Our Partner Mathew Liu provided a full-day training course to senior property managers and officers on mediation in the contexts of water seepage and disputes in multi-storey buildings.
The training course was co-organized by the Department of Justice and the Food and Environmental Hygiene Department (FEHD), via the Joint Mediation Helpline Office, in promotion of the firm belief on the vital role of alternative dispute resolutions among neighbors.
This course was also one of the first property management training course after the implementation of new procedures for investigating water seepage in private buildings by the Joint Office by FEHD and the Buildings Department on 16 July 2026. The new procedures involves expedited investigation, wider use of technology and prosecution power. Property management companies, alongside owners and stakeholders, are keen on receiving regulatory, legal and expert support in this regard.
SFKS is experienced in advising on all ranges of property and land disputes, for instance, water seepage and leakage, building management, tenancy and conveyancing disputes.
SFKS is honoured to be named as Finalist in 7 categories of ALB Hong Kong Law Awards 2026 by Thomson Reuters.
- GBA Law Firm of the Year (Hong Kong)
- Real Estate Law Firm of the Year
- Private Wealth Law Firm of the Year
- Labour and Employment Law Firm of the Year
- Transportation and Logistics Law Firm of the Year
- Corporate Citizenship Law Firm of the Year
- Dispute Resolution Lawyer of the Year (Roy Leung,Managing Partner)
SFKS is deeply grateful for these nominations, and shall continue with our solemn pledge to serve clients respectfully, apply law professionally and render work effectively. We also congratulate all finalists and peers in the legal profession.
SFKS is pleased to announce a successful outcome for our client before the District Court in Tang Chau Ming v Tang Sze Yuen [2026] HKDC 1107. On 22 June 2026, Deputy District Judge Alfred Cheng dismissed the Plaintiff’s claims for defamation and malicious falsehood against our client, the Defendant.
The dispute arose from the management of a Chinese customary law family arrangement known as Yuen Pak Tso (元柏祖) (the “Tso”) and its land in Yuen Long. The Plaintiff, who served as the elected manager of the Tso, alleged that a “Meeting Summary” distributed by our client during an ancestral worship gathering contained defamatory words. In the Plaintiff’s case, the words in question suggested that the Plaintiff had breached his fiduciary duties and acted dishonestly by secretly renting out Tso land to his own sole proprietorship business, Heng Hing Development Co. The Plaintiff sought substantial damages and an injunction.
After a 4-day trial, the Court evaluated the natural and ordinary meaning of the words and determined that they were defamatory in nature. While the Court rejected the defence of justification—finding the statements to be factually incorrect based on the evidence presented by the Plaintiff’s witness—our client successfully established the defence of qualified privilege so the Plaintiff’s defamation claim was dismissed. The Court agreed that the communication occurred on a privileged occasion, ruling that our client, as a descendant and member of the Tso, possessed a legitimate social and moral interest to convey his management concerns to fellow clansmen, who had a corresponding interest to receive them.
Crucially, the Court rejected the Plaintiff's contention that the qualified privilege was defeated by express malice on our client’s part. Applying the established appellate principles, the Court emphasized that a defendant’s carelessness, irrationality, or tendency to leap to conclusions does not equate to malice. The Judge accepted that our client maintained an honest, genuine belief in the truth of his statements due to a breakdown in communication and a poor relationship with the Plaintiff, rather than an improper dominant motive or a reckless indifference to the truth. As a result, the Plaintiff’s claims were entirely dismissed, and he was ordered to pay a portion of our client’s legal costs.
This outcome represents a complete vindication for our client following a deeply personal family and customary land dispute. It also reinforces SFKS’s established expertise in handling highly contentious defamation, customary law matters, and complex disputes involving qualified privilege and factual challenges.
This case serves as a vital reminder of the robust protective boundaries afforded by the defence of qualified privilege in Hong Kong defamation law. It underscores that the law actively safeguards the freedom of honest communication where a shared moral, social, or legal duty exists—such as within family, community, or customary organizations. So long as a speaker acts in good faith to protect a legitimate interest that is shared by the audience and harbors an honest belief in what he says, the protection of privilege remains intact, even if the underlying conclusions are ultimately shown to be mistaken.
This case was led by our Consultant Mr. Tommy Tam and assisted by our Senior Associate Ms. Koey Wong and Trainee Solicitor Ms. Janice Leung. SFKS takes this opportunity to thank Counsel Mr. Stony Chan for his thorough and able assistance throughout these proceedings.
