of the Banking Ordinance and applies to all authorized institutions. The compliance deadline was set as “not later than 1 June 2023”; locally incorporated institutions must ensure their subsidiaries comply, and other trustees within a banking group are encouraged to adopt the Code.

The module includes a Code of Practice for Trust Business; institutions declare their observance of the Code annually, and the HKMA maintains a list of trustees covering authorized institutions, their subsidiaries and other trustees within an AI group carrying on trust business in Hong Kong. As at September 2026 the module remains in its 27 May 2022 version: the document of 2 May 2023 is a circular, not a revision.

TB-1 does not reach a private trust company unless it sits inside an authorized institution’s group.

Pension trustees are a different world

The employer-side obligations within the MPF system itself — contributions, deadlines, reporting — are covered separately in the guide to the MPF in Hong Kong; what follows concerns only the requirements applying to the scheme’s trustee.

An MPF trustee requires MPFA approval under section 20(1) of Cap. 485; the approval procedure is set out in MPFA Guidelines I.1, published at a permanent “current version” address and revised from time to time — the version should be checked on the date of reference. The MPFA’s public register lists ten approved trustees; the register page itself is marked “As at 26 Jul 2024”, and the count should be quoted with that marker.

The financial thresholds sit not in section 20 but in the subsidiary regulation, Cap. 485A: paid-up share capital of at least HK$150,000,000 and net assets of at least the same amount, plus assets held in Hong Kong of at least HK$15,000,000; an associate of a substantial financial institution has an alternative of HK$30,000,000. The only accessible text of these provisions is a 2013 consolidation on a third-party mirror, so the figures are given with that qualification and need checking against the current text.

A registered occupational retirement scheme under Cap. 426 works differently, and it ties Cap. 426 directly to Part 8 of Cap. 29: the scheme must have at least one independent trustee who is not the employer, an employee of the employer or an associate; a corporate trustee incorporated in Hong Kong or re-domiciled to Hong Kong must be a registered trust company; a non-Hong Kong corporate trustee must be comparable to a registered trust company and have significant presence and control in Hong Kong; where the trustees are individuals there must be at least two, at least one of them a non-employer trustee ordinarily resident in Hong Kong.

And what is not required at all

A single family office in Hong Kong generally needs no licence. The Government states it directly in its release of 10 February 2026: “Single-family offices are not required to obtain a licence in Hong Kong in general, which helps maintain a high level of privacy.”

The PTC as a company: form, name and the significant controllers register

A Hong Kong private trust company is formed as an ordinary private company limited by shares under the Companies Ordinance (Cap. 622) — and that is precisely why it cannot register under Part 8 of Cap. 29. The “specified company” definition excludes private companies, and registration would require a public company with HK$3,000,000 paid up and HK$1,500,000 on deposit. This is not a choice but a consequence of form: a typical PTC is ineligible for Part 8 by definition, and the SFC carve-out in paragraph 1.3.18, addressed to registered companies, is therefore unavailable to it.

The name: “trust” and “trustee” need prior approval

The words “trust” and “trustee” are on the list of words requiring the Registrar of Companies’ prior approval. The basis is sections 100(2) and 108 of Cap. 622 and the Companies (Words and Expressions in Company Names) Order (Cap. 622A). The Guideline on Registration of Company Names, dated January 2024 and updated May 2025, provides at paragraph 8(b) that a name will not be registered if it “contains any of the words or expressions specified in the Companies (Words and Expressions in Company Names) Order (Cap. 622A)”, and Appendix A to the Guideline lists both “trust” (信託) and “trustee” (受託).

The practical point: a name such as “X Family Trustee Limited” requires the Registrar’s prior approval. It is a name control, not a licence, and it has nothing to do with the TCSP regime — but it will delay incorporation if nobody thinks of it in advance.

For comparison, an adjacent rule: using the word “Bank” in a company name without the HKMA’s consent is an offence under the Banking Ordinance (Cap. 155).

The significant controllers register: how a trust appears in it

Since 1 March 2018 every Hong Kong company must keep a significant controllers register under Division 2A of Part 12 of Cap. 622. The Companies Registry’s guideline on keeping these registers is dated 1 March 2018 and updated 23 May 2025.

A significant controller is a person who meets one of five conditions: more than 25% of issued shares or of rights to capital or profits; more than 25% of voting rights; the right to appoint or remove a majority of the directors; the right to exercise, or actual exercise of, significant influence or control; and the fifth condition, addressed squarely at trusts: “The person has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm that is not a legal person, but whose trustees or members satisfy any of the first four conditions (in their capacity as such) in relation to a company”.

The mechanism has two layers, and Chapter 10.6 of the guideline sets them out directly. First the company considers whether a trust or firm meets one of the first four conditions; if so, “its SCR should show that the trustees or members of the firm, as the case may be, are the significant controllers”. The company “must then consider whether there is any individual (other than the trustees or members) or legal entity that has the right to exercise or actually exercises significant influence or control over the activities of the trust or firm”.

Paragraph 10.6.6 gives the telling example: “A settlor or beneficiary who is actively involved in directing the activities of the trust”.

Three conclusions follow, and they matter to a family structure:

•          the trust itself is never entered — it is not a legal person;

•          the trustees are entered, which in a PTC structure means the PTC itself or its directors, depending on how ownership is configured;

•          so is anyone who actually directs the trust — an actively involved settlor, a beneficiary directing the trust’s activities, and by the same logic a protector holding directive powers.

Which is why the choice of who owns the PTC’s shares is not a detail: it determines what goes on the PTC’s own register. For a full treatment of the regime, see our analysis of the significant controllers register in Hong Kong.

Hong Kong keeps no register of trusts

There is no register of trusts in Hong Kong. Part 8 of Cap. 29 produces a register of trust companies; the TCSP register is a register of licensees; and the significant controllers register is kept by companies, not centrally, and records the controllers of companies.

The 2017 consultation on enhancing the transparency of beneficial ownership of Hong Kong companies was expressly limited to companies, answered FATF Recommendation 24, and proposed no trust register. That is a well-supported negative built from the absence of any such register across the responsible agency’s materials, not an express government statement.

What changed in company law between 2023 and 2026

Instrument	What it did	In force
Companies (Amendment) Ordinance 2023	general modernisation of company law provisions	—
Companies (Amendment) Ordinance 2025	treasury share regime and paperless corporate communication	17 April 2025
Companies (Amendment) (No. 2) Ordinance 2025	the company re-do­mici­liation regime	23 May 2025

There is no Companies (Amendment) Ordinance for 2024 or 2026, and nothing enacted between 2023 and 2026 changed the significant controllers regime or created any beneficial-ownership obligation touching trusts.

The re-domiciliation regime matters to PTCs indirectly but genuinely: an offshore private trust company — Cayman, BVI, Jersey — can migrate to Hong Kong keeping its legal identity, and once re-domiciled it satisfies the incorporation element of the “specified company” definition for Part 8 of Cap. 29 — provided it ceases to be a private company — and qualifies as an eligible corporate trustee for Cap. 426. The Companies Registry completes its approval within two weeks of a complete filing.

For scale: 1,609,720 local and re-domiciled companies were on the register at 30 June 2026 — an all-time high — with 122,481 newly registered in the first half of 2026. On what a Hong Kong company must do after incorporation — annual return, audit, statutory registers — see our guide to mandatory annual compliance for Hong Kong companies.

Taxing a trust: who pays, and at what rate

A Hong Kong trust is not a taxpayer: the trustee is. The definitions in section 2 of the Inland Revenue Ordinance (Cap. 112) bring within “person” “a corporation, partnership, trustee, whether incorporated or unincorporated, or body of persons”, and define “trustee” as “any trustee, guardian, curator, manager, or other person having the direction, control, or management of any property on behalf of any person, but does not include an executor”.

The clearest published statement by the Revenue is a footnote to paragraph 6 of practice note DIPN 43: “Tax liability is imposed on the trustee of a trust estate as the chargeable person – section 2 of the Ordinance includes ‘trustee’ as a person”.

