Guide to Global Payroll Management - 2020 - C-21

Payroll Tax Summaries for Selected Countries
the salary threshold (€62,550 annually) and want to keep private health insurance coverage
in their home country, they can choose it as their private health insurance and avoid being
enrolled in the German public health insurance system.

Relief from double taxes
Germany has both an income tax treaty (see Appendix A, page A-26) and a totalization
agreement (see Appendix B, page B-17) with the U.S.

HONG KONG

HONG KONG
Basis for tax
A salaries tax is imposed on all employees regardless of nationality or residence status
provided the services are rendered in Hong Kong and the individual spends 60 days or
more in the country during any tax year (which runs from April 1 to March 31 of the following year). When services are rendered partially in Hong Kong and partially outside of Hong
Kong, and the non-Hong Kong services are subject to a tax which is substantially the same
as the Hong Kong salaries tax, only that part of income relating to the Hong Kong services
is subject to Hong Kong salaries tax.
Individuals not employed by a Hong Kong employer are only subject to Hong Kong salaries
tax if their visit to Hong Kong exceeds 60 days in any tax year. Persons stationed in Hong
Kong but who frequently travel outside of Hong Kong may apply to pay tax on a time apportionment basis by reference to the number of days spent in Hong Kong during the tax year.
This relieves the individual of paying tax on the income from the non-Hong Kong services.
An individual is considered as having non-Hong Kong employment where:
*

the employer is based outside of Hong Kong;

*

the employment contract has been negotiated and concluded outside
Hong Kong and is enforceable outside Hong Kong; and

*

the employee is paid outside of Hong Kong.

Company directors and other officers are subject to salaries tax on fee income if the corporation is managed and controlled in Hong Kong. Compensation for operational functions,
other than statutory duties, is treated as employment income. Pension income is also subject to salaries tax but only to the extent it is based on services rendered in Hong Kong.

Taxable employment income
Salaries tax is imposed on each worker's taxable income, which includes all income arising in or derived from any office, employment or pension in Hong Kong. Income from services performed by mariners, flight crews and individuals who do not spend more than 60 days
during visits in Hong Kong in any tax year is excluded from taxation during such periods.
Fringe benefits that are convertible into cash are taxable. Also taxable are an employer's
discharge of an employee's personal debts and certain fringe benefits provided locally and
abroad by the employer. The most common taxable fringe benefits in a typical expatriate
compensation package are:

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Guide to Global Payroll Management - 2020

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