The full judgment can be found at:
New Individual Income Tax Regulations Regarding Offshore Trust Assets
In recent years, establishing offshore trusts has gradually become a new trend among Chinese Mainland residents for wealth management and asset allocation. Through this approach, high-net-worth individuals can not only effectively achieve risk isolation, asset protection, and tax planning, but also provide more flexible, private, and professional arrangements for the long-term security and succession of family members. However, in light of the Announcement on Matters Concerning Individual Income Tax on Offshore Trusts (Announcement No. 21 of 2026) (the “Announcement”) issued by the Ministry of Finance and the State Taxation Administration on July 24, 2026, individuals who transfer property into offshore trusts or receive income through offshore trusts are deemed to have obtained income prescribed under the Individual Income Tax Law of the People’s Republic of China, and are therefore required to declare and pay individual income tax in accordance with the provisions of the Announcement.
(1) Scope of the Announcement
Offshore Trusts
Offshore trusts refer to trusts established under foreign laws or other legal arrangements with trust-like functions, including foreign legal arrangements that are not established in the name of a trust but substantially perform functions similar to those of a trust. However, financial products issued by certain banks, insurance companies, securities firms, fund companies, etc., are excluded.
Resident Individuals
Individuals who have acquired foreign nationality or long-term or permanent residency abroad, but whose primary economic interests originate from within China, may also be determined to be resident individuals with domicile. The following rules apply to resident individuals:
(a) Where a resident individual transfers property into an offshore trust, the individual shall take the balance after deducting the original cost of the property and reasonable expenses from the market value at the time of transfer as the taxable income, and declare and pay individual income tax under the category of “income from transfer of property”;
(b) Income generated during the existence of an offshore trust into which a resident individual has transferred property, regardless of whether it is actually distributed, shall be subject to annual individual income tax declaration and payment by the resident individual as the taxpayer under the category of “income from transfer of property” or “interest, dividends, and bonuses”; and
(c) A resident individual shall also declare and pay individual income tax on distributed income received from an offshore trust into which property has been transferred by a non-resident individual.
Non-Resident Individuals
Where a non-resident individual transfers property into an offshore trust, it shall be deemed as a transfer of property by an individual. The individual shall take the balance after deducting the original cost of the property and reasonable expenses from the market value of the property as the taxable income in respect of income from transfer of property derived from within China, and declare and pay individual income tax under the category of income from transfer of property.
However, if a resident individual and a non-resident individual transfer property into the same offshore trust, it shall be treated as if the entire transfer was made by the resident individual, regardless of whether the property is sourced from within China.
(2) Statute of Limitations for Tax Recovery
The Announcement takes effect from the date of issuance (i.e., July 24, 2026). Nevertheless, the Announcement also explicitly states that there are recovery periods for taxes arising from the transfer of property into offshore trusts and from income generated during the existence of offshore trusts.
With respect to the transfer of property into offshore trusts, effective from January 1, 2026, resident individuals are required to declare and pay individual income tax. Moreover, for the period from January 1, 2023, to December 31, 2025, any individual income tax payable but unpaid by resident individuals arising from the transfer of property into offshore trusts, as well as any individual income tax payable but unpaid by non-resident individuals arising from the transfer of property into offshore trusts during the period from January 1, 2023, to July 24, 2026, shall also be declared and paid within 90 days from July 24, 2026. However, it should be noted that the Announcement explicitly states that if the amount of unpaid individual income tax is relatively large, the tax authorities may extend the statute of limitations for recovery in accordance with the provisions of the Law of the People’s Republic of China on the Administration of Tax Collection.
With respect to income generated during the existence of offshore trusts, effective from January 1, 2026, resident individuals are required to declare and pay individual income tax. For income derived from offshore trusts of resident individuals prior to January 1, 2026, regardless of the income category, resident individuals are also required to declare and pay individual income tax within 90 days from July 24, 2026, under the category of “interest, dividends, and bonuses”. In addition, resident individuals are required to declare and pay individual income tax within 90 days from July 24, 2026, on income distributed to resident individuals during the existence of an offshore trust into which property has been transferred by non-resident individuals.
