In terms of salaries and benefits, personnel stationed overseas often enjoy dual income from both domestic and overseas remuneration packages.
Where they form a labour relationship with the Chinese company, the overseas remuneration is usually combined with the domestic counterpart as a basis for labour payment. If the overseas salary is not paid in full or on time, a request for payment may instead be made to the company.
In cases where overseas-stationed personnel form a service relationship with the Chinese company but receive salaries and payment of social security provident funds from their Chinese company, the legal relationship may instead be determined as a labour relationship.
In terms of personal income tax, overseas-stationed personnel with dual income are also subject to double taxation, both in China and the host country/region. According to articles 1 and 7 of the Individual Income Tax Law, domestic income is subject to personal income tax, and the same applies to overseas income if the employee “is domiciled in China”, or “is not domiciled in China but has stayed in the aggregate for 183 days or more of a tax year in China”, regardless of whether a dual relationship exists. However, the portion of tax paid abroad may be credited against tax payable in China.
On 17 January 2021, the Ministry of Finance and the State Taxation Administration clarified the differentiation between domestic and overseas income of overseas-based individuals in the Notice on Individual Income Tax Policies Concerning Overseas Income, which further refines tax credits and ancillary provisions.
In terms of social security, according to the official reply of the Ministry of Human Resources and Social Security, Chinese citizens working abroad who have not cancelled their Chinese nationality may participate in Chinese social security. At the same time, most host countries/regions mandate foreign employees to participate in local social security schemes. Generally speaking, the social security contributions on both sides cannot be used to exempt from one another, and foreign-stationed personnel must often maintain dual contributions.
Since 2012, China has entered into bilateral social security agreements with 12 countries including Germany, South Korea and Denmark. In these specific circumstances, mutual exemption from paying relevant social insurance contributions may apply to overseas-stationed personnel, which to a certain extent resolves the dilemma of double contribution and mutual recognition.
