Hello,

Lately i got some confusing information about the amount of tax what i have to pay if i start living in China after my retirement.
Some people are saying that you don't have to pay tax if you are retired, and some say that you have to pay.

Is there anybody already retired end living in China who can share information about this?

It will be much helpful in deciding when i am going to move to China

Thank you for sharing information

Nico

My understanding.

In China you only pay tax on the income that is declared, by either you or your employer. It is not unheard of for an employer to 'deduct' tax and national insurance from pay and then keep it themselves.

In China, if you are over retirement age (60), you will not get a work visa. You will not get recruited by the public sector schools and universities, they are not permitted to employ over 60 foreigners any more.

Many teachers returned home when the regulation was brought in a few years ago. However, some teachers of 60+ years end up doing something in the private sector; perhaps on the wrong visa. Others freelance as tutors (cash in hand), also technically illegal.

Maybe i didn't make myself clear.
I am not planning to look for work in China, i will live from my pension what is paid to my bank account in holland.

So what i am asking, if i start living in China, my wife is Chinese, will the Chinese government deduct tax from my dutch pension

Pensions are not taxable in China. Generally, income source outside China is not taxed by China unless you are deemed "domiciled" in China.

It is not clear to me what would cause you to be deemed, by the Chinese, as domiciled in China. Maybe owning a home or business, I do know that if you remain in China for five years being domiciled is triggered. Foreigners deemed domiciled will find their world wide income subject to China's Individual Income Tax (IIT). China's IIT is progressive and rates are high at a fairly low, by US standards, income levels. My opinion is that you avoid being domiciled.

As for the five year rule, you can avoid being domiciled by remaining outside China for at least 30 consecutive full days, or accumulating 90 days total in less than five years. If you stay out of China for 30 days, the five clock is reset upon your return.

It is now difficult to find information on China's IIT as there does not seem any bilingual books published the last five years or so. Try websites of the Big4 CPA firms. I like PWC and Deloitte. I retired in the US in 2001, then taught accounting in China for eight years. When I got to 67, the university declined to give me another contract. I have been living off a pension and savings.

In China you only pay tax on declared income.

Hi

iask.sina.com.cn/b/1717730.html

A Chinese lady with a German husband asked the same question. because your pension comes from the work you did overseas its not required to pay tax here. Income Tax in China is required only for the income you get from the work you do here.
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But as per what Geezer said about the 5 year rule, if you have any rental or Stock etc income in Holland or elsewhere after 5 years of continous living in China then you would have to pay income tax on that here in China. So as Geezer says, get out for 30 days and reset the clock before that becomes an issue.

Dazzer is correct. In China you pay tax only on declared income. However, China tax law is quite clear; you must declare all income.

I think a safe bet is that governments determine what of your income is taxable. And, I am sure governments fully expect all income, as defined by the government, and all tax due on that income is paid. Governments, all of them I am sure, will take measures to insure compliance with the tax laws and will attempt to collect, along with penalties and fines, all tax due.

The government defines what activities produce income. Any remuneration derived from those activities is taxable. The key factor in understanding taxation is to realize you owe at least an accounting to the government for all income. The government requires you to 1) report all income, and, pay all taxes due. Failure to comply with tax laws laws can lead to various unpleasant actions by the government.

I use "government" as the above are pretty much universal in what ever country you earn your money and, in the case of Americans, also applies to US taxes where ever the income is earned. Each of us needs to be aware of China's IIT and the laws of whatever country we are citizens of.

Be aware China tax enforcement, for everyone, has been hit or miss, perhaps lax, and the Chinese government knows this. For several years, China has been developing a tax enforcement system. Essentially, it is a huge database focused on collecting information regarding payments, receipts, and personal data. This multiyear effort is being built and beta tested on a limited target group: expats. All employers report up to tax bureaus and the tax bureaus report to the provincial level and eventually there will be a national database.

Additionally, income earners are required to file monthly reports on income reported and NOT reported by employers. Part time or side jobs and occasional work is to be included in this self filed tax return. Under the IIT, this income is taxed at different rates, and calculated differently, than income earned under contract at a primary employer. The IIT refers to this type of income as "personal services."

China is "nationalizing" IIT. This will standardize and unify application of the tax law, consistent with the national database program, as local tax bureaus come under the direction of the State Administration of Taxation (SAT). In the past, each local Tax Bureau could determine how to apply tax laws and calculate tax.

Like China has achieved a national standard on anything. You know when you have been in China too long when you no longer ask why the guy earning 4000rmb/m is driving a Mercedes.

Or the guy driving a Mercedes parks illegally to avoid paying parking.