Late payment surcharges could be avoided if the declaration and payment are completed within the above 90-day window. If any person fails to pay individual income tax within the prescribed time limit, the tax authorities will impose a late payment surcharge, which is at a high annual rate of approximately 18.25%.
(3) Impact of the Announcement
Immediate Declaration and Payment, and Recovery Periods
As the Announcement takes effect immediately from the date of issuance, it requires that any individual income tax payable but unpaid within the recovery periods be declared and paid within the 90-day window. For offshore trusts into which property was transferred on or after January 1, 2023, and for offshore trusts that generated income prior to January 1, 2026, the relevant individuals and management teams need to promptly sort through and clarify the trust assets and income, so as to declare and pay individual income tax in a timely manner and avoid tax recovery, late-payment surcharges, or the imposition of penalties by the tax authorities. If the amount of unpaid individual income tax is substantial, the tax authorities may also extend the period for tax recovery.
Installment Payment of Tax
The tax authorities may allow applications for installment payment of tax. Given that the new rules carry retroactive recovery periods, the amount of unpaid individual income tax may be substantial. Where taxpayers face difficulties in paying the tax after making a declaration in accordance with tax laws, they may, upon filing a record with the competent tax authority, pay the tax in equal installments over a period of five years.
New Offshore Trusts to Be Established
In summary, with the formal implementation of the Chinese Mainland’s new individual income tax rules on offshore trusts, any newly established offshore trust structure must take individual income tax into core consideration. Whether it is the income from transfer of property arising from the transfer of assets into the trust or the various types of income generated during the existence of the trust, tax compliance and the corresponding tax cost have become key factors in determining the feasibility of cross-border wealth management structures.
Reported New Levy of Tax on Gains from Offshore Insurance Policies
Hong Kong has been a primary offshore wealth management gateway for Chinese Mainland residents seeking global asset diversification and financial protection, providing a wide range of wealth management products such as insurance. However, according to a report from Caixin and other news sources, Chinese Mainland tax authorities have also begun levying individual income taxes on gains from offshore insurance policies, including those in Hong Kong.
It is reported that Beijing and Hangzhou authorities have started to apply personal income tax rates of 20% on returns from Hong Kong insurance policies, including dividend and interest earned on prepaid premiums. The tax collection is feasible due to the implementation of Common Reporting Standard and the sharing of ownership details. Such tax measures may adversely affect both Mainland residents who have placed offshore insurance policies and insurers who have heavy on these residents purchasing policies, since the relevant income will clearly be subject to 20% tax and yield advantage of such offshore policies will be diminished.
Although the new levy is less of a threat than a total ban on buying offshore insurance which is also a concern, together with the recent tax regulations regarding offshore trust assets, the reported new levy of tax on gains from offshore insurance policies shows the tightening scrutiny of offshore capital and investments by the Chinese Mainland government and the increasing effect of tax on their gains. As such, all parties involved in wealth management exercise need to closely monitor other actions which may be taken by the government in the future and consider the impacts of such measures before conducting any wealth management or investment activities.
Disclaimer :
This material is provided for general information only. It does not constitute legal or other professional advice nor constitute any lawyer-client relationship between Sit, Fung, Kwong & Shum and any user or browser. No liabilities are assumed arising from any reliance on the information in this material. Please consult your cross-border tax advisor regarding any Chinese Mainland tax matter.
Sit, Fung, Kwong & Shum is a Hong Kong law firm and does not practice or provide legal or other advice on the laws or tax matters of other jurisdictions. References to the laws and practice of any other jurisdictions in this material are provided for general reference and comparative purposes only, and do not constitute any advice, opinion or representation on the law or practice in those jurisdictions.
For organisations operating in Hong Kong, achieving recognition as a tax-exempt charity under Section 88 of the Inland Revenue Ordinance (Cap. 112) (“S.88 of the IRO”) is often a defining milestone. Beyond the immediate fiscal advantages, this status serves as a powerful signal of credibility, strengthening donor confidence and providing a robust foundation for long-term fundraising and market presence. However, obtaining this status is far from an automatic administrative process; it requires a meticulous approach to the organization’s constitutional structure, its governance framework, and the practical reality of its daily operations.