What is taxed, and when

Profits tax arises only where three conditions hold together: the person carries on a trade, profession or business in Hong Kong; that activity produces profits; and the profits arise in or are derived from Hong Kong. That is how the Revenue itself states the conditions in its guide to the territorial source principle.

The Revenue’s own overview of the taxes it administers states the reach directly: “Persons, including corporations, partnerships, trustees and bodies of persons, carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits… (excluding profits arising from the sale of capital assets)”.

Two consequences follow for a family trust. First, a passive trust holding a portfolio and carrying on no business is not within the profits tax charge at all. Second, even where there is a business, only Hong Kong-source profits are charged — Hong Kong remains a territorial jurisdiction. How an offshore source is actually established, and what the Revenue tests in such a claim, is covered separately in the guide to the offshore profits claim in Hong Kong.

The rate follows the trustee’s own legal form

Chargeable person	Normal rate	Two-tiered regime, from 2018/19
Corporations	16.5%	8.25% on the first HK$2,000,000, then 16.5%
Uni­ncorpo­rated businesses	15%	7.5% on the first HK$2,000,000, then 15%

The Revenue publishes no position on which of these rates applies to a trustee. The profits tax page, the two-tiered rates FAQ, the notes to returns BIR51 and BIR52, the unincorporated business pamphlet, and DIPNs 20, 43 and 61 together with the general overview were all checked; none addresses it. The list of persons who may sign a BIR52 does not name a trustee at all.

What follows is analysis, not the Revenue’s position. Because the chargeable person is the trustee, the rate follows the trustee’s own legal character: a corporate trustee, a private trust company included, is a “corporation” within section 2 and is charged at 16.5% or 8.25%; an individual trustee is a person other than a corporation and is charged at 15% or 7.5%. Hong Kong law knows no separate tax personality for the trust estate.

The two-tiered trap for a family with several structures

A trust is expressly an “entity” for the purposes of the two-tiered election. The Revenue’s FAQ defines the term as: “‘entity’ means — (a) a natural person; (b) a body of persons; or (c) a legal arrangement, including — (i) a corporation; (ii) a partnership; and (iii) a trust”.

And here sits a limit that is easy to miss: in any year of assessment only one connected entity may elect for the two-tiered rates. The FAQ puts it as: “An entity’s election is effective only if no other connected entity has made an election for the same year of assessment”.

For a family with a trust, a holding company and an operating company under common control the consequence is practical: the reduced rate on the first HK$2,000,000 goes to one structure in the group, not to each of them. The election has to be planned, not left to default.

There is no practice note on trusts

The Inland Revenue Department has never issued a practice note on the taxation of trusts. The DIPN index runs from 1 to 63 (plus 13A) and contains nothing on trusts, trustees or private trust companies.

The nearest documents are: DIPN 20 on mutual funds, unit trusts and similar investment schemes (June 2012); DIPN 43on the offshore funds exemption, which carries the footnote quoted above; DIPN 51 on offshore private equity funds; and DIPN 61 on the profits tax exemption for funds (June 2020).

DIPN 61 offers a formulation useful to trust structures, at paragraph 66: “In relation to a fund in trust form, since the trustee is legally in charge of the trust estate and holds the legal title of the trust’s properties, any commercial or business undertaking carried on by the trustee of the trust estate for the fund would be regarded as commercial or business undertaking carried on by the fund”; and at paragraph 40 it calls the trustee the fund’s operator.

Taxing the beneficiary

The Revenue publishes nothing on the taxation of trust distributions in a beneficiary’s hands. The salaries tax pages, the guides and all four relevant DIPNs were checked.

The answer follows from the schedular structure of Hong Kong taxation, which the Financial Services and the Treasury Bureau states directly: “We only levy taxes on business profits under profits tax, property rental income under property tax and employment income under salaries tax”.

What follows is analysis. A distribution from a trust is not employment income, not rental income from Hong Kong land, and not the profit of a trade carried on by the beneficiary — so it falls outside all three schedules and is not taxed. Tax arises only where the payment is in substance something else: disguised remuneration for work, or a receipt of a trade the beneficiary carries on.

Registration and a tax file

Hong Kong has no trust-specific registration regime with the Revenue. Neither the business registration pages, nor the list of businesses required to register, nor the business registration guide mentions trusts or trustees.

Analysis: a business registration certificate and a profits tax file arise for a trust only where the trustee carries on a business — the practical hook being the “officer of an unincorporated body” category in the list of applicants. A passive family trust holding investments generally has neither.

What Hong Kong does not tax: estates, capital gains and gifts

Hong Kong has no estate duty, no capital gains tax, no gift tax, no wealth tax and no withholding tax on dividends or interest. This is not a concession and not a trust regime — it is how the tax system is built, and it is where most of the practical value of a Hong Kong trust comes from.

The Financial Services and the Treasury Bureau states it directly: “There is no value-added or sales tax; no capital gains tax; no withholding tax on dividends and interest; and no estate duty in Hong Kong”.

The Revenue’s list of the taxes it administers confirms it from the other side: salaries tax, profits tax, property tax, stamp duty, estate duty (historic), betting duty, hotel accommodation tax and business registration. No capital gains, gift, wealth or inheritance tax appears on it.

Estate duty was abolished from 11 February 2006

Estate duty was abolished by the Revenue (Abolition of Estate Duty) Ordinance 2005, Ord. No. 21 of 2005, for deaths occurring on or after 11 February 2006. The Ordinance was gazetted on 11 November 2005 and came into operation on the expiry of three months from publication.

The Revenue states the practical consequence directly: for deaths from that date no estate duty affidavits or accounts need be filed, and no estate duty clearance papers are needed to apply for a grant of representation.

The regime falls into three periods, which matters for older estates:

Date of death	Position
before 15 July 2005	the Estate Duty Ordinance (Cap. 111) applies with the full rate scale
15 July 2005 to 10 February 2006	transitional estates: duty on estates whose principal value exceeds HK$7,500,000 is reduced to a nominal HK$100
on or after 11 February 2006	no duty

The Estate Duty Ordinance (Cap. 111) has not been repealed — it continues to govern deaths before 11 February 2006. The Revenue still publishes rate tables running back to 1 April 1996.

Why this changes the logic of structuring

The absence of estate duty removes the principal motive for which trusts are created in most high-tax jurisdictions. A Hong Kong trust does not save estate duty, because there is none to save.

The work a Hong Kong trust does therefore lies elsewhere: continuity of ownership across generations; separating management from ownership; protection against forced-heirship claims in the family’s home jurisdiction; consolidating assets spread across several countries; and governing stakes in a family business. None of those is a tax objective.

Other jurisdictions’ death taxes do not go away, though: the nationality, domicile and asset location of the people in the structure can attract a foreign estate or inheritance tax regardless of Hong Kong law. That is a separate analysis, and it cannot be replaced by pointing at the absence of the tax in Hong Kong.

Withholding: what it does reach

There is no withholding tax on dividends or interest in Hong Kong. The Government’s public finance fact sheet puts it as: “There is no withholding tax on dividends paid by corporations, and dividends received from corporations are exempt from tax”.

The one material withholding relates to royalties paid to non-residents. Under section 21A the assessable profit is deemed to be 30% of the sum, rising to 100% in the specific case where the intellectual property was previously owned by a person carrying on a trade in Hong Kong and the sum accrues to an associate.

Practice note DIPN 22 applies the corporate rate in its worked examples and produces an effective figure of about 4.95% (30% of 16.5%). For a non-corporate payee, and at the concessionary tier, the figures differ; those derived numbers do not appear in the practice note and are arithmetic rather than the Revenue’s position.

One caution when working with the sources: the rate table on the Revenue’s site headed as double taxation agreement rates is not a table of Hong Kong’s domestic rates and does not apply to the domestic regime.

Stamp duty on settling assets into trust

Settling assets into a Hong Kong trust attracts no tax as such, but it can attract stamp duty — and the duty is charged on market value, not on the price. Hong Kong stamp duty is charged on documents rather than on persons or income, which is why it reaches a transfer to a trustee even where there is no price at all. The mechanics of duty on share transfers — the rates, the computation and the paperwork — are covered in detail in the guide to stamp duty on share transfers in Hong Kong.

