Aircrew tax question - UK/HKG

[JagdHamster]

Hi there,
I work as aircrew for a HKG parent airline, flying mainly from Heathrow to Hong Kong (with some duties in Asia) and have a UK contract with a UK-listed branch of that airline (no directors, merely a plate company) and salary paid in GBP into a UK bank account. I am also resident in the UK and a UK citizen. A few years ago the company advised us that we were all UK-employed and should clear HKG tax and pay full UK tax via PAYE.

Recently, HKG's IRD determined that this advice was all wrong and that we are considered HKG employees, mainly due to the source of income being the parent company and management and control (as well as the majority of duties) all taking place in HKG. Bit of a mess, then!

My question is in regard to the UK/HKG DTA, paragraph 3 of Article 14 "Income from employment". It says that international aircrew working for a HKG company "may be taxed" in HKG (effectively), but all this is notwithstanding (i.e. disregarding) paragraphs 1 and 2 (which deal with residence).

So, in notwithstanding residence, does this mean I should pay only HKG Income tax? This is how the Belgians and French interpret their DTAs (worded exactly the same way), but with HMRC you never know.

Thanks for your thoughts,
JH.

[maths]

The reference to "notwithstanding" means that irrespective of the earlier part of Art 14, if you are employed by a HK company (as you state HMRC have so determined) then HK are able to levy their income tax on your salary if their domestic law so provides.

This, however, does not preclude the UK also levying their income tax on your salary.