A. The Gatekeeper’s Role: The Inland Revenue Department
Under Section 88 of the IRO, the Inland Revenue Department (“IRD”) acts as the primary gatekeeper for tax exemptions. The statute provides tax relief for charitable institutions and trusts of a public character, but the IRD’s review is substantive. An organization must first qualify as a charity at law before it can be accorded tax-exempt status. In practice, this means the IRD will look past broad aspirations to determine whether the entity is genuinely established and maintained for exclusively charitable purposes, ensuring its operations remain strictly aligned with its stated mission.
B. Defining “Charity” at Law The Public Benefit Test
In Hong Kong, being "non-profit-making" is not synonymous with being a "charity". To meet the legal criteria, an organization must be established exclusively for charitable purposes, which are traditionally recognised under the four heads of charity:
a. the relief of poverty;
b. the advancement of education;
c. the advancement of religion; and
d. other purposes of a charitable nature beneficial to the community not falling under any of the preceding heads.
Where an organisation relies on the fourth head, the public benefit must extend to the Hong Kong community.
The core test is whether the organisation is exclusively charitable in both purpose and operation. This means its objects must be limited to charitable purposes, and its actual activities must remain aligned with those purposes. Worthy social objectives are insufficient if the legal criteria of exclusivity and purpose are not strictly satisfied in both the organization's objects and its operations. If the organisation’s objects are mixed, private, political, or otherwise non-charitable, it will not satisfy the statutory and common law requirements for recognition.
C. The Public Benefit Test
Equally fundamental to charitable status is the requirement of "public benefit," which is analyzed through two distinct lenses: the public aspect and the benefit aspect.
On the public side, the benefit must be available to the general public or a sufficiently large section of it, with beneficiaries appropriate to the organization's purpose. Where the benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted by geographical or other restrictions. Crucially, any personal benefit—such as those received by founders or members—must be purely incidental, and any restrictions based on family ties or employment are generally viewed as inconsistent with charitable status.
On the benefit side, the organization must provide clear and identifiable advantages related to its purposes, balanced against any potential detriment or harm.
In addition, the organisation must act lawfully and must not engage in, or support, conduct that is contrary to national security or otherwise inconsistent with charitable purposes.
D. Building a Robust Governing Document
A properly drafted governing instrument—be it a trust deed, articles of association, or a constitution—is the indispensable blueprint of a charity. The document should not merely state broad aspirations; it should set out the charitable objects with precision and provide a clear legal framework for administration, accountability, and dissolution.
In practice, the IRD expects the governing document to contain several key features. First, it should limit the application of the organisation’s funds strictly to its stated charitable objects. Second, it should prohibit the distribution of income or property to members, founders, or directors, except where limited remuneration is properly justified and expressly permitted. Third, it should require disclosure and management of conflicts of interest. Fourth, it should provide for the keeping of proper accounting records and the preparation of annual financial statements. Finally, it should ensure that any surplus assets on winding up are transferred to another charitable institution or trust of a public character.
From a commercial and governance perspective, these provisions are not merely formalities. They are often decisive in establishing that the organisation is sufficiently independent, accountable, and properly constituted to qualify for recognition. Where remuneration of governing body members is contemplated, the governing instrument should address the issue carefully and with appropriate safeguards. Any such remuneration must be necessary, reasonable, and consistent with the organisation’s charitable purposes.
E. The Application Process: A Substantive Review
The application under Section 88 of the IRO recognition should be approached as a substantive legal review rather than a routine filing exercise. It involves submitting a prescribed form along with intensive supporting documentation, including the organization's constitution and detailed records of its activities and funding.
The supporting documents will typically include the organisation’s constitutional documents, details of its activities, and information showing how its funds are applied and governed. In reviewing the application, the IRD will consider not only the wording of the constitution but also the organisation’s historical, current, and intended operations. This means that the applicant must ensure consistency between the legal documents and the practical reality of the organisation’s work.
Where the application is complete and no further clarification is required, the IRD’s guidance indicates that it generally aims to respond within four months. In more complex cases, particularly where the organisation has trading activities, investment structures, or unusual governance arrangements, a longer review period should be expected.
F. Trading Activities and Tax Exposure
It is a common misconception that the status under Section 88 of the IRO provides an absolute shield against all taxes. Charities may still be liable for profits tax on certain trading or business activities unless specific statutory conditions are met. Specifically, the profits must be applied solely for charitable purposes, must not be expended substantially outside Hong Kong, and the trade or business must either be carried on in the actual carrying out of the charity’s expressed objects or mainly by the charity’s beneficiaries.