What is transferred	Basis	Rate
Hong Kong stock: contract note	Head 2	0.1% of the consideration or value on each note, sold and bought
Hong Kong stock: transfer operating as a voluntary disposition inter vivos	Head 2	HK$5 plus 0.2% of the value of the stock
Hong Kong stock: transfer of any other kind	Head 2	HK$5
Hong Kong immovable property	Head 1	the ad valorem scale, below
An instrument executed in conformity with a duly stamped agreement	s. 29D(2)(a)	a fixed HK$100
Transfer of property or stock to a charity	s. 44	exempt

The voluntary disposition rule: why market value is the base

A transfer of property to a trustee for no consideration is treated as a voluntary disposition inter vivos and is charged on market value. That is the core of section 27 of the Stamp Duty Ordinance (Cap. 117), and its structure is worth knowing exactly, because subsections (1) and (2) do different jobs.

Subsection (1) addresses immovable property: any conveyance of immovable property operating as a voluntary disposition inter vivos is chargeable as a conveyance on sale, with the substitution of the value of the property conveyed for the amount or value of the consideration. For Hong Kong stock the substitution of value is built into the Head 2 rate itself, and section 27(2) does something different — it sets off duty already paid on the contract notes against the duty on the instrument of transfer.

Subsection (4) is the deeming provision, and it reaches further than it looks. Any conveyance or transfer not made in favour of a purchaser, incumbrancer or other person in good faith and for valuable consideration is deemed to operate as a voluntary disposition inter vivos; and the consideration is not treated as valuable where the Collector is of the opinion that, by reason of its inadequacy or other circumstances, the instrument confers a substantial benefit on the transferee.

Subsection (3) adds a procedural requirement that is easy to forget: an instrument operating as a voluntary disposition is not duly stamped unless the Collector has stamped it under section 13(3)(b). Adjudication here is not optional.

The Government portal’s formulation, citing subsection (4) expressly: “If the Collector of Stamp Revenue is of the opinion that the consideration stated in a conveyance of property or a transfer of Hong Kong stock is inadequate, the conveyance or transfer shall be deemed to be a conveyance or transfer operating as a voluntary disposition inter vivos (i.e. a gift)”. For agreements for sale the parallel provision is section 29F.

Section 27(5) contains exceptions, and two of them are expressly about trusts. In the statutory words, the section does not apply to a conveyance or transfer made for nominal consideration for the purpose of securing the repayment of an advance or loan, or “made for effectuating the appointment of a new trustee, whether the trust is expressed or implied”, or “under which no beneficial interest passes in the property conveyed or transferred”, or “made to a beneficiary by a trustee or other person in a fiduciary capacity under any trust, whether expressed or implied”.

A practically important conclusion follows: changing the trustee of a Hong Kong trust does not attract ad valorem stamp duty, whereas the initial settlement of assets into the trust does.

But subsection (5) carries a condition that destroys the relief for anyone who does not know about it. Its closing words: “this subsection shall have effect only if the circumstances exempting the conveyance or transfer from charge under this section are set forth in the conveyance or transfer”. The ground of exemption must be recited in the instrument itself. A transfer on a change of trustee that does not say on its face that it effectuates the appointment of a new trustee loses the exemption — and is charged on market value. It is the cheapest detail in this section to get right and the most expensive to miss.

An adjacent provision: section 28(1) treats as a voluntary disposition any instrument by which property is conveyed or transferred to a person “in contemplation of a sale of that property” — worth remembering when assets earmarked for an early sale are settled into a trust.

Declarations of trust: when they are charged

A declaration of trust over Hong Kong immovable property falls within “agreement for sale” unless no beneficial interest passes under it — and that is the statute, not merely the practice note. The definition of “agreement for sale” in section 29A of Cap. 117 includes paragraph (d): “an instrument in which a declaration of trust in respect of immovable property is made, other than a declaration of trust under which no beneficial interest passes in the property subject to the declaration”. SOIPN No. 1, at paragraph 9(c), states the same thing more briefly: “declarations of trust whether for value or not (unless no beneficial interest passes under the declaration)”.

That parenthesis is the whole point for nominee holdings: a declaration recording a holding for the same beneficial owner is outside the ad valorem charge. For shares the same result comes through the fixed HK$5 on a transfer “of any other kind”; the Revenue’s stamping circular 03/2010 ties the charge expressly to “a change of beneficial interests in the Hong Kong stock”.

No general fixed HK$100 duty for a declaration of trust over immovable property under which no beneficial interest passes could be confirmed from the accessible official sources. That rate should not be asserted without checking the text of Head 1.

A useful adjacent rule for real-estate structures, recorded at paragraph 12 of SOIPN No. 8: “when a residential property is registered under the name of a trustee, the trustee will not be regarded as the beneficial owner of the property concerned”. The limits of that sentence must be respected: the note is about ad valorem duty, and the words quoted are said of residential property registered in a trustee’s name. It cannot be cited as a general principle of Hong Kong stamp duty.

The current property scale and the 2026 change

From 26 February 2026 the ad valorem rate on residential property valued above HK$100,000,000 rose from 4.25% to 6.5%. The measure was announced in the 2026-27 Budget on 25 February 2026 and enacted by the Stamp Duty (Amendment) Ordinance 2026, Ord. No. 3 of 2026, gazetted on 29 May 2026 and deemed to have come into operation on 26 February 2026. A separate Scale 3 was created for non-residential property, with the top rate unchanged at 4.25%.

The current scale: HK$100 up to HK$4,000,000; then the marginal relief bands; 3.75% from HK$10,080,000 to HK$20,000,000; 4.25% from HK$21,739,120 to HK$100,000,000; HK$4,250,000 plus 30% of the excess from HK$100,000,000 to HK$109,574,470; and 6.5% above HK$109,574,470.

There is a source conflict worth knowing here: the Revenue’s Budget page still lists the stamp duty measures among those that “have to be implemented through legislative amendments” and are “subject to change during the legislative process”, while the gazetted Ord. No. 3 of 2026 shows the measure is enacted. The gazetted ordinance governs; the Revenue’s historical rate table is also stale and stops at the period ending 25 February 2026.

The preceding changes, for completeness: the HK$100 band was raised to HK$4,000,000 from 26 February 2025(Ord. No. 12 of 2025), and special, buyer’s and new residential stamp duties were reduced to nil at 11 a.m. on 28 February 2024 by the Stamp Duty (Amendment) Ordinance 2024, Ord. No. 8 of 2024. The mechanism matters for accuracy: those duties were not repealed; their rates were set to 0%.

Group relief under section 45 is unavailable to a trustee

Intra-group relief under section 45 of Cap. 117 is built on beneficial ownership of not less than 90% of the issued share capital as between bodies corporate. The Revenue’s procedural form IRSD124 requires a statutory declaration that the transferor or parent was “the beneficial owner of not less than ninety per cent of the issued share capital” of the other.

Analysis, not the Revenue’s position: since SOIPN No. 8 states that a trustee is not regarded as the beneficial owner, and since a trust is not a body corporate and cannot be an associated body corporate of the transferor, a transfer of property to a trustee falls outside section 45.

The 2026-27 Budget announced a relaxation of the intra-group relief criteria — lowering the minimum threshold of association between transferor and transferee from 90% to 75%, and extending the relief to bodies corporate that do not issue share capital, limited liability partnerships among them — for instruments executed on or after 25 February 2026. The relaxation concerns the corporate association test, not the admission of trusts to the regime.

The decisive point: as at 5 September 2026 that relaxation is not in force. The Revenue’s own stamp duty page still carries it with the qualification “subject to the enactment of the relevant amendment ordinance”, and neither of the two stamp duty ordinances enacted in 2026 contains it.

The second 2026 ordinance has nothing to do with property or with group relief. The Stamp Duty (Amendment) (No. 2) Ordinance 2026 began as a Bill gazetted on 29 May 2026, had its first reading on 10 June 2026 and was passed by the Legislative Council on 8 July 2026; its subject is the calculation and payment of stamp duty on dual-counter stock transactions conducted at the renminbi counter, so that the trade and the duty settle in renminbi at the same time.Attributing property provisions to it is a common error.

