How to Legally Transfer Assets out of China?

Learn How to Transfer Money back to Your Country

With China’s reform and opening policy since 1978, many foreign companies and foreigner individuals have come to China to invest, including property purchase. If you are one of them, and currently consider selling the property to remit the profits out of China, it is always best to figure out the issues involved in advance.

For example, is there any difference between a foreign owner and a Chinese owner in the process of selling a house? What problems will be involved in the process of selling a house? And most importantly, how can money be legally repatriated overseas? 

As we know, each Chinese citizen has a foreign exchange limit equivalent to $50,000 US dollars a year for daily needs (travel, study abroad, etc.), with corresponding proof materials required. For foreigners, it is limited to exchange 500 US dollars per day without any documents required but it is allowed to make foreign exchange purchases and transfers to overseas accounts without amount limitation through bank transfer one time, as long as it is legal income after tax within China (including property transfer) by showing proof,

First, with regard to the property transfer for foreigner or residents of Hong Kong, Macau and Taiwan, there are three cases applicable:

Property transfer of foreigners or residents of Hong Kong, Macao and Taiwan

(Applicants should be foreigners or residents of Hong Kong, Macao and Taiwan when buying and selling the property)

Key takeaways:

1. The maximum transferable amount is equal to the online registered transaction price minus the tax amount payable as the seller (Personal Income Tax and VAT). Therefore, online registered transaction price must be carefully taken into account.

2. The approval letter can only be issued once. In case of any error, the relevant government department will not reissue it.

3. The funds must be transferred to the overseas accounts at one time, not in batches before the end of year after obtaining the approval. .

4. After obtaining the approval letter, according to the operating procedures of each bank and whether they have practical experience, the transfer can usually take between 1 to 7 days.

5. There are no restrictions on the number of property sales for each person

Property transfer during Immigration

(The applicant is the domestic resident of the applying city when the house was purchased, and now is a permanent resident of a foreign country, or foreign citizen or a permanent resident of Hong Kong, Macao or Taiwan after the property was sold).

Key takeaways:

1.Submit the application with complete information. The approval letter should be issued within 20 working days. It will take effect on the issuing date and the validity period is 15 days within which the foreign currency exchange and transfer must be completed; after the 15 days the approval letter will expire.


2.The maximum transferable amount is equal to the online registered transaction price minus the tax amount payable as the seller (Personal Income Tax and VAT). Therefore, the online registered transaction price must be taken into account carefully.


3.Before the immigration, the applicant must be the resident of the application city (for example, if applying in Beijing for the property in Beijing, then the applicant must be Beijing resident).

Transfer of inherited property

(the applicant must be foreigner and the decedent a resident of the application city)

 Key takeaways:

1.Submit the application with complete information and the approval letter should be issued within 20 working days. It should take effect on the issuing date and the validity period is 15 days within which the foreign currency exchange and transfer must be completed, after the expiration is invalid).


2.The maximum transferable amount equals the online registered transaction price (inherited share) minus the taxes amount payable as the seller (Personal Income Tax and VAT). Therefore, the online registered transaction price must be taken into account carefully.


3.The decedent must be the resident of the application city (for example, if the inheritor is applying in Beijing, then the decedent must have been a Beijing resident).

The transfer of assets for foreign companies

The transfer of assets for foreign companies is much more complicated than personal assets. Here is a quick overview of it and we encourage you to contact us for any questions you might have.

1.The materials prepared during the transaction are different. In addition to a lot of basic documents, you may need shareholders’ resolutions that give approval (green light) to sell the property, power of attorney, etc.…


2.Tax payment in holding property and tax payment during transaction process are different. During the period of property holding, property tax and land use tax must be paid annually. In case the payment is deferred, the Tax Bureau will impose delay charges and penalty fines. The taxes in the transaction involve land value tax and stamp duty.


3.Foreign-funded companies are divided into those with domestic branches & domestic bank accounts and those without domestic branch and company accounts. Those without domestic company accounts also involve issues such as how to collect payment, pay taxes and make the international wire transfer.

Property and fund transfer have the characteristics of long transaction cycles and complicated processes, involving the Title Registration Bureau, various tax authorities, notary offices, banks, etc. All processes are interconnected, and no link can be faulty. Once a process is not handled properly, it will delay the schedule, not to mention the risk of contract breach and failure to repatriate money out of China. It is recommended to make a plan in advance and entrust professional assistance.

 

 

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About Marketing

I am living in China since 2007. I am sharing my experiences for other expatriates to make their stay in Beijing more enjoyable. As I am writing this blog for SCOUT Real Estate agency, I am also computing updates about the Real Estate market in Beijing, not only on residential properties, but as well on commercial locals and offices. Hope you enjoy your reading!