Human Resources EU SME Topics

A foreign company without legal representation in mainland China cannot conclude labour contracts with Chinese citizens if the place of work performance is in China. To be able to do so, a legal entity must be established in the country; but even in this case the procedure to hire local citizens may differ: Representative offices can do so only through ad hoc agencies (such as FESCO or CIIC); joint ventures or wholly foreign-owned enterprises may employ local individuals directly, or still choose intermediaries (for more information on the different types of business entities that can be established in China, see the FAQ “What types of companies can I establish in China?”).

For foreign companies which do not wish to have any legal entity in China, but still need someone on the ground, the only possible solution is to establish a commercial relationship / service agreement with a self-employed professional, who will be responsible for paying independently income taxes and social security contributions.

Foreign workers in China are generally required to pay Individual Income Tax (IIT) on income earned in the country. Tax obligations depend on residency status:

• Those staying in China for 183 days or more in a calendar year are considered resident taxpayers, and will need to fill the annual reconciliation with the tax bureau. Resident taxpayers staying in China for more than 5 consecutive years will also be taxed in China on their global income.
• Those staying in China for less than 183 days in a calendar year are considered non-resident taxpayers, and are taxed only on income sourced in China (on a withholding basis by their employers)

China uses a progressive tax system for individual income, with rates ranging from 3% to 45%, depending on the income bracket. For foreign citizens, potential exemptions for certain allowances and deductions are granted, like housing subsidies or children’s education. Some foreign-sourced income may also be exempt under bilateral tax treaties between China and the foreign worker’s country of origin.

In addition to income tax, foreign workers need to contribute to China’s social insurance system, unless exempted under a bilateral social security agreement (this is the case only of a handful of EU Member States). Contributions are paid by both the employee and the employee; rates vary from province to province. Upon leaving China, foreign employees can reclaim their own pension contributions (this is done through their last employer).

To be able to work legally in China, foreign workers must have: (i) a work permit linked to a specific employer, and (ii) a residence permit for work purpose. Foreign students are not eligible to obtain such permits, but enjoy some flexibility to do internships in mainland China:

• Foreign students studying in Chinese universities with an X1 visa can undertake internships if they meet specific requirements. They must be enrolled in a qualified university, gain approval from their institution, obtain a study resident permit, and receive an official endorsement from the Exit-Entry Bureau. Internships must align with their major, be limited to one at a time, and not exceed 180 days without re-registration. Students on an X2 visa must convert it to an S2 visa to qualify. Non-compliance can lead to fines and disciplinary action.
• Foreigners studying in foreign universities and based abroad can enter China on Z visas for internships under inter-governmental agreements can apply for a residence permit for work marked as “Internship.” They must provide essential documents, including a valid passport, visa application form, recent photograph, health certificate, an application letter from their organization, and business-related permits. The exit-entry administration may request additional documents, interviews, or proof of financial support as needed. Decisions made by the administration regarding permit applications are final and cannot be appealed.

It is strongly advised not to enter China for work through the 30-day visa-free policy, or on other categories of visas, such as tourism or business. Although this used to be a common practice, it is illegal and can lead to detainment and even deportation (and consequent multi-year ban from re-entering China).

It is very common for foreign companies and organisations in China to outsource their human resources management to professional third-party agencies. In fact, China has complex labour regulations and a fast-evolving regulatory environment, which can often baffle foreign companies in the market. Outsourcing employee recruitment management means that foreign companies can reduce costs, as they will not need to hire an in-house HR team.

In some cases, such as for Representative Offices, this is the only possible way to hire and manage human resources in China. The services provided by professional HR firms in China usually include HR outsourcing/dispatching Chinese staff to representative offices; personnel file transfer & management; social insurance management; housing fund management for local employees; medical services & local employee welfare solutions; payroll and taxation services; recruiting services; training & development; Chinese labour law consultancy.

China has introduced a visa-free policy allowing citizens of certain countries to visit the country for business, tourism, family visits, and transit for up to 30 days. However, this policy applies only to selected nations.

As of 4 November 2025, citizens of all EU Member States are eligible for 30-day visa-free entry to China, except for nationals of Czechia, and Lithuania. Eligible travellers must possess a valid passport and a return flight ticket. Immigration officials may also request proof of accommodation and a return ticket upon arrival.

It is important to note that the visa waiver does not extend to individuals traveling to China for work, study, or journalism. In these cases, a specific visa is still required, even for citizens of eligible countries.