Salaries Tax - Employee versus
An employee has a
master and servant relationship with his employer. The work of an
employee is within the control of his employer as to what to do, how
to do and when to do. See
An office holder
holds an office created by law or covenants. The office holder's
duties are statutory and irrespective of whoever holding the office.
A common example is the director office of a company.
Not all so-called "directors" are
office holders in law. If a "director" is employed by a company
through an employment contract, he is an employee only, not a
"director" for tax purpose.
The income from a
Hong Kong employment
is taxable in full. The remuneration from a Hong Kong office is
taxable in full too. So, in general, whether the income is from a
Hong Kong employment or from a Hong Kong office is unimportant.
From case law, the location of a
director office depends on the management and control of the
company. In practice, the director office of a company incorporated
in Hong Kong is treated as locating in Hong Kong unless the contrary
is proved. Read Board of Review Case D123/02
For a non-Hong Kong employment, the income attributable to services
outside Hong Kong is exempt. Furthermore, for an employee performing
services in Hong Kong during visits not exceeding 60 days, he is
exempt from tax also. But these exemptions do not apply to a Hong
Kong office holder. Therefore, for a non-resident
working partly in Hong Kong and partly overseas, the distinction of
his income between employment and office can affect his tax
In practice, a person may hold the
capacity of an employee and an office holder at the same time. If
the employment contract does not clearly make a distinction of the
remuneration for the two capacities separately, the Revenue may take
all the remuneration as taxable income. So, to avoid tax dispute, it
is advisable to have the remunerations for these two different
capacities clearly defined.