Income tax for Foreigners
Payroll (Expatiate: Salary paid outside Japan, Fringe benefits）
（There comes German Expatriate from the German parent company. The different
procedures for payroll from Japanese staff are as follows.)
Basically monthly payroll procedures are same as Japan staff. There would be difference in case Expatriate receives salary paid outside Japan and/or fringe benefits etc.
①Company house (including electricity and water) is provided by a company without any charge to staff. Individual tax and/or social insurance etc are born by the company.
→Company burden are recognised as fringe benefit and salary gross up is necessary for calculating monthly withholding tax under the PAYE (Pay as you earn) system.
②Expatriate comes from a country which has a pension treaty with Japan.
→After a certain application is made, double pension payment burden can be avoided.③Some salary is paid outside Japan.
→Salary for work in Japan is treated as taxable income due to Japan source income.
Salary paid outside Japan is outside the scope of monthly PAYE, but this is settled through the annual tax return filing.
・Working VISA (Certificate of Eligibility) is necessary to work in Japan.
・Pension treaty is not applied for local hired staff.
・There are taxable fringe benefits and non- taxable one.
・Gross up calculation is necessary if some fringe benefits are paid by company.
・Does the expatriate receive salary outside Japan? If not, tax burden would be settled through the Year End Adjustment like Japan local staff.
→If yes, self annual tax return filing is mandatory.
Individual tax return filing - self assessment - for Feigners (First year come to Japan, annual return filing, departure from Japan)+ Tax administrator
Tax return for Expatiate - First year come to Japan, annual tax return filing and departure from Japan.
First year come to Japan:
A person who has intention to live in Japan more than one year is categorised as Resident (Non Permanent Resident) from the first day when enter into Japan, even though a working VISA is not issued yet.
Departure from Japan:
When expatriate returns to home country for good, tax burden should be settled through Year End Adjustment or individual tax return filing by the day of departure from Japan. If tax administrator is assigned the tax rerun filing due date is extend until 15th March next year.
In case some payments relating to working in Japan (Bonus, resignation payment etc) after departure from Japan, 20% of withholding tax should be applied as Non-Resident.
If payments relating to working in Japan are made outside Japan, tax settlement should be made through a tax return filing. Tax burden would be same as 20% of gross payments.
・Withheld from salary:
- Salary paid in Japan, Fringe benefit (company house, social insurance and personal tax burden by company).
・Salary paid outside Japan:
- Outside the scope of PAYE = settled through tax return filing.
- Individual is categorised tax status Resident or Non-resident.
- Salary paid in Japan and outside Japan are taxed in different way.
- In case of Non-permanent Resident, some portion of salary relating to work outside Japan can bee exempt from taxable income if some conditions are met.
【Reference】Information about Income Tax（NTA Web-site）