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.

An office holder holds an office created by law or covenants. The office holder’s duties and responsibilities are statutory and irrespective of whoever holding the office. A common example is the director of a corporation.

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.

The basic charge to Salaries Tax is laid down in section 8(1) of the Inland Revenue Ordinance, that is, income from any employment or an office is assessable in Hong Kong. Such income is stated in the section as “income arising in or derived from Hong Kong”. If you are an employee and your source of employment is in Hong Kong, your full income derived from that employment falls within the basic charge to salaries tax, except in the basis period of a year of assessment render all your services outside Hong Kong, or services rendered during your visit to Hong Kong not exceeding a total of 60 days in the basis period of a year of assessment. If you are a director of a company resident in Hong Kong, your full income derived from that office in Hong Kong is chargeable to salaries tax. This is not affected by the number of days during the year of assessment that you stayed in Hong Kong, and no exemption or relief are available, because they apply only to income from employment.

In practice, a person may hold the capacity of an employment 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 Inland Revenue Department 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.

Source：Hong Kong Inland Revenue Department’s website

- https://www.ird.gov.hk/eng/pdf/dipn10.pdf
- https://www.gov.hk/en/residents/taxes/salaries/salariestax/exemption/index.htm