An expatriate manager arrives in Shanghai on 1 October and leaves on 31 March. Payroll asks a single question: is he a tax resident this year? Most people answer it by counting days. That answer is usually wrong in one of two directions — either the count itself is done wrong, or the count is the wrong test. This note sets out how the rule actually works, including the six-year clock that most foreign employees do not know exists, and the reason the treaty version of “183 days” is not the same 183 days.
What the 183-day test actually decides
Article 1 of the Individual Income Tax Law defines a resident individual in two alternative ways: a person who has a domicile in China, or a person who has no domicile but has spent 183 days or more in China in a tax year. The tax year is the calendar year, 1 January to 31 December.
The consequence is not cosmetic. A resident individual is taxed on worldwide income. A non-resident is taxed only on China-source income. That single classification can add an entire foreign salary, foreign rental income or foreign investment gain to the Chinese tax base.
The first test is the one that catches people who never expected it. Domicile here does not mean owning property or holding a residence permit. Under Article 2 of the Implementing Regulations (State Council Order No. 707), a person has a domicile in China where they habitually reside in China by reason of household registration, family ties or economic interests. A Chinese national who has worked abroad for years may still fail this test in the tax authority’s view, and a foreign national who has moved their family and life to China may fail it too. Days are irrelevant once domicile is established. For the typical assignee with a home, family and employer abroad, domicile is normally absent, and the day count is the only test that matters.
How to count a day: the 24-hour rule
This is where most self-assessments go wrong. Days are not counted as calendar days on Chinese soil. Under Article 2 of MOF and STA Announcement No. 34 of 2019, a day counts only if the person is present in China for the full 24 hours of that day. A day on which presence is less than 24 hours does not count at all.
The official illustration makes the effect concrete: a Hong Kong resident who arrives in Shenzhen on Monday morning and returns to Hong Kong on Friday evening has less than 24 hours in China on both Monday and Friday, so neither counts; Saturday and Sunday are spent in Hong Kong. Three days a week count, and across 52 weeks that is 156 days — below the threshold, so the person remains a non-resident and their entire foreign income stays outside Chinese tax.
The most common error: counting days in China as days worked in China. They are different tests. Days of residence follow the 24-hour rule in Announcement No. 34 of 2019. Days of work, used to allocate employment income between China and abroad, are defined separately in Announcement No. 35 of 2019 and include public holidays, personal leave and training taken during the China work period. A person can have 200 days of residence and a different number of China work days in the same year.
The four tiers for employment income
Once residence is settled, employment income is split by a second set of thresholds. The rules sit in Article 5 of the Implementing Regulations and in Announcement No. 35 of 2019 (Ministry of Finance and STA).
| Days in China | What is taxable | Practical effect |
|---|---|---|
| 90 days or less | Income for work performed in China that is paid or borne by a Chinese employer | Foreign-paid salary for China work escapes Chinese tax entirely |
| More than 90, under 183 | All income attributable to work performed in China, regardless of who pays | The foreign payroll no longer shelters China work days |
| 183 or more, six-year test not met | Worldwide employment income, except foreign-paid income for work performed outside China | Offshore salary for offshore work stays exempt, but must be claimed |
| 183 or more, six consecutive years met | Worldwide income, with no carve-out for foreign-paid foreign work | Full global exposure; only a foreign tax credit relieves double taxation |
Two things about this table are regularly missed. First, the exemption in the third row is not automatic: Article 4 of the Implementing Regulations requires the individual to file with the competent tax authority before the exemption applies. Second, the 90-day tier is a domestic-law rule; where a treaty applies, the treaty’s own threshold governs and is usually 183 days. Once the taxable base is settled, the rate schedule in China individual income tax brackets applies to the balance.
The six-year clock, and why it starts in 2019
The exemption for foreign-paid income for foreign work is not indefinite. Article 4 of the Implementing Regulations sets two conditions and one reset:
- The exemption applies where the years in which the person spent 183 days or more in China are fewer than six consecutive years.
- In any such year, a single absence from China of more than 30 days resets the consecutive count to zero.
Announcement No. 34 of 2019 then fixes the starting point, and this is the detail that surprises people: the six prior years are the six consecutive years before the current one, and the count begins with 2019. Years up to and including 2018 are disregarded entirely.
The arithmetic consequence is worth stating plainly. Because the clock starts in 2019, no one could have accumulated six qualifying years before 2025. 2025 was the first year in which the six-year test could actually bite, and 2026 is the first year in which the 30-day reset can be observed in practice.
The official example runs as follows. A Hong Kong resident works in Shenzhen from 1 January 2013 and returns to Hong Kong on 30 August 2026, with one trip home from 1 February to 15 March 2025. Because pre-2019 years are disregarded, the qualifying years run 2019 to 2024 — fewer than six at the end of 2024, so foreign-paid foreign income is exempt. In 2025 the count reaches six consecutive years with no absence over 30 days, so 2025 income is taxable worldwide. In 2026 the trip of 1 February to 15 March 2025 — 43 days — has reset the count, so the foreign-paid foreign income is exempt again.
The treaty 183 is a different 183
Where the individual is a tax resident of a treaty partner, the treaty may override the domestic result. Article 15 of the China–Singapore treaty is the standard model, and most Chinese treaties follow it. Employment income is taxable only in the residence state if all three of the following hold:
- the recipient is present in China for a period or periods not exceeding 183 days in any twelve-month period beginning or ending in the tax year concerned;
- the remuneration is paid by, or on behalf of, an employer who is not a resident of China;
- the remuneration is not borne by a permanent establishment that the employer has in China.
