Getting Money out of China to Buy a House

Not a week goes by without one of the China attorneys at my firm getting an email or a phone call from someone (usually an American or a European) wanting us to help them complete a house sale to a Chinese citizen or with some plan for selling houses to Chinese citizens.

They want to know how their potential buyer can get X dollars out from China to pay for the house or houses. We usually respond to these calls with something like the following:

China generally prohibits its citizens  from sending more than USD$50,000 each year outside China without government approval to send more and that approval is virtually never given for buying a house overseas.

There are sometimes legal workarounds — but not often — and for us to know if there are any in this case you will need to retain us and pay us and then we would need to know a lot more facts and conduct a fair amount of research and almost certainly speak with Chinese government agencies as well.

But here’s the thing you should be asking yourself. Why are you the one making this call and not the Chinese buyer? The holdup here is happening on the China side so wouldn’t it make better sense for the Chinese buyer to hire his or her own domestic Chinese lawyer in China rather than having an American hire an American lawyer (or when these calls come through our Spain office, having a European hire a European lawyer)? I strongly suspect the reason you have been tasked with this is because the Chinese buyer believes there is no legal way for it to get the money out so he or she is just figuring why not have you spend thousands of dollars to run to ground various ideas for getting the money out.

Our China attorneys have handled a number of large dollar single home deals, but only for sellers who want us to help them justify getting out of a deal with Chinese buyers because they now have a higher offer on the table and they are tired of waiting around for the deal with their Chinese buyers to close. This makes sense.

There are a whole host of quasi-legal ways to get money out of China, such as bitcoin, loans, company to company transfers for alleged product or service purchases, and various other things, but all have various risks.

Success in getting money out of China legally is generally going to depend on the following:

  • The nature of the transaction. Real estate purchases tend to be the worst of all because Chinese citizens must expressly state that they are not asking to send money out of China to purchase real estate.
  • The parties on both sides.
  • The relationship and the history between the parties.
  • The location of the parties.
  • The nationalities and even the ethnicities of the parties (especially the receiving party).

The Chinese government tends to look at all of the above (and more) to determine whether its citizens can take money out or not. Note that the rules for foreigners taking money out of China are far more random, especially when it comes to getting proceeds out on a real estate sale. But very generally, if you have really good documents showing how the money came in and proving that you have paid all necessary taxes and that you don’t owe anyone in China (government or otherwise) any money, you should be legally allowed to get the money out. Would that were always the case and we’ve heard plenty of nightmares from people who have tried, including stories where the amount involved (typically $3,000 to $6,000) was too little to keep trying or to hire an attorney or an accountant to assist them. For foreigners, much depends on who you are dealing with at the bank and how China feels that particular day about its foreign currency reserves.

The more legally interesting calls come from American and European companies facing the following situations:

For more on getting paid from China, check out the following: How to Reduce China Payment Risks

What are you seeing out there?