On July 24, China’s Ministry of Finance (MOF) and State Taxation Administration (STA) issued rules that tax offshore trusts funded by Chinese residents.
Just over five weeks later, on September 1, the same two bodies ended an exemption that had allowed foreign individuals to receive dividends from foreign-invested enterprises in China tax-free since 1994.
In between, the National Development and Reform Commission (NDRC) opened a public consultation on outbound investment rules that name resident individuals, for the first time, among the investors they govern.
Each measure has its own logic and its own set of affected taxpayers. Read together, they describe a single direction of travel: Beijing intends to see and, where appropriate, tax cross-border wealth it previously could only infer.
For wealthy families in mainland China and Hong Kong, the instinctive question is whether this is the moment to leave. In most cases it is not.
The better question is whether the family has already arranged the residence options it would want if circumstances changed, and whether it has done so early enough to coordinate them with tax and legal advice.
What Has Changed, and What Remains a Draft
The trust rules, MOF and STA Announcement No. 21 of 2026, treat a resident’s transfer of assets into an offshore trust as a taxable disposal. Individual income tax of 20% applies to the gain between original cost and market value at the date of contribution, and trust income is then attributed to the resident contributor each year, whether or not it is distributed.
Look-through treatment extends to underlying offshore companies the trust controls, with control defined as 25% ownership or substantive influence over capital, operations, or distributions. Regulated financial institutions and entities with a demonstrable operating business are carved out.
A 90-day window, ending on October 22, 2026, allows the settlement of historical liabilities without late-payment surcharges.
Announcement No. 27, issued and effective on September 1, repeals the 1994 provision under which foreign individuals received dividends from foreign-invested enterprises free of individual income tax. Those distributions now attract the standard 20% rate, withheld at source, with no transitional period.
The change reaches founders who hold mainland operating companies through a foreign nationality or an offshore holding company, an arrangement common among families anchored in Hong Kong.
Outbound investment sits on a different footing. State Council Order No. 837, the Regulations on Outbound Investment, took effect on July 1 and counts resident individuals as investors alongside enterprises, while leaving detailed rules for individuals to be written later.
On August 21, the NDRC released its revised Administrative Measures for Outbound Investment for comment, with a September 20 deadline; the draft would extend to individuals the filing and annual reporting framework that has governed corporate outbound investment since 2018. It remains a draft and may change before adoption.
None of this occurs in a vacuum. China has received financial account data under the Common Reporting Standard (CRS) since 2018, and the OECD reports that participating jurisdictions exchanged information on 123 million accounts holding €12 trillion in 2022 alone.
In January, the STA publicly reminded residents to review their overseas income for 2022 through 2024 and correct any omissions, a sign that the data are now being matched against filings.
What the Rules Do Not Mean
Greater scrutiny has not emptied Hong Kong, and the city’s own figures emphasize that point. As of February 28, 2026, Invest Hong Kong had received 3,166 applications under the New Capital Investment Entrant Scheme (New CIES), representing about HK$95 billion (approximately US$12.2 billion) in anticipated investment, with 1,762 applicants already holding formal approval.
Hong Kong remains where many mainland families bank and hold their operating companies; what has changed is the appetite for additional options held alongside it.
Another misunderstanding needs correcting. A residence permit or a second passport does not, by itself, alter where a person is tax resident. Announcement No. 21 makes the point directly: Acquiring foreign nationality or permanent residence abroad does not end Chinese tax residence where an individual’s principal economic interests remain in China.
Tax residence follows where a person lives and where the center of their economic life lies; it is determined by tax law and treaty tie-breakers, not by a passport office. According to Evelyn Xu, Regional Director at Arton Capital, “A passport is a travel document with a nationality attached. Tax residence is a question of where your life actually happens, and no consulate can answer it for you.”
Anyone acquiring a document in the expectation of automatic tax relief has misread both the document and the direction of Chinese enforcement. The trend the data describe is diversification, not exodus; planning, not panic; and optionality, not tax avoidance.
How Families Are Responding
The observable pattern is acceleration. Families that have weighed residence planning for years are bringing the decision forward, and advisers report conversations that open with the October 22 filing window and close with school admissions in another country.