The FIHV concession: why a trust can use it

A Hong Kong trust, a discretionary trust included, can be a family-owned investment holding vehicle (FIHV) and apply a 0% profits tax rate. That is the direct answer to a question usually got wrong: the regime does not require the FIHV to be a corporation or a partnership.

The Revenue’s formulation is verbatim: “Entity means a body of persons (corporate or unincorporate) or a legal arrangement and includes a corporation, partnership and trust (including a discretionary trust)”. The statute itself, at section 5(1) of Schedule 16E, defines the FIHV as: “An entity (Entity A), whether established or created (however described) in or outside Hong Kong, is a family-owned investment holding vehicle for a year of assessment if — (a) at all times during the basis period for that year, one or more than one member of a family (particular family) has at least 95%, in aggregate, of the beneficial interest (whether direct or indirect) in Entity A; and (b) Entity A is not a business undertaking for general commercial or industrial purposes mentioned in section 20AM(6)”.

The regime was introduced by the Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023, Ord. No. 8 of 2023, gazetted on 19 May 2023, and applies to years of assessment commencing on or after 1 April 2022.

The conditions

Condition	Position	Provision
Rate	0% at FIHV level and at FSPE level	Schedule 16E, ss. 24(2) and 25(2)
Ownership	at least 95% of the beneficial interest held by members of one family, directly or indirectly, at all times during the basis period	s. 5(1)(a)
Nature of the activity	not a business undertaking for general commercial or industrial purposes	s. 5(1)(b), referring to s. 20AM(6)
Assets under management	aggregate net asset value of the Schedule 16C assets of the FIHVs served — not less than HK$240,000,000	s. 11(2)
Employees	the average number of qualified employees “is adequate in the opinion of the Commi­ssio­ner” and “is in any event not less than 2”	s. 10(1)(b)
Who counts as an employee	a full-time employee in Hong Kong, carrying out investment activities in Hong Kong, with the necessary qua­lifica­tions	s. 10(2)
Operating expenditure	expenditure incurred in Hong Kong on investment activities — not less than HK$2,000,000	s. 10(1)(c)
Family office safe harbour	the family-office management percentage at 75% or more, for one year or on average across years	ss. 3(2)–(3)

One correction to a widely repeated formulation: the phrase “normally not fewer than” does not appear in the statute. The text says “is adequate in the opinion of the Commissioner; and … is in any event not less than 2”, and the Revenue’s own page says “at least two full-time employees in Hong Kong”. “Normally not fewer than” must not be quoted as statutory language.

The key asymmetry: the vehicle may be a trust, the family office may not

An FIHV may be a trust; an eligible single family office may not. The Revenue’s requirement for the eligible single family office is direct: it must be a private company, incorporated in or outside Hong Kong, that is normally managed or controlled in Hong Kong, with at least 95% of its beneficial interest held by members of the family.

The structuring consequence is obvious: the family trust occupies the FIHV position, and the family office company occupies the manager position. Building the regime the other way round fails by definition.

A family-owned special purpose entity (FSPE) may be interposed between the FIHV and the assets, established solely to hold and administer investee private companies or Schedule 16C assets. The concession applies at both levels — at FSPE level to the extent that corresponds to the FIHV’s beneficial interest in it.

What counts as a qualifying asset

Schedule 16C lists the classes of specified assets, and the list is closed. It covers: securities; shares, stocks, debentures, loan stocks, funds, bonds or notes of, or issued by, a private company; futures contracts; foreign exchange contracts under which the parties agree to exchange different currencies on a particular date; deposits other than those made by way of a money-lending business; deposits with a bank as defined in the Banking Ordinance; certificates of deposit; exchange-traded commodities; foreign currencies; and over-the-counter derivative products.

The unified fund exemption: why it usually does not fit a family

A trust can be a fund for the purposes of the unified exemption in sections 20AM to 20AY: DIPN 61 expressly lists among the admissible forms an arrangement in which “property is held on trust for the participating persons by a trustee”. The definition of a fund turns not on form but on the character of the arrangement: property managed as a whole or contributions and profits pooled; participating persons without day-to-day control over the management; and a purpose or effect of enabling those persons to participate in or receive profits, income or other returns.

Analysis, not the Revenue’s position: a single-family trust will usually fail the pooling and participating-persons character of that definition, even though the trust form itself is admissible. Which is exactly why the family route is the FIHV rather than the fund exemption.

For a full treatment of the FIHV regime — its conditions, the safe harbour and how it works in practice — see our analysis of the Hong Kong family office tax concession.

What is proposed, and what is not yet law

An adjacent but distinct circuit is the fund structures: the Hong Kong OFC and LPF have exemption regimes of their own, and a family with a substantial portfolio often chooses between a trust and a fund. How they are built is covered in the guide to Hong Kong fund structures: the OFC and the LPF.

The Inland Revenue (Amendment) (Preferential Tax Regimes for Funds, Family-owned Investment Holding Vehicles and Carried Interest) Bill 2026 was gazetted on 12 June 2026 and had its first reading on 24 June 2026. It proposes to expand the definition of “fund”, widen the scope of qualifying investments, remove the 5% threshold for incidental transactions, relax the treatment of special purpose entities and family-owned special purpose entities, enhance the carried interest regime, and introduce a tax reporting mechanism together with economic substance requirements similar to those in the FIHV regime.

As at 5 September 2026 this is a Bill, not law. A release of 12 August 2026 records that it is before the Legislative Council’s Bills Committee, that the clause-by-clause examination is complete, that the second reading debate is expected to resume in the second half of 2026, and that if passed the measures are to apply from the year of assessment 2025/26.

The 2026-27 Budget is more specific about the content: expanding “fund” to cover specified funds-of-one, and classifying digital assets, precious metals and specified commodities as qualifying investments. For scale: the Government put the number of single family offices in Hong Kong at more than 3,380 at the end of 2025.

FSIE, charitable trusts and CRS reporting

The foreign-sourced income exemption (FSIE) regime reaches a trust only where the structure forms part of a multinational group — and the chargeable entity in that case is the trustee, not the trust. That follows directly from the definitions and from the Revenue’s own illustrative examples.

The definitions in section 15H(1) of Cap. 112: “entity” means “a legal person (other than a natural person); or an arrangement that prepares separate financial accounts, such as a partnership and a trust”; “MNE entity” means “a person that is, or acts for, an MNE group or an entity included in an MNE group”; “MNE group” means “a group that includes at least one entity or permanent establishment that is not located or established in the jurisdiction of the ultimate parent entity”.

The Revenue’s illustrative Example 3 addresses precisely this construction: a Hong Kong investment fund operating in the form of a trust held 100% of several subsidiaries in another jurisdiction. The Revenue’s conclusion: “Trustee-HK was a person who acted for Investment Fund-HK and hence was regarded as an MNE entity”. The trust is an “entity” but is not a “person” — so it is the trustee that falls inside the perimeter.

The practical boundary runs along group consolidation and multi-jurisdictional presence, not along the trust form.A standalone family trust holding a portfolio directly sits outside the regime; a trust whose trustee heads a group with a foreign subsidiary or permanent establishment sits inside it. Natural persons are excluded from the regime in all cases.

From 1 January 2024 the perimeter widened: “disposal gain” covers gains on the sale of any property, not only equity interests. The change was made by the Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Ordinance 2023, Ord. No. 32 of 2023, gazetted on 7 December 2023.

An important correction to a common citation error: Schedule 17FD is not the FSIE schedule. The FSIE schedule is 17FC; Schedule 17FD was introduced by the Inland Revenue (Amendment) (Tax Concessions for Intellectual Property Income) Ordinance 2024, Ord. No. 17 of 2024, and belongs to the 5% patent box regime — an entirely different regime with no bearing on trusts.

Charitable trusts and section 88

A trust is expressly recognised as one of the permitted forms of charity in Hong Kong, and the exemption is granted by section 88 of the Inland Revenue Ordinance. The Revenue’s current guidance is the Tax Guide for Charitable Institutions and Trusts of a Public Character, in its June 2023 edition.

