Is a Hong Kong private limited company equivalent to a SARL or an SAS?
Following several tax audits and inspections,administration determined that a Hong Kong-based company was conducting business in France and issued a tax assessment to its individual shareholder.
The Administrative Court of Appeal, which heard the case, having concluded that business activity did indeed take place in France, was thus required to determine the tax treatment of that activity by determining to which type of French company the Hong Kong company should be equated.
The Court will then note that the company was incorporated as a "private company limited by shares" and that, under Hong Kong law, the liability of such companies is limited to their capital contributions, just as it is for limited liability companies (LLCs) and simplified joint-stock companies (SASs).
She will then point out that the company’s articles of incorporation“reproduce the standard provisions of the model articles of incorporation, derived from Chapter 32 of the Companies Act, some of which are incapable of governing, in terms of formation and operation, the situation of sole membership that characterized the company during the fiscal years and years at issue.”
The Court will then rule that "the adoption of such model articles of incorporation thus reveals that Asiexa Ltd was not incorporated in accordance with the statutory flexibility characteristic of simplified joint-stock companies under French law." It thereby treats the company as a limited liability company (SARL) under French law.
Since the company has only one shareholder and has not opted for corporate income tax, the Court held thatadministration indeed entitled to conclude that the company’s profits were taxable in the hands of its sole shareholder.
The tax assessment is therefore confirmed.
CAA Nancy, Dec. 18, 2025, No. 24NC01503
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