Xu frames it as a matter of timing rather than conviction: “The families we speak to have not changed their minds, but they have changed their calendars. For many, a decision that was once parked for 2028 is now being taken this year.”
Inquiries rise months before applications can be completed, because a residence file requires that source-of-funds documentation, due diligence, and often a qualifying investment be in place first. That lead time is built into the process.
Chinese nationals were the largest cohort in most residence by investment (RBI) programs long before this summer. Greece’s Ministry of Migration and Asylum counted 21,393 initial investor permits in force in January 2026, and Chinese nationals held 10,272 of them, a 48% share.
What the summer’s measures add is a reason for the professional adviser to raise the subject. A trust restructuring, a dividend policy review, or an outbound investment filing now sits naturally beside a conversation about where the next generation will study and where the family could live if it wished to.
Why Residence Is Gaining on the Passive Passport
For a decade the default hedge was a citizenship by investment (CBI) passport acquired with no intention of relocating. That approach still serves mobility and contingency purposes. It does little for tax residence, and the new rules now say so explicitly.
A residence permit works differently: Held passively, it is still only a document. Embedded in a professionally advised relocation, however, it can anchor a genuine change in where a family lives, works, and holds its economic ties.
Announcement No. 21 even prices the transition: Where a resident who has funded an offshore trust later becomes a nonresident, the rules trigger a deemed disposal of the trust property, with consequences that need modeling before the move.
Which route fits depends on where the client will actually live, where their income arises, whether the family relocates together or in stages, and how a future change in tax residence interacts with structures already in place. Those are questions for a tax adviser and a lawyer.
A residence adviser’s job is to confirm that the option they recommend exists, is attainable on the family’s timeline, and will survive due diligence.
In Xu’s words, “Optionality that has never been stress-tested is a brochure. A residence option truly proves its value only if the family could exercise it on a known timeline, with its tax and legal advisers in the room.”
Mobility Planning as Insurance
The case for acting early has little to do with immediate departure. Planning in advance widens the menu of jurisdictions, clarifies timelines, and gives tax and legal advisers room to coordinate their work with the residence application instead of reacting to it.
Programs also change faster than families do. Spain closed its golden visa in April 2025; Portugal removed the real estate route in 2023; Greece raised its main property threshold to €800,000 in high-demand areas in 2024. Thresholds rise, and eligibility tightens, usually with only months of notice.
Xu is blunter about timing: “Insurance is cheapest precisely when nobody feels they need it. Every program we have watched close or reprice did so with its queue at the longest.”
The families with the most choice are the ones who filed when nothing forced them to. Waiting for a regulatory deadline or a school admissions cycle compresses a process that rewards deliberation into one that punishes it.
Where Arton Capital Fits Alongside Tax, Legal, and Wealth Advisers
Arton Capital does not give tax advice, and it is not trying to. Its seat on a family’s advisory team is deliberately narrow: It assesses residence and citizenship options, program eligibility, implementation timing, and due diligence exposure, and it refers tax, legal, and wealth questions to the specialists who own them.
In practice, the division of labor runs as follows. The tax adviser determines the consequences of any change in residence or structure. Lawyers advise on disclosure and legal obligations, including the new trust and dividend filings.
Wealth advisers assess structures and investments. Arton maps which jurisdictions are realistically open to the family, on what timeline and with what due diligence risk, and then manages the application so that it lands when the rest of the plan is ready for it.
Xu describes Arton as “the fourth chair at a table that already seats three experts. Our value is knowing, jurisdiction by jurisdiction, what is achievable, by when, and at what due diligence cost, so that the other three can plan around facts rather than assumptions.”
Founded in 2006 and headquartered in Montreal, Arton advises families through 19 offices worldwide and a Certified Partner network that includes tax, legal, and banking professionals. It also designs and implements investor programs for governments, work that has directed more than US$4 billion in foreign direct investment to participating countries and gives the firm a working view of how authorities process, refuse, and revisit applications.
Assess Mobility Before It Becomes Urgent
For families with cross-border structures and the advisers who serve them, the practical next step is to assess residence options before a deadline sets the pace. Xu’s counsel to referring professionals is direct: A tax adviser or lawyer who raises mobility before the client does “has done that client a service. We exist to make that conversation an easy one to have.”
To learn more, visit Arton Capital’s website.