The key passages: paragraph 16 names a trust as one of the forms in which a charity may be established, alongside a society, a company and a statutory body; paragraph 20 records that “A charity is exempt from tax under section 88 of the IRO. The general tax exemption contained in section 88 is subject to conditions”; paragraph 22 sets out the proviso for a charity carrying on a trade or business: the profits are exempt only if they are applied solely for charitable purposes, are not expended substantially outside Hong Kong, and either the trade is exercised in the course of the actual carrying out of the expressed objects or the work is mainly carried on by persons for whose benefit the charity is established.

The section 88 exemption relates to profits tax. Section 44 of the Stamp Duty Ordinance operates separately, exempting transfers of immovable property and shares to a charity from stamp duty — paragraph 52 of the same guide says so expressly.

Classifying a trust under CRS

The Revenue’s AEOI guidance contains a dedicated Chapter 17, “Treatment of Trusts”, and the classification turns on what the trust does, not on who acts as trustee.

Situation	Cla­ssifi­cation	Wording of the guidance
Gross income primarily attributable to investing, reinvesting or trading in financial assets, and the trust is managed by another entity that is a financial institution	investment entity, that is, a financial institution	“This is the case when a trust has gross income primarily attributable to investing, reinvesting, or trading in financial assets and is managed by another entity that is a financial institution”
No professional management of that kind and no other financia­l-insti­tution definition is met	no­n-fina­ncial entity (NFE)	the trust “is an NFE”
Not an active NFE	passive NFE	“If a trust is not an active NFE, it will be a passive NFE”
The trust is resident in Hong Kong and is not a non-reporting financial institution	reporting financial institution	the obligations are discharged by the trust or, in defined circu­msta­nces, by the trustee itself

The controlling persons of a trust are defined broadly. The Revenue’s wording is verbatim: “In the case of a trust, the Controlling Person(s) include the settlor(s), the trustee(s), the protector(s) or enforcer(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, or any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership)”.

A practically significant relief applies to discretionary beneficiaries: such a beneficiary is treated as an account holder only in the years in which a distribution is made to them. That is stated both for a trust that is a reporting financial institution and for a trust that is a passive NFE.

One terminological caution: the expression “trustee-documented trust” is not used in the Revenue’s guidance, even though the construction it describes — the obligations being discharged by a trustee that is itself a reporting financial institution — does appear there. The term should not be attributed to an official source.

The new obligation from 1 January 2027

The Inland Revenue (Amendment) (Automatic Exchange of Information) Bill 2026 was passed by the Legislative Council on 17 June 2026, and the new requirements take effect from 1 January 2027. It makes registration on the AEOI portal mandatory for every reporting financial institution regardless of whether it has anything to report; institutions already operating but unregistered must register by 31 March 2027; a record-keeping duty of six years after the filing deadline is introduced, including where an institution has ceased to be a reporting institution or has been wound up; and new penalties are added, together with an administrative-penalty mechanism as an alternative to criminal prosecution.

For a Hong Kong trustee that is a reporting financial institution this is a direct increase in the compliance burden, and it needs to be planned for now.

Moving separately is the Inland Revenue (Amendment) (Crypto-Asset Reporting Framework and Amended Common Reporting Standard) Bill 2026, gazetted on 22 May 2026 and given its first reading on 3 June 2026; as at 5 September 2026 it has not been passed: the crypto-asset reporting framework is proposed to apply from 1 January 2027, and the amended CRS from 1 January 2028. The Bill extends coverage to central bank digital currencies and specified electronic money products, adds reporting data points, and requires account holders to self-certify all jurisdictions of tax residence.

Country-by-country reporting and the minimum tax

Country-by-country reporting applies to multinational groups with consolidated revenue of at least EUR 750 million (HK$6.8 billion) operating in two or more jurisdictions. The same threshold is used by the minimum top-up tax regime introduced by the Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025, Ord. No. 21 of 2025.

An ordinary family trust structure sits far below that threshold and outside both regimes. The position of a trustee heading a group of that size is determined by the same logic as in Example 3 to the FSIE regime.

A step-by-step algorithm: how a trust with a private trust company is built

The sequence is dictated not by the target structure but by the order in which legally significant facts come into existence: first the governing law and the composition of the property, then the corporate shell, and then — only then — the trust instrument and the transfer of assets. Breaking that order produces the most expensive mistake in practice: the property has been transferred and the structure meant to hold it does not yet exist.

The algorithm below describes the fullest case — a family trust with a private trust company as trustee. For a trust with a professional trustee, steps 3 to 5 are replaced by selecting and engaging a licensed provider.

Step 1. Fix the governing law and the subject matter of the trust

Hong Kong law does not require a trust administered from Hong Kong to be governed by Hong Kong law: Cap. 76 recognises trusts governed by the law of any jurisdiction. But a Hong Kong governing law is a mandatory condition of the section 41Y protection, and without it the point of choosing Hong Kong is substantially reduced.

The composition of the property is fixed at the same step. The critical split is by location and by type of asset: Hong Kong shares and immovable property attract stamp duty on transfer, movable property abroad does not, and immovable property outside Hong Kong falls outside section 41Y altogether.

Step 2. Test the tax consequences before the transfer, not after

Stamp duty is the only material tax on the creation of a Hong Kong trust, and it is charged on market value, not on the consideration given. The calculation, on the rules set out in the previous section, is done before the trust instrument is signed. For assets outside Hong Kong, gift tax and inheritance tax are checked in the jurisdiction where the asset sits and in the settlor’s jurisdiction of tax residence — Hong Kong levies neither, but the asset’s jurisdiction may.

Step 3. Incorporate the company that will act as trustee

A private trust company is formed as an ordinary private company limited by shares under Cap. 622. A name containing the word “trust” or the characters 信託 requires the prior approval of the Registrar of Companies — the application should be lodged early, since no processing time is prescribed. The practical workaround is a name without those words.

The requirements for the company itself are standard: at least one director who is a natural person, a company secretary situated in Hong Kong, a Hong Kong registered office, and a significant controllers register (SCR) from day one. The incorporation procedure and the recurring annual duties are covered in separate materials — Hong Kong company registration and mandatory annual compliance.

Step 4. Settle the position on the TCSP licence

This is the one step at which an irreducible legal uncertainty remains in the structure, and it cannot be passed over in silence. The position is formed in writing, with a legal opinion, against the four factors in question 7 of the Companies Registry’s FAQ: undertaking a TCSP activity, advertising the activity or receiving referrals, aiming to make a profit, and carrying it out with reasonable or recognisable continuity.

The practical consequence: a private trust company serving a single family trust, receiving no remuneration and not offering services to third parties sits outside licensing on the balance of those factors — but that is a conclusion drawn from general criteria, not from an elaborated regulatory position: the one published answer on this scenario (the trust companies FAQ, question 5(a)) returns the same test without elaborating it. Any expansion — a second unrelated trust, remuneration, serving another family — changes the answer.

Step 5. Build the governance: who takes the decisions

The board of the private trust company is the effective governing organ of the trust. This is where it is decided what powers the settlor keeps. Section 41X permits the settlor to reserve investment and asset-management powers only; reserving a power to revoke the trust, to appoint trustees or to direct distributions is not protected by the section and creates a risk of the trust being attacked as a sham.

The typical construction: the settlor and family members sit on the board or on a committee attached to it; an independent director or professional adviser secures compliance with fiduciary duties; and a protector with a defined and limited list of powers is appointed by the trust instrument.

Step 6. Draft the instrument around the default rules

Cap. 29 supplies default powers, most of which yield to the expressed intention of the settlor. The mandatory minimum set of departures: extending the investment powers beyond the closed list in section 4 and the Second Schedule, adding a power to acquire land, regulating remuneration, and fixing the duration of the trust.

Only section 41W is mandatory: a clause exempting a remunerated professional trustee from liability for fraud, wilful misconduct or gross negligence is void whatever the instrument says.

Step 7. Open the bank account before the assets move

The account is opened in the trustee’s name with the trust capacity disclosed, and it is done before the property is transferred, not afterwards. Hong Kong banks apply an extended identification procedure to trust structures: the settlor, the beneficiaries, the protector and the controlling persons of the private trust company are all disclosed. The practical side of the procedure is covered in the material on corporate bank accounts in Hong Kong for non-residents.

