UK inward investment by Chinese entrepreneurs and investors - the UK immigration options
19 May 2021
In this update Graeme Kirk and Sohan Sidhu, Partners at AGA UK member firm Ellisons Solicitors present the immigration options open to Chinese corporations and entrepreneurs when investing in the UK.
The UK has for many years been the beneficiary of significant inward investment by Chinese Corporations and Entrepreneurs. There are many UK Companies owned by Chinese Investors and Entrepreneurs and Chinese investments throughout the United Kingdom.
London continues to be one of the leading Global financial centres, even after Brexit, the United Kingdom is still considered to be a great place to do business, both in relation to ease of business transactions, but also the advantages of a strong independent legal system with a high reputation. There has also been a considerable amount of Chinese investment in other UK regional cities including Birmingham, Manchester, and Leeds.
Many Chinese families have also taken advantage of the opportunities offered by the English private school system, which has a high international reputation, to educate their families in British schools and thereafter British Universities. A number of UK Universities, notably Oxford and Cambridge Universities, are recognised as among the leading Universities in the world.
The UK also offers many tax benefits to Chinese families living in the UK under our non-domiciled tax arrangements, which, if correctly adopted, will mean that a Chinese citizen living in the UK should only pay UK income tax on UK source earnings and not on overseas income.
The Immigration Team at Ellisons Solicitors, led by Graeme Kirk and Sohan Sidhu, is recognised as one of the UK’s leading Immigration Teams and has acted for Chinese clients investing in the UK for many years. Under the UK Immigration rules, a main applicant, e.g., a Chinese Investor is entitled to bring his/her spouse/partner and children under eighteen to the UK and all family members will potentially qualify for permanent residence rights (known as “indefinite leave to remain”) normally after five years of residence, although this can be accelerated in some cases, as set out below.
The main routes for inward investment to the UK are as follows:
Representative of an overseas business:
A Chinese Company may apply to send one key individual to the UK in order to establish and run a UK branch or wholly owned subsidiary of the Chinese Company in the UK. This is a very popular way of establishing a UK operation and potentially enables the UK subsidiary Company or branch, once established, to bring across further Chinese nationals to work in the UK for the Company.
The Chinese Company will need to show that it intends to establish its UK operation in the same line of business as its business in China. In addition, the key individual chosen to be sent to the UK should be a senior employee or Director of the parent Company but cannot be a majority shareholder of the parent Company. It will be necessary for the Chinese Company to show that it has the necessary funds available to establish its UK operation and to pay the representative a reasonable salary in the UK, which will enable him/her to maintain themselves and their family members in the UK. However, there is no minimum requirement for capital investment in the UK under this visa category.
The proposed representative will need to pass an English Language Test at Level A1.
Permission is initially granted under this category for three years of residence. At the end of three years, it will be necessary for the representative to apply for an extension of stay for an additional two years, and to provide evidence that the UK branch/subsidiary has been established, has undertaken the proposed UK business activities and that the UK business has survived, and that the representative has been paid his/her salary in the UK. At the end of five years of residence it is possible for the representative and his/her family to apply for permanent residence rights in the UK.
Tier 1 (Investor) Visa:
This visa category is for high-net-worth individuals who can bring a sum of at least £2million to the UK to be invested in qualifying UK investments. Qualifying investments are the share or loan capital of UK registered trading Companies, not primarily engaged in property development or property management. Although many Investors are passive Investors, this route can also be used for an active investment into a UK Company, which can even be started by the Investor after arrival in the UK.
With a £2million investment, it is possible to apply for permanent residence rights in the UK after five years. With an investment of £10million, it is possible to apply for indefinite leave to remain (permanent residence) after two years and with an investment of £5million, it is possible to apply for permanent residence (indefinite leave to remain) after three years.
It is necessary, as part of the initial due diligence process for the Chinese Investor to prove the source of his/her funds for investment for a period of two years prior to the date of his/her initial visa application. These funds have to be invested in qualifying investments within three months of arrival in the UK.
There is no English language requirement for this category.
Skilled Worker Visa:
It is now possible for skilled worker visas to be obtained by UK Companies for Chinese nationals who wish to invest in the UK Company, and also take up key roles in the management and running of the Company.
The UK Company would need to hold or obtain a UK Sponsors Licence and then issue a Sponsorship Certificate for the Chinese national, for the Chinese national to fill a full-time genuine role in the management and running of the Company. The Skilled Worker Visa leads to the possibility of applying for permanent residence (indefinite leave to remain) after five years of residence in the UK under this heading.
There is a requirement for the main applicant to satisfy an English Language Test at Level B1 in Speaking, Listening, Reading, and Writing.
This new visa category can be used by Chinese Entrepreneurs who wish to start a business in the UK which is both innovative and scalable on an international basis. This is a complicated visa to obtain and requires prior endorsement from a UK Endorsing Body. It will be necessary for the applicant to prove that he/she has at least £50,000.00 available for investment in the new UK business.
There is also a requirement to satisfy an English Language Test at Level B2 in Speaking, Listening, Reading, and Writing.
Under this category, it is possible to apply for permanent residence (indefinite leave to remain) after three years.
This is a simpler type of application to the Innovator Visa, requiring prior endorsement from an Endorsing Body, but it is only a two-year visa with no rights to permanent residence, and will need to be converted into an Innovator Visa to lead to permanent residence rights. An English Language Test at Level B2 is required.
Ellisons Immigration Team will be delighted to provide advice and assistance to Chinese clients wishing to consider these options. Chinese clients should note that Brexit has had no effect whatsoever on UK immigration options for Chinese citizens.
About Ellisons Solicitors
Ellisons Solicitors is a top 200 UK full-service law firm, and one of the region’s oldest, most established and fastest growing firms.
With a team of almost 250 colleagues, including 29 partners – the firm has six offices located across Essex and Suffolk, alongside an office in London: Colchester, Chelmsford, Ipswich, Bury St Edmunds, Tendring (Clacton-on-Sea and Frinton-on-Sea)
At Ellisons we can provide advice and assistance in most areas of English law, including company law, commercial law, property law, dispute resolution, employment matters, family law and tax law.