Returning assets abroad can be a complicated, time-consuming process, especially in the current economic climate of China in which capital control is getting stricter. It has always been an essential but challenging task for foreign investors to repatriate money. Foreign businesses located in China as representative offices or satellite operations encounter these difficulties every day. In this article, we will show the methods that can be used for repatriation of money and the corresponding implications it can cause.

One of the main players involved in the process of profit repatriation is the State Administration of Foreign Exchange (SAFE). This governmental organization regulates the flow of money by drafting regulations governing foreign exchange market activities. The SAFE is also tasked with the surveillance of international exchanges and can take actions against companies that are not compliant with the rules.

Profit repatriation for companies

A company that wants to repatriate money from China to its home country might find out that doing so is not as easy as in other countries. Three main methods can be used, but all have specific prerequisites and requirements that need to be met.


The use of dividends to repatriate profit is the most common method but is subject to a number of prerequisites.

At first, an FIE (Foreign Invested Enterprise) can only repatriate profits if their registered capital is filed in time and accordingly to the company’s article of association.

Secondly, the enterprise can only repatriate profit once a year due to the annual tax and compliance process and to ensure that the 25% – is paid over dividends.

Thirdly, a company can only repatriate profits if their accumulated losses of the previous years are made up.

And fourthly, not all profits can be repatriated after-tax clearance. For WFOE (Wholly Foreign-Owned Enterprise) it is mandatory to place 10% of its annual profits in a reserve fund until it reaches 50% of the registered capital of the enterprise.

Intercompany Payments

The use of intercompany payments can be an exciting option for a company because it is subject to fewer prerequisites than the method of using dividends. Regarding this method, the head office in the home country charges the Chinese subsidiary for example for supporting services or intangible assets. The payment should be a legitimate claim since the SAFE is closely watching these types of payments and sees it as a tool of tax avoidance. But there are some advantages of using this technique: For example, it can be done more than once a year because you don’t have to go through the annual tax and compliance procedures. It is also more tax-efficient, although it is subject to more types of fees, like, VAT, withholding CIT and different surcharges. These taxes are deductible from the CIT taxable income.

Extending loans

The third method of money repatriation is extending a loan within a company to the office abroad. Especially for companies that have cash flow problems within the head office, this would be a suitable option. This method however is subject to a lot of prerequisites and stricter control in comparison with the other two techniques. Four main prerequisites need to be taken into account.

The foreign-invested enterprise must be located in China for at least one year.

The receiving party must be related to the FIE through an equity relationship.

The loan is limited to 30 % of the equity of the enterprise shown in the last report.

The loans have to be in line with general business principles. Therefore, there should be interest on the loan above 0% and it is generally expected to pay back the loan within five years.

The procedure for these methods can sometimes be quite complicated and very time-consuming, especially the methods using dividends. In the table below we show the steps that have to be followed in each method.

Profit repatriation for Individuals

The Chinese Renminbi (RMB) cannot be directly transferred. It first has to be exchanged into foreign currency. There are limits for Chinese nationals on the amount they can exchange, while for foreign expats this is not the case. There is however a maximum amount of withdrawal from ATMs. The yearly limit one can withdraw is 100,000 RMB, and the daily limit is set at 10,000 RMB. Sending money home can also be a complicated process for expats. Below we have listed the methods that can be used for this process.

Local banks

The first option is to send money home via a local Chinese bank. The first step is to file an application to the SAFE. This application process will be done by the local bank. A form needs to be filled in that requires documents as a passport, work permit, employment contract and payroll and tax bills. The reason of such strict documentation is that people need to prove that they are legally employed with a working permit and that taxes are paid on the transfer amount.

If the documentation is alright, the local bank will file the application to the SAFE. Unfortunately, several fees are being charged on the process. On top of that, the receiving bank may charge a commission fee and sometimes an exchange fee. If requirements from the SAFE are not met, 500 US dollars is the maximum transfer amount.

Exchange agencies

Another option for transferring funds across the border are exchange agencies. These companies are specialized in sending money from one place to another place and the most famous ones are MoneyGram and Western Union. They are usually a lot faster and Western Union works with a lot of Chinese banks. The transfer fee at Western Union is between 15-30 US dollars and due to the “money track control number” the money can be tracked.

The maximum transfer amount is 500 US dollars and can only be transferred in US dollars, so no Chinese RMB transfer is possible. If people want to transfer more than 500 US dollars, they have to prove that taxes have been paid related to the amount and that they are legitimately registered. When the transfer is done, someone else has to pick up the money in the receiving country in the last step.

Carrying cash across the border

The last option is to carry the cash across the border in person. In this case, the maximum amount a person can carry without declaring it to customs is 5,000 US dollars or the equivalent in any other currency.

Mobile payments

An alternative method for sending money home is using online mobile payment applications like WeChat Pay and Alipay. These payment applications have changed the whole payment industry in China. One of the features is the ability to send money between users of the application. Unfortunately, they have a lot of restrictions, and without a Chinese ID and or Chinese Bank card you cannot use these features. For more information on the use of mobile payment applications, please read the following article.


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