Step 8. Transfer the assets and document them

Each class of property is transferred separately: shares by an instrument of transfer with stamp duty paid, immovable property by assignment with ad valorem duty (AVD) paid, cash by transfer into the trust account. The date of transfer is documented: it is the date from which limitation periods in challenge proceedings and the tax computations run.

Step 9. Set up the recurring obligations

Obligation	Frequency	Basis
Annual return and business registration renewal for the private trust company	annual	Cap. 622, Cap. 310
Audited financial statements of the company	annual	Cap. 622
Keeping the significant controllers register current	within 7 days of the change coming to knowledge	Cap. 622, Part 12, Division 2A
Trustee’s profits tax return	annual, where there are assessable profits	Cap. 112
CRS cla­ssifi­cation and reporting	annual	Cap. 112, Part 8A
Registration on the AEOI portal	once; existing institutions by 31 March 2027	AEOI Amendment 2026 (passed 17 June 2026)
Review of the board composition and the reserved powers	on family events	trust instrument

An indicative timeline for steps 1 to 8 is eight to sixteen weeks, with the critical path running through name approval (where the name contains the word “trust”) and the bank account opening — not through incorporation, which takes a matter of days.

Common mistakes and what they cost

Mistakes in Hong Kong trust structures almost never concern the idea of a trust — they come from importing into Hong Kong assumptions that hold in offshore common-law jurisdictions but do not hold under Cap. 29. Eight of the most frequent are set out below, each with its specific price.

Mistake 1. Assuming the trustee has a general power of investment

There is no general power of investment in Hong Kong. Section 4 of Cap. 29 and the Second Schedule contain a closed list: the 2013 reform widened it but did not abolish it. Cap. 29 confers no power to acquire land at all.

What it costs: every investment outside the list is a breach of trust. The trustee is personally liable to restore the fund to the position it would have been in but for the breach, whether or not the investment was profitable. It is cured by one clause in the trust instrument — but only in advance.

Mistake 2. Reserving too many powers to the settlor

Section 41X is headed “Reserve power of settlor”, and the heading misleads: only investment and asset-management powers are protected. A power to revoke the trust, to appoint and remove trustees, or to direct distributions is not covered by the section.

What it costs: a trust in which the settlor has in substance retained control is vulnerable to being held a sham — with every consequence that follows: the assets are treated as never having left the settlor’s estate, the protection against creditors and against forced heirship does not operate, and foreign tax consequences are recomputed on beneficial ownership.

Mistake 3. Assuming a private trust company self-evidently needs no TCSP licence

Paragraph 1(d)(i) of Part 1 of Schedule 1 to Cap. 615 defines a trust service as “acting, or arranging for another person to act — (i) as a trustee of an express trust or a similar legal arrangement”. Neither section 53B nor any subsidiary legislation carves out private trust companies, and the Companies Registry’s only published answer on the scenario — question 5(a) of its trust companies FAQ — merely repeats the “by way of business … to other persons” test without elaborating it.

What it costs: carrying on a regulated trust business without a licence is a level 6 offence — a fine of HK$100,000 and imprisonment for up to six months (section 53F). For a family structure serving a single trust without remuneration the risk is low, but it is not zero, and it calls for a reasoned written position rather than a silent assumption.

Mistake 4. Treating section 41Y as a universal forced-heirship firewall

Section 41Y protects movable property only, and lifetime transfers only. The conditions are cumulative: Hong Kong governing law expressed in the instrument, movable property, an inter vivos transfer, and every trustee being either an individual ordinarily resident in Hong Kong, or a body corporate whose central management and control is in Hong Kong, or a body corporate incorporated or established in Hong Kong.

What it costs: foreign immovable property and testamentary dispositions remain subject to foreign forced-heirship rules. A structure built for that protection but holding foreign real estate does not achieve its object — at the full cost of building it.

Mistake 5. Paying stamp duty on the consideration rather than on market value

On a transfer of Hong Kong shares or immovable property into a trust the consideration is absent or nominal. Section 27(4) of the Stamp Duty Ordinance allows such a transfer to be deemed a voluntary disposition inter vivos, and section 27(1) requires the duty to be computed on market value.

What it costs: additional duty plus a penalty measured as a multiple of the shortfall; the transfer itself remains valid, but an unstamped instrument is not receivable in evidence. For residential property above HK$100 million the rate has been 6.5% since 26 February 2026, and the difference between computing on nominal consideration and on value runs into millions.

A related mistake that costs exactly as much: failing to recite the ground of exemption in the instrument on a change of trustee. Section 27(5) exempts a transfer effectuating the appointment of a new trustee, but it operates “only if the circumstances exempting the conveyance or transfer from charge under this section are set forth in the conveyance or transfer”. An exemption the document is silent about does not apply — and an operation that should have cost HK$5 is charged on market value.

Mistake 6. Confusing Part 8 registration with a licence or with supervision

Registration of a trust company under Part 8 of Cap. 29 is voluntary and is not a form of prudential supervision: the Registrar checks capital, deposit and objects, but does not supervise the conduct of the business on an ongoing basis. It becomes mandatory only in particular regimes — for example, for a Hong Kong-incorporated corporate trustee of an ORSO scheme.

What it costs: unnecessary expense — issued share capital of HK$3,000,000 paid up in cash and a deposit of HK$1,500,000 locked into a structure that did not need registration. The converse mistake costs more: an ORSO corporate trustee without registration fails the requirements of Cap. 426.

Mistake 7. Putting the word “trust” in the company name without prior approval

“Trust” and 信託 appear in Appendix A to the Guideline on Registration of Company Names and require the Registrar’s prior approval under sections 100(2) and 108 of Cap. 622.

What it costs: not a prohibition but a delay — and a delay on the critical path. No processing time is prescribed, and until the name is settled neither account opening nor the drafting of transfer documents can begin. The practical answer is a name without those words; the trustee’s powers do not depend on what the company is called.

Mistake 8. Dissolving the private trust company without dealing with the trusteeship

The private trust company is the trustee. Striking it off does not terminate the trust and does not transfer the assets: the property remains vested in a person that no longer exists, and restoring the position requires an application to the court for a vesting order under section 45 of Cap. 29.

What it costs: a court process instead of a document, months instead of days, and assets frozen throughout. The correct order is to appoint a successor trustee and vest the property before dissolution begins; the dissolution procedure itself is covered in the material on closing a Hong Kong company.

Mistake	The provision that prevents it	The point at which it is still free to fix
Investments outside the closed list	s. 4 and the Second Schedule, Cap. 29	before the trust instrument is signed
Excessive reserved powers	s. 41X, Cap. 29	before the trust instrument is signed
No position on the TCSP licence	Schedule 1, Part 1(d)(i), Cap. 615	before the company begins to act as trustee
Relying on s. 41Y for foreign immovable property	s. 41Y, Cap. 29	when the composition of the property is settled
Stamp duty on nominal consideration	ss. 27(4) and 27(1), Cap. 117	before the instrument is presented for stamping
Unnecessary Part 8 registration	ss. 77–81, Cap. 29	before the capital and deposit are put up
A name containing “trust”	ss. 100(2) and 108, Cap. 622	before the incorporation application is filed
Dissolution without a change of trustee	s. 45, Cap. 29	before the dere­gistra­tion application is filed

Who a Hong Kong trust suits, who it does not, and when professional review is required

A Hong Kong trust is an instrument for families and structures whose centre of gravity — assets and management alike — sits in Asia, and whose requirement of the jurisdiction is a combination of common law, no estate duty and no capital gains tax, and a reputation banks accept. It is neither a tax optimisation nor a universal asset-protection device.

Who it suits

A family whose assets are largely securities, interests in operating companies and movable property rather than foreign real estate. That is exactly the composition the section 41Y protection is built for, and exactly the composition that attracts no stamp duty on transfer where the assets sit outside Hong Kong.

Structures for which perpetual duration matters. Since 1 December 2013 the rule against perpetuities does not apply to new trusts, and a trust runs for an unlimited period by default unless the instrument provides otherwise. That puts Hong Kong alongside jurisdictions where perpetual duration is achieved by special legislation.

