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Hong Kong tax treaty and FATCA status

Hong Kong does not appear in the IRS treaty list, but it does appear in the Treasury FATCA table. The IRS description of income tax treaties and the saving clause is summarized here as well.

Hong Kong in the two federal lists

The IRS A-to-Z page lists countries with U.S. income tax treaties, and Hong Kong does not appear in that list. Treaty treatment can vary by country and income item.[4]

The Treasury FATCA table lists Hong Kong with status In Force and identifies the intergovernmental agreement as Model 2.[3]

Hong Kong's FATCA agreement is separate from an income tax treaty.[3]

What the IRS says an income tax treaty does

The IRS describes treaty provisions as changing tax treatment for specified income between the United States and another country. Foreign country residents, whether or not citizens, may receive reduced U.S. tax rates or exemptions for certain income from U.S. sources under a treaty. U.S. residents or citizens may receive reduced foreign tax rates or exemptions on certain income from foreign sources under the same treaties.[4]

The IRS says that if a treaty does not cover an income type, or if no treaty exists between the United States and the relevant country, tax is paid under the applicable U.S. return instructions and rates.

The Treasury FATCA entry

Treasury describes FATCA as requiring foreign financial institutions to report information to the IRS about accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Treasury says institutions may register directly with the IRS to comply with FATCA rules or comply through intergovernmental agreements treated as in effect in their jurisdictions.[3]

An intergovernmental agreement provides a framework for financial institutions in a jurisdiction to comply with FATCA. Treasury identifies Hong Kong's arrangement as Model 2 and marks its status In Force. That information concerns FATCA reporting by financial institutions, not a treaty change to an individual's income tax treatment.[3]

Reading the lists as a U.S. citizen

For Hong Kong, the IRS list has no Hong Kong entry and Treasury gives a Model 2, In Force entry.[3][4]

In more detail

The IRS also describes a saving clause in most income tax treaties. It says the clause preserves U.S. taxation of the worldwide income of U.S. citizens and residents, as if the treaty had not come into effect, subject to listed exceptions. The IRS separately states that income not covered by a treaty, or income where no treaty exists between the country and the United States, is taxed under the applicable U.S. return instructions and rates.[4]

Worked illustrations

Considering foreign-source income

Under income tax treaties, U.S. residents or citizens may qualify for reduced foreign tax rates or exemptions on certain income from foreign sources. The IRS also says the treatment varies by country and income item.[4]

Reading Hong Kong's FATCA row

Treasury lists Hong Kong's FATCA intergovernmental agreement as Model 2 with In Force status.

Related reading

See also Hong Kong information exchange and U.S. trust reporting and Hong Kong Profits Tax and Foreign Trust Reporting.

Questions and answers

Does the IRS treaty list show a U.S. income tax treaty for Hong Kong?

Hong Kong does not appear in the IRS A-to-Z treaty list. The IRS says that when no treaty exists between the United States and the relevant country, income is taxed under the applicable U.S. return instructions and rates.[4]

What does Treasury list for Hong Kong under FATCA?

Treasury lists Hong Kong as In Force and identifies the agreement as Model 2. This is a FATCA intergovernmental agreement entry, separate from the IRS income tax treaty list.[3]

What does an income tax treaty do according to the IRS?

The IRS says treaties can provide reduced rates or exemptions for certain income, depending on the country and income item. Its description covers foreign residents with U.S.-source income and U.S. residents or citizens with foreign-source income.[4]

What does the FATCA agreement entry describe?

Treasury says FATCA requires foreign financial institutions to report information about specified financial accounts to the IRS. It describes intergovernmental agreements as one way institutions comply with FATCA in their jurisdictions.[3]

Related glossary terms

  • Treaty rate table: A treaty rate table summarizes income categories and tax rates or exemptions under U.S. income tax treaties.
  • Tax residence: Tax residence describes a person's status in a country for tax purposes. Treaty texts address how it affects income items and applicable treaty requirements.
  • Foreign grantor trust: A foreign grantor trust is a foreign trust treated as owned by a grantor, often a U.S. person. Ownership brings Form 3520 and Form 3520-A reporting duties.

Related articles and guides

  • Seychelles and U.S. tax treaty information: The IRS income tax treaty list and Treasury's FATCA table show what applies to Seychelles for U.S. citizens, and treaty rules vary by income item and country.
  • Guernsey and U.S. tax agreements: Guernsey's entries in the IRS treaty list and the Treasury FATCA table, including its Model 1 status, and what both mean for U.S. citizen readers today.
  • Belize and U.S. tax treaty and FATCA lists: Belize appears on neither the IRS treaty list nor the Treasury FATCA table. A treaty and a FATCA agreement are different instruments for U.S. citizens.

Tools and official documents

  • FATCA agreement lookup: Look up any jurisdiction in the U.S. Treasury FATCA table and see its agreement model and status as the Treasury lists them, with a link to the source.
  • IRS form finder: Search form reference pages by keyword or number. Each result has a one-line description, and matches run across form titles and numbers, plus descriptions.
Sources and data notes
  1. Inland Revenue Department, Government of the Hong Kong Special Administrative Region, Profits Tax. https://www.ird.gov.hk/eng/tax/bus_pft.htm. Retrieved .
  2. Inland Revenue Department, Government of the Hong Kong Special Administrative Region, Automatic Exchange of Financial Account Information. https://www.ird.gov.hk/eng/tax/dta_aeoi.htm. Retrieved .
  3. U.S. Department of the Treasury, Foreign Account Tax Compliance Act: agreements and understandings by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  4. Internal Revenue Service, United States income tax treaties, A to Z. https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z. Retrieved .
  5. Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
  6. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .

Dates in this block record when each source was read for this page.