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Do foreigners have to pay social security in China?
For foreigners working in China, the question of whether they must pay social security has always existed in recent years. Can expats not do it? Today we will sort it out for you.
Misconception 1:
“Foreign employees dispatched from foreign headquarters do not need to pay social insurance contributions in China.”
Reinterpretation 1:
The employment status of foreigners working in China is summarized as below.
a. Foreign employees dispatched from foreign headquarters to work in China, who has signed labor contract with foreign headquarters and has obtained relevant work permits for employment in the local affiliated company in China;
b. Foreign employees employed by local company in China, who has signed labor contract with the local company and obtained relevant work permits for employment.
Employees in the above status shall participate in social insurance scheme pursuant to the PRC Social Insurance Law.
Misconception 2:
“Foreign employees whose country of origin is in the list of countries where mutual exemption of social insurance contributions apply under the bilateral agreement with China do not need to pay social insurance contributions in China.”
Reinterpretation 2:
At present, 12 countries have signed bilateral agreement on mutual exemption of social insurance contribution with China, among which 11 of such agreements have come into effect and implementation. These countries include Germany, South Korea, Denmark, Switzerland, the Netherlands, Finland, Luxembourg, Canada, Spain, Japan and Serbia.
According to the bilateral agreement, only citizens participating in social insurance scheme in their home country can be exempted from the obligation of (part of) social insurance contributions as agreed in the bilateral agreement during the period of employment in the other country that signs the bilateral agreement.
The purpose of the bilateral agreement on mutual exemption of social insurance contribution is to avoid repeated social insurance contribution, on the prerequisite that the individual has already participated in the social insurance scheme in their country of origin and provided “Certificate of Coverage” in due form.
Therefore, foreigners who fail to meet the prerequisite above shall not be exempted from social insurance contribution in China even if their country of origin is on the list.
In addition, the exemption of social insurance contribution stipulated in the bilateral agreements are not applicable to social insurances in all categories. Subject to stipulations agreed by different countries, only the contribution for basic pension insurance and unemployment insurance can be exempted by providing "Certificate of Coverage" issued by relevant government departments.
Misconception 3:
“Our company has already provided foreign employees with commercial pension insurance, so there is no need to pay social insurance contribution.”
Reinterpretation 3:
The benefits offered by the company shall be not be considered as a substitute for statutory obligations set forth in the national laws and regulations.
However, on the basis of participation in China’s social insurance scheme pursuant to the law, companies may provide additional benefits as supplement .
Misconception 4:
“Foreign employees have agreed through negotiation that the company do not need to enroll them in China’s social insurance scheme.”
Reinterpretation 4:
It is the statutory obligation to participate in China’s social insurance scheme in compliance with Chinese laws. No agreement made between any parties shall overtop the law.
Should you still have anything unclear, please do not hesitate to contact us.