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I hold a Hong Kong employment visa and want to start freelancing…

As a foreign national temporarily resident in Hong Kong on a sponsored employment visa, there are a number of different compliance issues that need to be addressed if you lose your job and you fancy embarking down the path of freelancing on your own behalf.

QUESTION

I have work permit granted to me (I was hired as a professional here in Hong Kong in my last employment).

Now, I am in job transition and I would like to do some freelance. 

Must I form a company here in order for me to do business with clients?

Can I issue invoice under my personal name, without a registered company here in Hong Kong?

ANSWER

There are two critical elements to this question that I propose that I deal with in order of priority, in terms of the difficulty associated with achieving the compliance outcome, but in the grand scheme of things they’re equally as important as the other because if you don’t take care of either of these components, you’ll be out of compliance and you may find yourself at odds with the authorities.

Firstly, just to deal with the question about the issuing of invoices – in Hong Kong, if you wish to carry on a business, irrespective of your immigration status, you need to be registered with the Inland Revenue Department, which means that you have to make a decision as to the kind of business vehicle that you want to use, either a sole proprietorship, incorporate a limited liability company locally, or enter into a partnership with another party, or indeed register a company that you may own indirect in another jurisdiction, that you report its presence to the registrar of companies here and go through a registration exercise to establish that entity in Hong Kong. But either way, you need to have a business vehicle and that business vehicle needs to be formally registered with the Inland Revenue Department through the issuance of a business registration certificate; and once you have a business registration certificate, you’re effectively then enabled to start carrying on a business.

So until you have that business registration certificate completed, then you are not allowed to carry on a business, therefore you can’t issue any invoices under your personal name. So, you just need to make a determination as to which business vehicle you prefer to use, and whilst I’m an immigration guy with a legal background, it’s kind of beyond the scope of the advice that we give as to the type of business vehicle that you might want to choose and the benefits, the advantages and the disadvantages accordingly. But certainly get your entity registered with the Inland Revenue Department and get yourself a business registration certificate so that will put that to bed.

The whole question of what is permitted activity whilst you’re here as a sponsored employee under the General Employment Policy as a professional, because your permissions to remain in Hong Kong are directly connected to you continuing to do the work for the employer sponsor, that underpinned your employment visa permissions.

So the moment that you stop working for that particular employer effectively in terms of ongoing employment and/or commercial activity in your own right, all bets are off until you approach the Immigration Department and make an application to the director of immigration to join in or establish a new business which takes the form of an investment visa application.

So in your situation, you’d have to make an application for an investment visa under the change of category manoeuvre, taking you from sponsored employment with a third party employer through to business investment in your own right. And the consents that you need under the business investment visa are in a sense quite challenging to get for one man businesses or freelancers because the approvability test for the investment visa is that you need to show that you’re in a position to make a substantial contribution to the economy of Hong Kong; and typically, by definition that means that one-man businesses are not going to by in of themselves represent the possibility of substantial contribution because typically there’s only one person benefiting; and I’ve written and posted quite a lot about the investment visa for freelancers and one-man businesses previously, so I’ll refer you to the various links appended to this post that will allow you to embark down that journey of discovery.

In a nutshell, the bottom line and the key message is that you’re not allowed to engage in any independent freelance activity until you’ve secured the permission of the Immigration Department irrespective of which business vehicle you choose to use. Um, but a necessary precondition to approval is that you do have a business vehicle that’s registered within the Inland Revenue Department.

Okay, I hope this helps.

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