Family offices planning to use the FIHV regime. A trust can be a family-owned investment holding vehicle and apply a 0% rate — subject to a HK$240,000,000 threshold of net assets under management, at least two qualified employees in Hong Kong and operating expenditure of at least HK$2,000,000 a year.

Settlors from forced-heirship jurisdictions whose assets are movable. Section 41Y provides express statutory protection that most common-law jurisdictions do not have.

Structures that already have an operating presence in Hong Kong. The requirements as to central management and control, employees and expenditure are met in passing rather than manufactured.

Who it does not suit

Anyone whose principal object is to reduce tax on income. A trust in Hong Kong is not a separate taxpayer and gives no rate below the ordinary one: the trustee pays profits tax at 16.5% (corporate) or 15% (unincorporated), and both the territorial principle and the FIHV regime are available without a trust.

Owners whose principal asset is foreign real estate. Section 41Y does not reach it, forced-heirship rules of the situs survive, and the structure adds cost without the corresponding result.

Anyone expecting to retain full control of the assets. Section 41X protects investment powers only. A settlor unwilling to give up the power to revoke the trust and to direct distributions will end up with a structure vulnerable to being held a sham.

Structures below the threshold of economic sense. A private trust company needs directors, a secretary, an office, an audit and annual compliance; at a modest asset level a professional trustee is cheaper and safer.

Anyone who needs anonymity. There is no register of trusts in Hong Kong, but the private trust company’s significant controllers register is kept and produced to law enforcement on demand, and banks disclose the settlor, the beneficiaries and the controlling persons under CRS.

When professional review is mandatory

Situation	What is reviewed	Why it cannot be settled unaided
A private trust company as trustee	the position on the TCSP licence	the regulator’s only published answer returns the general test without elaborating it; the conclusion is built from four factors and needs a written opinion
Settlor or beneficiaries resident in a jurisdiction with CFC rules or gift tax	tax consequences outside Hong Kong	Hong Kong levies nothing, but the transfer may be a taxable event in the jurisdiction of residence
Hong Kong shares or immovable property are settled into the trust	computation of stamp duty on market value	rates, exemptions and valuation differ by class of property; the error is measured against the value of the asset
The FIHV regime is to be used	compliance with the thresholds and the structure	a trust can be an FIHV, but the family office must be a private company — the inverse construction does not work
The trustee sits within a multinational group	FSIE, country­-by­-country reporting, minimum tax	the chargeable entity is the trustee, not the trust
An ORSO or MPF scheme	mandatory registration or approval of the trustee	the trustee requirements of Cap. 426 and Cap. 485 are mandatory
An existing trust created before 1 December 2013	whether the rule against perpetuities and the former powers apply	the 2013 reform does not operate retro­specti­vely across all provisions

The general rule: the more elements of the structure sit outside Hong Kong, the less weight Hong Kong law carries and the earlier a review is required in each jurisdiction touched.

If you are considering a trust or a private trust company in Hong Kong — start with an assessment of the structure and the jurisdiction: the order of steps, the documents required and the tax consequences all depend on the composition of the property and the residence of the participants, and they should be settled before the first asset moves.

Frequently asked questions

Is a trust a separate taxpayer in Hong Kong? No. Section 2 of the Inland Revenue Ordinance brings the trustee within the definition of “person”; the trust itself is not a person for tax purposes. Profits tax is paid by the trustee: 16.5% for a corporate trustee and 15% for an unincorporated one, on the territorial basis of charge.

Does a private trust company need a TCSP licence? Hong Kong law gives no direct answer. Paragraph 1(d)(i) of Part 1 of Schedule 1 to Cap. 615 covers acting as a trustee of an express trust, section 53B contains no carve-out for private trust companies, and the Companies Registry’s only published answer — question 5(a) of its trust companies FAQ (revised 9 May 2018), which describes in terms a company whose sole purpose is to act as trustee of a private family trust, “with or without fees” — merely repeats the “by way of business … to other persons” test. There is no guidance elaborating that test and no enforcement precedent. The conclusion is built from the four factors in question 7 of the Registry’s FAQ: undertaking a TCSP activity, advertising the activity or receiving referrals, aiming to make a profit, and carrying it out with reasonable or recognisable continuity.

Is there estate duty in Hong Kong? No. Estate duty was abolished by the Revenue (Abolition of Estate Duty) Ordinance 2005, Ord. No. 21 of 2005: gazetted on 11 November 2005 and in force from 11 February 2006. For deaths occurring before that date, Cap. 111 continues to apply.

How long can a Hong Kong trust last? For trusts created on or after 1 December 2013 the rule against perpetuities is abolished: there is no limit on duration unless the trust instrument provides otherwise. Trusts created earlier keep the former regime with its 80-year option. The 21-year restriction on accumulation of income is retained for charitable trusts.

Can the settlor keep control over the trust’s investments? Yes, but narrowly. Section 41X protects investment and asset-management powers only. Reserving a power to revoke the trust, to appoint and remove trustees or to direct distributions is not protected by the section and raises the risk of the trust being held a sham.

Does a trust have to be registered in Hong Kong? No. There is no register of trusts in Hong Kong, and creating a trust requires neither registration nor notification. Registration duties attach to the company acting as trustee — under Cap. 622, including the significant controllers register — not to the trust.

What stamp duty arises on settling assets into a trust? It depends on the class of property. A transfer of Hong Kong shares is charged at 0.2% of market value plus HK$5; immovable property is charged on the ad valorem scale, where the rate for property above HK$100 million has been 6.5% since 26 February 2026. Cash and property outside Hong Kong attract no duty. Section 27(1) of the Stamp Duty Ordinance requires the duty to be computed on market value rather than on the consideration given.

Can a trust use the FIHV regime and its 0% rate? Yes. The definition of “entity” in the FIHV regime expressly includes a trust, a discretionary trust included. The conditions are at least 95% of the beneficial interest held by members of one family, net assets under management of not less than HK$240,000,000, at least two qualified employees in Hong Kong and expenditure of not less than HK$2,000,000 a year. The managing family office, by contrast, must be a private company — it cannot be a trust.

Key takeaways

•          Cap. 29 is in the version consolidated on 23 May 2025; there has been no substantive trust-law reform in Hong Kong since 2013. Every key provision — sections 3A, 41Q–41V, 41W, 41X, 41Y and 40A–40D — was introduced by the Trust Law (Amendment) Ordinance 2013, in force from 1 December 2013.

•          There is no general power of investment in Hong Kong. Section 4 and the Second Schedule are a closed list; the Ordinance confers no power to acquire land. The powers are extended by the trust instrument.

•          Section 41W is mandatory and wider than usually assumed: it bars not only exoneration but also an indemnity out of the trust property. It applies only to a trustee who both acts professionally and is remunerated, and it does not apply to approved trustees of MPF schemes.

•          Section 41X protects the settlor’s investment powers only, and section 41Y protects only movable property transferred inter vivos, under a Hong Kong governing law and with every trustee having a Hong Kong connection.

•          The rule against perpetuities is abolished for trusts created on or after 1 December 2013 — subject to two exceptions in section 3(1A) of Cap. 257: wills executed before that date, and instruments made in exercise of a special power of appointment created earlier.

•          Registration of a trust company under Part 8 of Cap. 29 is voluntary and is not supervision. The requirements are HK$3,000,000 of share capital paid up in cash and a HK$1,500,000 deposit; registration becomes mandatory only in particular regimes, ORSO among them.

•          The regulator has posed the private trust company question in its trust companies FAQ but answered it with the general test, without elaborating it. The penalty for unlicensed activity is HK$100,000 and up to six months’ imprisonment.

•          The trust is not the taxpayer; the trustee is. The rates are 16.5% and 15%; Hong Kong has no estate duty, no capital gains tax, no gift tax and no withholding tax on dividends and interest.

•          The only material tax on creating a trust is stamp duty, computed on the market value of Hong Kong shares and immovable property.

•          A trust can be an FIHV at 0%; a family office cannot — it must be a private company.

