Living in Hong Kong: a territorial tax, salaries taxed from 2 % to 17 %

In Hong Kong, taxation follows the source of income. The Income Revenue Department (IRD) taxes profits and salaries that originate in or are derived from Hong Kong, as well as the income of property owners located in Hong Kong. Salary tax is calculated in two ways, and the lower of the two amounts is payable: a progressive scale from 2 % to 17 %, or a standard rate of 15 % followed by 16 %. No inheritance tax is payable on deaths since February 11, 2006. This page does not address the tax treatment of employment partly performed outside Hong Kong, nor the mandatory pension fund: the IRD notes on tax treatment and the relevant pages of the Public Management and Finance Act (MPFA) could not be consulted.

A tax that follows the source of income

The IRD guide "A Brief Guide to Taxes" (2025-2026 edition, October 2025) sets out the principle for three taxes.

The rule for attributing a salary earned partly outside Hong Kong is found in the law and in the IRD notes, which we were unable to consult.

Payroll tax: the lower of two calculations

The IRD's PAM 39 guide (May 2026) states that tax is "chargeable on the smaller of" two amounts. The first applies a progressive tax scale to net taxable income, that is, total income less deductions and allowances. The second applies the standard rate to total net income before allowances.

The standard rate is 15 % on the first HK$ 5,000,000 of net income and 16 % thereafter, starting in year 2024/25.

Tax allowances: two IRD documents diverge. The guide "A Brief Guide to Taxes" (October 2025, p. 26) indicates, in its "2025/26 onwards" column, a basic allowance of HK132,000. Table PAM 61, which is marked "August 2026," shows a column at HK145,000 for the same allowance, the year of application of which could not be determined. We are not making a determination or using any allowance amount: the amount applicable to your year can be found on the IRD website.

The tax year ends on March 31 and begins on April 1.

What the IRD says about earnings, dividends and real estate

The same guide provides four key points for wealth preservation. These are taken from a summary of the guide: reread the cited pages before taking action.

• Capital gains. Profits from the sale of capital assets are excluded from the tax on profits (p. 1).
• Dividends. Dividends from a Hong Kong company subject to corporate income tax are excluded from the beneficiary's taxable profits (p. 4). The guide does not address withholding tax on dividends.
• Interests. Interest on deposits with an authorized institution in Hong Kong is exempt (p. 6).
• Real estate. Property tax is 15 % of the net taxable value, after a standard deduction of 20 % for repairs and charges (p. 21).

Corporations are subject to a corporate income tax of 16.5%, reduced to 8.25% on the first HK$2,000,000. Unincorporated businesses are taxed at 15%, or 7.5% on the first HK$2,000,000 (p. 2). The guide also mentions a foreign-source income regime for certain disposals of entities within multinational groups.

Hong Kong resident: 180 days, or 300 days over two years

Two documents specify a threshold of days. The Franco-Hong Kong agreement, in its protocol (§ 5), considers a person to be a resident if they stay in Hong Kong for more than 180 days during a tax year, or more than 300 days over two consecutive tax years, including the year in question. The IRD's page on the automatic exchange of information uses the same measure, as well as a person who "ordinarily resides in Hong Kong," a concept it does not define.

These texts serve to determine residence for the purposes of the agreement and automatic exchange. They do not replace Hong Kong tax law regarding your income tax.

No inheritance tax since February 11, 2006

The IRD guide indicates that no inheritance tax (estate duty) applies to deaths occurring on or after February 11, 2006 (p. 35). The Franco-Hong Kong agreement, however, does not include any provisions regarding inheritance: the official list classifies it as "IR – IF". This page does not address the transfer of assets in France.

Health and social protection

The CLEISS, a French public international social security organization, addresses Hong Kong under "The exception: Hong Kong" on its page about China: health insurance there is entirely state-funded, without employer or employee contributions. The page is undated (it includes references to 2024). It makes no mention of the mandatory pension fund or any agreement with France.

And what about France?

Living in Hong Kong does not automatically remove you from your French tax domicile, which is based on three alternative criteria: your primary residence or place of residence, your main professional activity, and your center of economic interests. The tax authorities state: "It is sufficient that one of these criteria is met." If both territories consider you a resident, Article 4 § 2 of the agreement determines the outcome in the following order: your permanent home, your center of vital interests, your habitual residence, your nationality for France or your right of residence for Hong Kong, and finally, the agreement of the authorities. The rules of the agreement are detailed on our dedicated page.

A salary of HK1,200,000: a numerical example (fictitious profile)

Situation. A hypothetical manager earns HK$1,200,000 in salary in Hong Kong. Assumptions made for this example: no deductions, therefore a total net income of HK$1,200,000; and, after allowances, a net taxable income of HK$1,000,000. This second amount is hypothetical and does not include any allowances.

Issue. He compares the progressive scale to the standard rate without knowing which one applies.

Strategy. He calculates both amounts, then retains the lower one, as provided for in the PAM 39 guide.

Result. The progressive tax on HK$1,000,000 is HK$152,000 (1,000 + 3,000 + 5,000 + 7,000 on the first four brackets, then 17% on HK$800,000). The standard rate tax is HK$180,000 (15% on HK$1,200,000). The amount due is HK$152,000 before any tax reductions. The result changes with the actual net taxable income, which depends on applicable allowances.

What changes depending on your situation

• The location where your job is performed, and the portion performed outside of Hong Kong.
• Your family situation, which is taken into account in the tax allowances.
• The nature of your income: salary, profits, rent.
• The number of days spent in Hong Kong in each tax year.
• Your French tax residence, which is assessed separately.

A specific case is examined based on the facts of the file. No result is announced in advance.