This distinction is particularly relevant for organisations that generate income through retail sales, property letting, commercial services, fundraising events, or other revenue-producing activities. The mere fact that profits are later used for charitable purposes does not, by itself, make the activity tax exempt. The commercial character of the activity, the way it is structured, and its connection to the charity’s objects are all relevant. For charities with significant revenue-generating operations, it is essential to assess the tax consequences before the activity begins, rather than after profits have been generated.
G. Ongoing Compliance and Review
Securing recognition under Section 88 of the IRO is not a "once-and-for-all" approval. The IRD retains the authority to review a charity’s status if circumstances change, and the organization remains under a continuing obligation to maintain transparent records. This includes notifying the Department of changes to its governing instrument, address, activities, or name. Internal governance must remain robust, with clear board oversight and financial discipline to ensure that funds are consistently deployed in furtherance of charitable objects. Any material straying from the constitution or engagement in inconsistent activities could jeopardize the organization's tax-exempt standing.
H. Practical Takeaways
For organisations seeking recognition under S.88 of the IRO, the most effective approach is to treat the process as both a legal structuring exercise and a compliance exercise. The constitutional documents should be drafted with precision, the charitable purpose should be clear and exclusive, and the operating model should be aligned with the claimed status from the outset. Where there are commercial activities, cross-border elements, or non-standard governance arrangements, specialist advice should be obtained early.
This article is co-authored by our Partner Simon Siu and our Trainee Solicitor Janice Leung.
Disclaimer :
This material is provided for general information only. It does not constitute legal or other professional advice nor constitute any lawyer-client relationship between Sit, Fung, Kwong & Shum and any user or browser. No liabilities are assumed arising from any reliance on the information in this material.
Sit, Fung, Kwong & Shum is a Hong Kong law firm and does not practice or provide legal advice on the laws of other jurisdictions. References to the laws and practice of any other jurisdictions in this material are provided for general reference and comparative purposes only, and do not constitute any advice, opinion or representation on the law or practice in those jurisdictions.
Introduction
Over the past twenty years, some Hongkongers have taken up residence abroad, many settling in the United Kingdom, Canada, Australia and other jurisdictions. In more recent years, as some families now consider return migration to Hong Kong, a frequently misunderstood question then arises: what is the right of abode status of children born to those parents overseas?
Many families assume that their children born overseas can automatically "inherit" Hong Kong permanent resident status. That assumption is often misconceived. The real starting point is the child's nationality at birth, which typically determines whether the child can rely on the Chinese descent route to the right of abode, or must instead qualify personally under the non-Chinese route. In many cases, the result is that the parents may return and reside in Hong Kong as permanent residents, while their children cannot rely on the same route and must face years of personal residence before any entitlement. A common and particularly striking example concerns families who emigrated to the United Kingdom under the British Nationality (Hong Kong) Selection Scheme or the later British National (Overseas) (BN(O)) route. Some parents who remained In the United Kingdom and acquired British citizenship or settled status there may assume that, because they retain Hong Kong permanent resident status and continue to be treated as Chinese nationals for the right-of-abode purposes, their overseas born children stand in the same position. They often do not. Understanding why requires close attention to the statutory framework, the Nationality Law of the People's Republic of China (PRC Nationality Law), and the case law on permanence.
The Statutory Framework
Article 24(2) of the Basic Law sets out the categories of Hong Kong permanent resident. Schedule 1 to the Immigration Ordinance (Cap. 115) (the Ordinance) provides the operative framework. For present purposes, two routes matter most:
a. the Chinese route under paragraphs 2(a)-(c) of Schedule ; and
b. the non-Chinese route under paragraph 2(d) of Schedule 1.
These two routes Impose materially different requirements.