Summary

A trust in Hong Kong is governed by the Trustee Ordinance (Cap. 29) of 1934, in the version consolidated on 23 May 2025; the substantive changes were made by the Trust Law (Amendment) Ordinance 2013 (Ord. No. 13 of 2013), in force from 1 December 2013. The Ordinance imposes a default statutory duty of care (section 3A), a closed list of permitted investments (section 4 and the Second Schedule), a mandatory prohibition on exempting a remunerated professional trustee from liability for fraud, wilful misconduct and gross negligence (section 41W), narrowly drawn reserved investment powers for the settlor (section 41X), and protection of lifetime transfers of movable property against foreign forced-heirship rules (section 41Y). The rule against perpetuities does not apply to trusts created on or after 1 December 2013. There is no register of trusts in Hong Kong, and registration of a trust company under Part 8 of Cap. 29 is voluntary, requiring HK$3,000,000 of paid-up capital and a HK$1,500,000 deposit. The position of a private trust company under the TCSP licensing regime in Cap. 615 has been posed by the regulator as a question and answered with the general “by way of business … to other persons” test, which is not elaborated for a PTC. A trust is not a taxpayer: profits tax is paid by the trustee at 16.5% or 15%; Hong Kong has no estate duty, no capital gains tax and no gift tax; and stamp duty is payable on the market value of Hong Kong shares and immovable property settled into the trust. A trust can be a family-owned investment holding vehicle (FIHV) taxed at 0%, whereas the managing family office must be a private company.

Sources

Primary sources — legislation, regulators and official guidance.

1.        Trustee Ordinance (Cap. 29) — Hong Kong e-Legislation, Department of Justice

2.        Cap. 29, section 41W “Trustee is not exempted from liability for breach of trust”

3.        Cap. 29, section 41X “Reserve power of settlor”

4.        Cap. 29, section 41Y “Transfer of movable property not affected by foreign law of inheritance”

5.        Cap. 29, section 45 “Vesting orders”

6.        Cap. 29, section 60 “Power to relieve trustee from personal liability”

7.        Trust Law (Amendment) Ordinance 2013, Ord. No. 13 of 2013 — Legislative Council

8.        Report of the Bills Committee on Trust Law (Amendment) Bill 2013 — Legislative Council

9.        Legislative Council Brief: Trustee Ordinance (Chapter 29)

10.    Trust Law (Amendment) Bill 2013 — Legislative Council

11.    Perpetuities and Accumulations Ordinance (Cap. 257)

12.    Recognition of Trusts Ordinance (Cap. 76)

13.    Hague Trusts Convention 1985: status table — HCCH

14.    Hague Trusts Convention 1985: territorial extensions — HCCH

15.    Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615)

16.    Guideline on Licensing of Trust or Company Service Providers, May 2025 — Companies Registry

17.    Licensing requirements for trust or company service providers: FAQ, June 2023 — Companies Registry

18.    Frequently Asked Questions: Trust Companies — Companies Registry

19.    Companies Registry guidelines, including the Guideline on Registration of Company Names and the Guideline on the Keeping of Significant Controllers Registers

20.    Companies Ordinance (Cap. 622)

21.    Licensing Handbook, July 2025 — Securities and Futures Commission

22.    Do you need a licence or registration? — Securities and Futures Commission

23.    Periodic reports and surveys, including the Asset and Wealth Management Activities Survey — Securities and Futures Commission

24.    Supervisory Policy Manual TB-1 “Regulation and Supervision of Trust Business” — Hong Kong Monetary Authority

25.    List of Authorized Institution-related Trustees — Hong Kong Monetary Authority

26.    Mandatory Provident Fund Schemes Ordinance (Cap. 485)

27.    Guidelines I.1: approval of MPF trustees — MPFA

28.    Register of MPF approved trustees — MPFA

29.    Occupational Retirement Schemes Ordinance (Cap. 426)

30.    Inland Revenue Ordinance (Cap. 112)

31.    Foreign-sourced Income Exemption — Inland Revenue Department

32.    FSIE: illustrative examples — Inland Revenue Department

33.    Tax Concessions for Family-owned Investment Holding Vehicles — Inland Revenue Department

34.    Tax Guide for Charitable Institutions and Trusts of a Public Character — Inland Revenue Department

35.    Departmental Interpretation and Practice Notes: index — Inland Revenue Department

36.    Guidance for Financial Institutions: automatic exchange of information — Inland Revenue Department

37.    AEOI Guidance, Chapter 17 “Treatment of Trusts” — Inland Revenue Department

38.    Stamp Duty Ordinance (Cap. 117)

39.    Stamp Office Interpretation and Practice Notes No. 1 — Inland Revenue Department

40.    Stamp Office Interpretation and Practice Notes No. 4 — Inland Revenue Department

41.    Stamp Office Interpretation and Practice Notes No. 8 — Inland Revenue Department

42.    Rates of stamp duty on transfer of Hong Kong stock — Inland Revenue Department

43.    FAQ on ad valorem stamp duty — Inland Revenue Department

44.    Estate Duty Ordinance (Cap. 111)

45.    Companies (Amendment) (No. 2) Ordinance 2025, Ord. No. 14 of 2025 — Legislative Council

46.    Who can apply for registration as a trust company — Companies Registry

47.    Companies Registry Annual Report 2024-25: business review — Companies Registry

48.    Profits tax rates — Inland Revenue Department

49.    FAQ on two-tiered profits tax rates — Inland Revenue Department

50.    Estate duty: abolition and transitional provisions — Inland Revenue Department

51.    Stamp duty: overview and intra-group relief — Inland Revenue Department

52.    Stamp duty rates — Government of the HKSAR

53.    Inland Revenue (Amendment) (Taxation on Foreign-sourced Disposal Gains) Ordinance 2023 — Inland Revenue Department

54.    Inland Revenue (Amendment) (Automatic Exchange of Information) Bill 2026 — Inland Revenue Department

55.    Crypto-Asset Reporting Framework (CARF) — Inland Revenue Department

56.    Gazettal of the Inland Revenue (Amendment) (Preferential Tax Regimes …) Bill 2026, 12 June 2026 — Government of the HKSAR

57.    Supervisory Policy Manual TB-1: banking regulatory document repository record — Hong Kong Monetary Authority

58.    Asset and Wealth Management Activities Survey — Securities and Futures Commission

59.    Companies Registry statistics for the first half of 2026, 17 July 2026 — Government of the HKSAR

60.    Cap. 29, section 3A “Statutory duty of care”

61.    Cap. 29, section 4 “Authorized investments”

62.    Cap. 29, Second Schedule “Authorized Investments”

63.    Cap. 29, Third Schedule “Application of Statutory Duty of Care”

64.    Cap. 29, section 41R “Interpretation of Part 4B”

65.    Cap. 29, section 41T “Remuneration of trustees other than under instrument creating trust”

66.    Cap. 29, section 77 “Application by company to be registered as a trust company”

67.    Cap. 29, section 81 “Objects”

68.    Cap. 29, section 89 “Trust funds to be kept separate”

69.    Administration of Trust Funds Rules (Cap. 29A)

70.    Cap. 257, section 3 “Application”

71.    Cap. 257, section 3A “Rule against perpetuities etc. have no effect”

72.    Cap. 257, section 3B “Restriction on accumulations for charitable trusts”

73.    Cap. 257, section 3C “Rule as to duration of non-charitable purpose trust not affected”

74.    Cap. 76, section 2 “Applicable law and recognition of trusts” and the Schedule containing the Convention text

75.    Cap. 615, Schedule 1: the definition of “trust or company service”

76.    Cap. 615, section 53B “Disapplication”

77.    Cap. 615, section 53F “Offence of carrying on trust or company service business without licence”

78.    Cap. 29, sections 40A to 40D: change of trustee on the beneficiaries’ directions

79.    Cap. 117, section 27 “Voluntary dispositions”

80.    Cap. 117, section 29A: the definition of “agreement for sale”

Disclaimer

This material is provided for information only and does not constitute legal, tax, financial, investment or consulting advice. Before taking any decision, individual professional advice should be obtained, taking into account the specific situation, jurisdiction, status of the company and the current requirements of the regulators.

Date of publication: September 2026.