Remote work from home for an overseas company counts as China-source income: file individual income tax yourself; exchange receipts above the annual quota as employee remuneration.

There are no direct expenses. You must file an annual tax reconciliation between March 1 and June 30 of the following year. If your annual inflow exceeds the permitted limit, you’ll also need to provide an employment contract and proof of earnings. The main difficulty lies in remembering to file this tax yourself.

Whether this money is China-source income is governed by Article 3 of the Implementing Regulations of the Individual Income Tax Law (State Council Decree No. 707, effective January 1, 2019). It states: “Unless otherwise provided by the finance and tax authorities under the State Council, the following income is China-source income regardless of whether payment is made inside China: (1) income from providing services inside China through holding a position, employment, performance of a contract, or similar activities.” Article 6 of the same regulations defines two categories. “Wages and salaries” include wages, salaries, bonuses, year-end pay increases, labor dividends, allowances, subsidies, and other income related to holding a position or employment. “Remuneration for services” means income from providing services, including design, decoration, installation, drafting, laboratory analysis, testing, medical services, legal services, accounting, consulting, lecturing, translation, manuscript review, calligraphy and painting, sculpture, film and television, sound recording, video recording, entertainment, performances, advertising, exhibitions, technical services, introduction services, brokerage services, agency services, and other services. Article 6 of the Individual Income Tax Law sets the taxable-income calculation: a resident individual's taxable comprehensive income is the balance of annual income after deducting RMB 60,000 in expenses, special deductions, additional special deductions, and other deductions determined by law. The same article says that income from remuneration for services, authors' remuneration, and royalties is calculated after a 20% expense deduction. That 20% provision names only these three categories; wages and salaries are not among them. Wages and salaries therefore enter the income calculation at their full amount, and the tax differs between the two categories. Article 9 makes the income recipient the taxpayer and the organization or individual paying the income the withholding agent. Under Article 10, the taxpayer must file a return in circumstances including “(2) receiving taxable income without a withholding agent” and “(4) receiving overseas income.” Article 11 states that residents' comprehensive income is taxed annually; where annual reconciliation is required, it must be completed from March 1 to June 30 of the year after the income is received. For incoming funds, see the Administrative Measures on Personal Foreign Exchange (People's Bank of China Order No. 3 of 2006, effective February 1, 2007). Article 9 places individuals' foreign-currency settlement and domestic individuals' foreign-currency purchases under annual-total management. Within the annual total, transactions can be processed at a bank with the individual's valid identity document. Above it, current-account transactions require that identity document plus relevant proof of the transaction amount and other supporting materials. Article 7 requires banks and individuals to follow these rules and prohibits evading the limits by splitting transactions or evading authenticity checks through false commercial documents or vouchers. Article 2 of the Detailed Rules for Implementation of the Administrative Measures on Personal Foreign Exchange (Huifa [2007] No. 1) sets the annual totals for settlement and domestic individuals' purchases at the equivalent of USD 50,000 per person per year, respectively. Article 10 provides that, for a domestic individual's non-business current-account settlement above the annual total, the bank requires the individual's valid identity document and the prescribed supporting evidence; item (7), employee remuneration, requires an employment contract and proof of income (nationwide in China).

国务院 (2018). 中华人民共和国个人所得税法实施条例（国务院令第 707 号，第三、六条）. https://www.gov.cn/zhengce/zhengceku/2018-12/22/content_5351177.htm；全国人民代表大会常务委员会 (2018). 中华人民共和国个人所得税法（2018 年第七次修正，第六、九、十、十一条）. http://www.npc.gov.cn/zgrdw/npc/xinwen/2018-09/05/content_2060671.htm；国家税务总局政策法规库. 中华人民共和国个人所得税法（第六条）. https://fgk.chinatax.gov.cn/zcfgk/c100009/c5193028/content.html；中国人民银行 (2006). 个人外汇管理办法（中国人民银行令〔2006〕第 3 号，第七、九条）. https://www.gov.cn/gongbao/content/2007/content_786257.htm；国家外汇管理局 (2007). 个人外汇管理办法实施细则（汇发〔2007〕1 号，第二、十条）. https://www.safe.gov.cn/safe/2007/0105/22509.html

Which tax category applies depends on your relationship with the foreign employer. If you’ve signed an employment contract and follow their instructions, your earnings are classified as wages and salaries. If you’re contracted independently and deliver results on a project basis, they’re treated as labor remuneration. These two categories are taxed differently, so it’s essential to determine which applies before filing. For incoming payments under USD 50,000 per year, you can exchange currency simply by presenting your ID. Any amount exceeding this threshold requires submission of your employment contract and income proof to the bank. Avoid attempting to split payments artificially to bypass these limits. This guidance applies strictly to individuals working from within China without physically relocating abroad. Those who actually move overseas to work for foreign firms must follow different regulations, as outlined in Section 14 of this chapter (check first whether the employer holds proper licensing for overseas labor deployment). Four related topics are not addressed in this book due to lack of verifiable evidence: whether VAT applies or if invoices must be issued; whether long-term remote workers should obtain a business license or register as self-employed; whether labor laws permit claims for vacation time, overtime pay, or severance from foreign employers; and issues concerning cross-border data transfer and confidentiality. A total of 2006 RMB is the maximum annual limit for personal foreign exchange transactions under these rules.