The difference that matters is the measuring window:
| Point | Domestic law | Treaty |
|---|---|---|
| Measuring period | The calendar year, 1 January to 31 December | Any 12-month period beginning or ending in that year |
| Day-counting method | 24-hour rule; part-days excluded | Days of presence, as the treaty and its interpretation provide |
| Conditions | Days only | Days, payer, and no permanent establishment — all three |
| Elective? | Mandatory | Optional; the taxpayer may choose the domestic computation instead |
The rolling window is the trap. A assignee who arrives on 1 October 2025 and leaves on 30 June 2026 is present 92 days in 2025 and 181 days in 2026 — under 183 in each calendar year. But the twelve months from 1 July 2025 to 30 June 2026 contain 273 days of presence, so for the 2026 tax year at least one qualifying twelve-month period exceeds the limit and the treaty exemption is not available on its own terms. Domestic-law counting would have produced the opposite answer.
Two different announcements numbered 35
A genuinely confusing detail, and one worth knowing before citing anything: in 2019 there are two announcements numbered 35, issued by different bodies, covering different things.
- Ministry of Finance and STA Announcement No. 35 of 2019 is the substantive one: source rules for salaries, bonuses and equity incentives, directors’ and senior management remuneration, the income-allocation formulas for the 90-day, 90-to-183-day and 183-day cases, and how treaties apply.
- STA Announcement No. 35 of 2019, issued in October 2019 and effective 1 January 2020, is procedural: the Measures for the Administration of Treaty Benefits for Non-Resident Taxpayers, which replaced the 2015 regime and set the “assess yourself, claim on filing, retain the documents” approach.
Citing the wrong one is a common error in English-language summaries. They are not interchangeable, and the procedural one does not create any entitlement — it only describes how an entitlement under a treaty is claimed.
Three worked examples
Example 1 — 174 days, no treaty. A German engineer spends 174 full days in China in 2026, paid entirely by the German parent. He is a non-resident. Only China-source income is taxable, and under the 90-to-183-day tier that means income attributable to work performed in China, regardless of the payer. His German salary for German work days is outside Chinese tax.
Example 2 — 200 days, third qualifying year. A French country manager spends 200 full days in China in 2026, the third consecutive year above 183 days. He is a resident. His worldwide employment income is taxable, except foreign-paid income attributable to work performed outside China — but only if he files for the Article 4 exemption. Suppose his total employment income is CNY 1,800,000, of which CNY 300,000 is paid by the French parent for 40 overseas work days. Filing the exemption removes that CNY 300,000 from the Chinese base. Failing to file leaves it in, and the tax on it at the 45 per cent top rate — see the bracket table — is money paid for a form that was not submitted.
Example 3 — the rolling window. As above, an assignee present 92 days in 2025 and 181 in 2026, but 273 days across the twelve months to 30 June 2026. Under domestic law neither year reaches 183 and the person is a non-resident throughout. Under a treaty with the standard wording, the 2026 year fails condition one. Which result applies depends on whether treaty relief is claimed, and that is an election, not an automatic outcome.
Five things to get right in practice
- Keep the immigration record, not a diary. Entry and exit stamps or the official exit-entry record are the evidence. Reconstructing days from a calendar or from expense claims fails on audit.
- Apply the 24-hour rule when projecting. Regional commuters and frequent short trips routinely under-count because they assume every day with a hotel night counts. It does not, if arrival and departure fall on the same day.
- Report when the estimate is exceeded. Announcement No. 35 of 2019 requires a report to the tax authority within 15 days after the end of the month in which actual days exceed a projected 90 or 183, with a recomputation and payment of the difference — and expressly without a late-payment surcharge. Silence converts a timing issue into a penalty issue.
- File for the six-year exemption. Without the filing, the exemption in Article 4 does not apply, regardless of how few qualifying years the person has.
- Obtain a tax residency certificate from home before claiming treaty relief. The certificate, the contract, payment evidence and — for passive income — beneficial ownership evidence are the documents that must be retained.
What this note does not cover
It does not cover the foreign tax credit mechanism for resident individuals, the treatment of equity incentives and deferred compensation, social insurance contributions for foreign employees, the separate rules for Hong Kong, Macao and Taiwan residents, or provincial practice in applying the day count. It also does not address permanent establishment exposure for the employer, which is a distinct question with a different answer. Where a conclusion depends on the specific treaty, the treaty text governs.
Sources and effective dates
- Individual Income Tax Law, Article 1 — the residence test and the calendar tax year; as amended with effect from 1 January 2019.
- Implementing Regulations of the Individual Income Tax Law (State Council Order No. 707), Articles 2, 4 and 5 — domicile, the six-year exemption and its filing requirement, and the 90-day rule; effective 1 January 2019.
- MOF and STA Announcement No. 34 of 2019, Announcement on the Criteria for Determining Residence Time of Individuals Without Domicile in China — the 24-hour rule, the six prior years, and the 2019 starting point; issued 14 March 2019, effective 1 January 2019.
- MOF and STA Announcement No. 35 of 2019 — source rules, income-allocation formulas, treaty application and the reporting obligation; effective 1 January 2019.
- STA Announcement No. 35 of 2019, Measures for the Administration of Treaty Benefits for Non-Resident Taxpayers — issued 14 October 2019, effective 1 January 2020; it superseded the earlier 2015 measures.
- China–Singapore Double Taxation Agreement, Article 15, and the interpretative note in STA Circular [2010] No. 75 — the three-condition employment income test and the twelve-month window.
Checked against the texts above in November 2026. Confirm the current version and your specific treaty before filing.