How does a Chinese work in Germany

German staff

Foreigners in China

So far, immigration to China has been extremely low. Almost 1 million foreigners live in the whole of China. Immigration is strictly controlled by the Chinese government

 

Work stays in China

Generally speaking, Germans who want to work in China need a work permit. To do this, you must first apply for a Z visa (Work) at one of the Visa Application Centers in Germany. After arriving in China, this must be converted into a residence permit. In the further course of the process you will receive the work permit. Since 2015, a work permit for certain, specially listed activities must also be applied for for short work stays. In particular, a distinction must now be made between people who are sent to China by their parent company to local subsidiaries, branches or representative offices, and between people who work in China for their customers or business partners. While the former still do not require a work permit for activities of up to 90 days, the second group now requires such a work permit for certain activities.

 

For foreigners who want to apply for a Chinese work permit, a three-level point system was introduced nationwide from April 2017. It "grades" foreign workers based on their experience and skills. It is no longer just professional experience and the amount of the salary that are included, but for the first time also Chinese language skills and degrees from Chinese universities. The law firm Taylor Wessing has put a points calculator online: https://sojump.com/jq/13867469.aspx

 

German interns in China

Since 2015 it has become difficult to work as an intern in China. F and M visas may no longer be issued to German interns. It is easiest for German students who are enrolled at Chinese universities to get a work permit.

 

Double taxation treaty

A double taxation agreement (DBA) has been in force between the Federal Republic of Germany and the People's Republic of China since 1985. This has been renewed, the new one has been in force since 1.1.2017. You can find information about the new features here.

 

social insurance

If you work in China - depending on your individual requirements - changes to insurance and pensions are pending. These can sometimes have drastic consequences; mistakes made are often irreparable. In your own interest, you should therefore deal with the organization of the foreign insurance in good time!

 

Social security system in China

• Since 2011, contributions to China's social security system are not only mandatory for the Chinese, but also for all foreigners employed in China.
• Foreigners who come from countries that already have social security agreements with China may be exempt from some contributions. These agreements are intended to prevent social security contributions on the same income from having to be paid separately in two countries.
• China currently has social security agreements with Germany, South Korea, Denmark, Finland, Canada and Switzerland.

 

In general, in Germany as in China, employees are required to take out insurance where they work (territorial principle), unless other provisions apply through supranational regulations or bilateral social security agreements. The main task of these agreements is to avoid double insurance. Therefore, the regulations on the social security law of the PR China of January 1st, 2008 are also relevant for foreign employees. These are subject to the Chinese social security system if no overriding social security agreements are applied. In the German-Chinese relationship, the German-Chinese social security agreement from 2002 applies, but this only covers the subject areas of pension and unemployment insurance. In addition, the provisions of the agreement only apply in the event of the employee being posted and for a period of 48 months.

 

Please note that the compulsory insurance for foreign personnel is implemented differently in different regions. It is advisable here to obtain precise information for the respective location.

 

Before a long-term stay in China, it is generally necessary to clarify whether it is possible to remain in the German social security system and, if so, whether this is intended and makes sense for the foreign assignment. The interests of the employer and employee must be weighed up here.

 

Income tax

The new Income Tax Act, which has been in force since January 1st, 2019, is considered to be the most profound change in income tax law since its introduction. The changes lead to adjustments in the taxation of foreigners and Chinese.

 

The changes will have a major impact on foreigners living in China. The new law, for example, introduced the internationally widespread approach - the 183-day rule - for determining residence. According to the old Income Tax Law, people without permanent residences in China were considered "tax residents" if they had resided in China for a full year. A person who does not have permanent residence in China, but stays in the country for an accumulated 183 days or more within a year, is now considered a "tax resident". The tax resident is taxable in China on his worldwide income.

More on this at GTAI or Roedl & Partner.

 

Foreign health insurance

The German statutory health insurance is not valid in China. Therefore, you should take out private foreign health insurance with repatriation before going to China. If you go abroad, it is very difficult to find the right insurance. In international comparison, Germany has some catching up to do when it comes to international insurance. German insurers often think far too little beyond their own national borders. For example, it is not easy to find affordable, unlimited international health insurance on the German insurance market. Most insurances are valid for a maximum of 3 years. If there is a corresponding agreement, those with statutory health insurance can switch to the respective statutory health insurance company in the host country. However, this only applies in the European Union. Private health insurers usually only offer convenient continued insurance for Europe. For permanent life on other continents, solutions are usually limited to a few years and are expensive. You can find detailed information on this topic on the DVKA (German Liaison Office for Health Insurance - Abroad).

 

unemployment insurance

Since February 2006, employees who work abroad can apply for voluntary unemployment insurance at the Federal Employment Agency. The prerequisite is a twelve-month compulsory insurance or compensation payments in the last two years. There is a one-month deadline for the application.

 

Private liability insurance

Normally, (German) private liability insurances include special protection in non-European countries via the additional conditions. This period can be extended to a longer period - three or five years. Have your insurance company confirm the coverage for the duration of your stay and the country in writing.

 

Legal protection insurance

German legal expenses insurance are often not valid in non-European countries. Check this before you move.

 

Sources: Germany Trade and Invest; AHK China; German Embassy, ​​Beijing; MOFCOM (Ministry of Commerce People's Republic of China); Luther Lawyers; WZR Beijing; Ernst & Young; Roedl & Partner, Manager Magazin

 

Status: April 2020