Foreigners are prohibited from directly purchasing real estate that is not for self-use.
Foreign investors may acquire real estate in the PRC if it is for their own use and the investor has had a presence in the PRC (or in the case of an individual, has worked or studied in the PRC).
For real estate acquisitions that are not for self-use, foreign investors must establish a foreign invested enterprise for the proposed investment project.
Last modified 13 Mar 2025
Yes, the concept of 'permanent establishment' applies.
For non-self use, a foreign invested enterprise (FIE) must be set up for the proposed investment project. The establishment of a FIE requires the reporting to the Ministry of Commerce or its local counterpart (MOFCOM) and the registration with the State Administration of Market Regulation or its local counterpart (SAMR). In addition, a FIE will need to be registered with tax authority to establish tax status and to be registered with State Administration of Foreign Exchange (SAFE) to enable settlement into RMB of foreign funds for the proposed investment. The whole process takes around one to two months to complete and there are no costs involved other than nominal government registration fees. The corporate governance for a FIE needs to follow the corporate governance as set out in the Foreign Investment Law and the Company Law.
For self-use, FIEs and representative offices are permitted to purchase property for their own use in the city where such FIEs or representative offices are located.
Last modified 13 Mar 2025
FIE in the PRC typically takes the form of either a Sino-foreign joint venture (JV) or a wholly foreign-owned enterprise (WFOE).
JVs and WFOEs each have their own benefits and disadvantages. Many foreign investors are attracted to the WFOE structure because it allows the foreign party to have complete control over the management of the enterprise, major financial decisions, and the use of intellectual property rights. JVs allow foreign investors new to the PRC to work closely with a local partner that may have significant contacts with the local business community, specific geographic or industry knowledge, and experience with government relations.
Last modified 13 Mar 2025
A JV is an independent legal entity. A JV typically takes the form of a limited liability company. The JV partners contribute registered capital to the JV and, unless otherwise agreed, enjoy rights in proportion to the percentage of its paid-in capital divided by the total paid-in registered capital of such JV. Capital contributions may be in cash or in-kind (eg land use rights, buildings, intangible assets or equipment). It is a legal requirement that the in-kind contributions undergo a valuation so that the parties’ respective equity contributions may be determined. The JV contract must also set out a schedule for contributions of registered capital, which may be in one lump sum or in instalments.
Currently the most frequently used foreign investment vehicle in the PRC is the WFOE. A WFOE typically takes the form of a limited liability company, though other corporate forms. The equity interest in a WFOE is entirely owned by its foreign investor or investors.
Last modified 13 Mar 2025
Where the total investment amount is at least US$10 million, the registered capital of a real estate foreign invested enterprise must be an amount representing at least 50% of its total investment amount.
Last modified 13 Mar 2025
Costs vary depending on the complexity of the corporate structure.
Last modified 13 Mar 2025
Timescales vary greatly depending on the complexity of the corporate structure and the location of the incorporation, but are typically one to two months.
Last modified 13 Mar 2025
The management and operations of a FIE are governed by a board of directors (or its sole director) and the managerial staff, who are responsible for the day-to-day operations of the FIE, with the highest authority of the FIE being its shareholder.The managerial staff consists of a general manager in addition to other board-appointed officers, such as a chief financial officer or deputy general manager. It is common in a JV structure that if one party has the right to nominate the general manager, the other party will have the right to nominate the chief financial officer.
Last modified 13 Mar 2025
Compliance costs vary depending on the complexity of the corporate structure.
Last modified 13 Mar 2025
As FIEs all generally have the status of a legal person and so are subject to the same taxes as set out in the Tax Topic for the Peopleʼs Republic of China.
Last modified 13 Mar 2025
Are foreigners allowed to invest by directly purchasing a commercial real estate asset?
Foreigners are prohibited from directly purchasing real estate that is not for self-use.
Foreign investors may acquire real estate in the PRC if it is for their own use and the investor has had a presence in the PRC (or in the case of an individual, has worked or studied in the PRC).
For real estate acquisitions that are not for self-use, foreign investors must establish a foreign invested enterprise for the proposed investment project.
Last modified 13 Mar 2025