The Chinese Route
For children of Hong Kong permanent residents born abroad, the key provision Is paragraph 2(c) of Schedule 1 (the descent route). The practical attraction of this route is dear because It dispenses With the seven years' personal residence requirement. However, It Is only available If the child was a Chinese national at birth and the parent was already a Hong Kong permanent resident when the child was born. The nationality question is often where the case succeeds or falls. Whether a child born abroad is of Chinese nationality often turns on Article 5 of the PRC Nationality Law. A child born abroad to a Chinese national parent generally has Chinese nationality unless the parent had "settled abroad" and the child acquired foreign nationality at birth. The Immigration Department's published guidance gives a clear illustration: where the parent is an "overseas resident" (e.g. a holder of the United States green card or United Kingdom's indefinite leave to remain) and the child acquires foreign nationality at birth, the child does not have Chinese nationality for Article 5 purposes and paragraph 2(c) route of Schedule 1 is usually unavailable, irrespective of the parent's own continued treatment as a Chinese national and Hong Kong permanent resident. Many families only discover this after refusal. The significance of this is that the paragraph 2(c) of Schedule l is concerned with conditions as they stood at birth. Later changes in the parent's status do not retrospectively cure a deficiency at that time.
Families sometimes ask whether the position can be revisited, for example, by renouncing the child's foreign nationality. Such options are highly fact-sensitive and require specialist advice in the PRC.
The Non-Chinese Route
Where the Chinese route is unavailable, the child cannot derive Hong Kong permanent resident status from the parent and must qualify personally under paragraph 2(d) of Schedule 1, which requires seven years of continuous ordinary residence in Hong Kong immediately before the application (aggregate residence is insufficient) and Hong Kong being taken as the place of permanent residence.
The Ordinary Residence Requirement
The "immediately before" rule is strict (Schedule 1, paragraph 1(4)(b)). As Fateh Muhammad v Commissioner of Registration [2001] HKCU 662 makes clear, the qualifying period must run directly up to the application itself; aggregate residence over a longer period is insufficient.
Certain periods are excluded from ordinary residence by section 2(4) of the Ordinance and may interrupt continuity. In this connection, Vallejos v Commissioner of Registration [2013] 16 HKCFAR 45 confirmed the meaning of "ordinary residence" under Article 24(2)(4) must be interpreted in light of context and purpose, and that immigration status of the residence is relevant to that analysis. In the particular case of foreign domestic helpers (FDH), the highly restrictive conditions governing their admission and stay meant that their residence was what the CFA determined as being "qualitatively so far removed from what would traditionally be recognized as "ordinary residence'"" as to fall outside Article 24(2)(4).
Temporary absences, however, do not necessarily break continuity. Section 2(6) of the Ordinance provides that a person does not cease to be ordinarily resident merely because of a temporary absence, having regard to its reason, duration and frequency. Whether, and in what circumstances, section 2(6) can preserve continuity in more complex cases remains a question requiring careful attention on the facts of the individual case.
The seven-year requirement is strict not only in duration alone. In Nowodzelski v Director of Immigration [2018] HKCA 295, the Court of Appeal reiterated that a person who had no lawful right to remain in Hong Kong after expiry of his limit of stay could not rely on that period as constituting ordinary residence for paragraph 2(d) of Schedule 1. That approach is also consistent with the strict operation of the ordinary residence requirement illustrated by Li Mengzhi v Commissioner of Registration [2024] 2 HKC 330 and, on appeal, [2026] HKCA 246. The applicant had in fact lived in Hong Kong for many years, but once her landing was treated as unlawful, section 2(4)(a)(i) prevented that period from counting as ordinary residence, with the result that she could not satisfy the seven-year requirement for permanent resident status.
The Permanence Requirement
Ordinary residence alone is not sufficient. The applicant must also satisfy the permanence requirement identified in Prem Singh, namely that Hong Kong has to be treated as a long-term home, demonstrated by objective facts consistent with that intention (Prem Singh v Director of Immigration [2003] 6 HKCFAR 26).
Schedule 1, paragraph 3 lists relevant indicators to that evaluation such as whether the applicant normally lives in Hong Kong, whether close family members are here, whether the applicant has a reasonable means of support, and whether they have paid tax in Hong Kong. No single factor is decisive, but the family's "centre of life" often carries decisive weight.
But Prem Singh should not be read as imposing a rigid checklist of "concrete steps". As clarified in Gutierrez Joseph James v Commissioner of Registration [2015] 1 HKC, permanence imports both subjective and objective elements and must be assessed in light of all evidence. Conduct, surrounding circumstances, and arrangements made on the applicant's behalf may all be relevant.
Read together, Prem Singh and Gutierrez establish that permanence is neither a purely formal declaration nor an impossible standard requiring the applicant to sever all foreign links. The courts require a fact-sensitive assessment of whether Hong Kong has genuinely been taken as the permanent home.
Why Birth Location Matters
As the analysis above demonstrates, birth location can materially affect the routes available. If a child is born overseas after the parent is treated as "settled abroad", Article 5 of the PRC Nationality Law will usually close the Chinese descent route at birth.
Two practical steps may preserve options. First, the birth may occur before the parent obtains foreign settled status, for example while still on a time-limited BN(O) or skilled-worker visa. Second, the family may consider giving birth in Hong Kong which may preserve eligibility under paragraph 2(a) of Schedule 1 or, for children under 21 born to category (d) parents, paragraph 2(e).
Paragraph 2(e) is notable because it shows that the Ordinance does make a limited, express provision for children born in Hong Kong to a category (d) parent. The absence of any equivalent provision for children born outside Hong Kong is therefore unlikely to be accidental It reflects a deliberate distinction in the statutory scheme.
Challenging a Refusal
The primary remedy is an appeal to the Registration of Persons Tribunal under section 3D of the Registration of Persons Ordinance (Cap. 177). The 90-day deadline is strict. The Tribunal determines the factual entitlement to the right of abode, not the rationality of the Commissioner's decision. Judicial review is a secondary remedy where the refusal is treated as a Director of Immigration decision or where a discrete public law error exists.
For practitioners, the strategic priority is identifying the decisive legal issue early. Depending on the case, that may be the child's nationality at birth, the parent's foreign immigration status at the time, excluded periods under section 2(4), satisfaction of the "immediately before" or the permanence requirement. The more precisely the case is framed, the more focused both the evidence and any challenge route can be.
Practical Guidance
For paragraph 2(d) cases, evidence should be assembled separately for residence and permanence. Residence evidence should establish continuity. Permanence evidence should address whether Hong Kong is the family's genuine centre of life, including financial and tax ties, family accommodation, schooling, healthcare, and sometimes the extent to which overseas connections have been maintained or wound down. A chronology proving physical presence will not, by itself, satisfy the permanence question. Conversely, bare assertions of long-term intention will not overcome a weak factual case on residence.
Where the applicant is a child, the Gutierrez principle requires particular attention. The evidence must address what arrangements the parent or guardian has made on the child's behalf and critically, what would secure the child's continued residence if the parent's own immigration position changed. That evidential gap was central in Gutierrez itself and should be anticipated in every child case.
Timing the application is crucial. The application should be made when the applicant can demonstrate a continuous qualifying period running right up to the filing date. Premature filing before the qualifying period is complete risks the entire claim.
Parents holding category (d) status should also be advised that the same permanence test applies to them on an ongoing basis. Prolonged absence and a settled life abroad can jeopardise their own status under Prem Singh, with knock-on effects for any dependent visas.
Summing up
A striking feature of the current framework is that parents may remain Chinese nationals and Hong Kong permanent residents, yet their overseas-born child may not be able to rely on the Chinese descent route. If the parents may return to Hong Kong as permanent residents, families may reasonably ask why the child must instead qualify independently through a continuous seven-year period of ordinary residence, even where the child is lawfully permitted to remain in Hong Kong. The anomaly may have other practical consequences. For example, when traveling to the Mainland, the family unit may be placed under different documentary regimes. In such a case, the split in status may do more than create administrative inconvenience. For those unfamiliar with this area of law and practice, the distinction may be difficult to reconcile.
At the level of legal analysis, the framework produces outcomes that are largely predictable once the child's nationality at birth and the parent's overseas immigration status at the relevant time are identified. These two facts will often determine whether the Chinese descent route under Schedule 1 paragraph 2(c) is available. Where it is not, paragraph 2(d) generally requires personal qualification through a continuous seven-year period of ordinary residence immediately preceding the application, together with a substantiated permanence case by objective evidence.
Taken together, the case law reflects a strict but consistent judicial approach. Permanence is a constitutional criterion to be assessed objectively in light of all relevant circumstances, while the seven-year ordinary-residence requirement operates strictly as to both duration and quality of stay.
As cross-border mobility becomes an increasingly ordinary feature of family life, the application of the right-of-abode framework to overseas-born children of Hong Kong permanent residents is likely to remain an important and recurring issue in Hong Kong immigration law.
This article is co-authored by our Partner Peter Sit and our Trainee Solicitor Christy Hui.
This article first appeared in the June 2026 issue of the Hong Kong Lawyer, the official journal of The Law Society of Hong Kong.
