For Foreign Nationals in Japan

“Maximizing Your Retirement Benefits in Japan: Navigating the Lump-sum Withdrawal Payment System and Tax Refunds for Foreign Nationals”

 

Discover the Lump-sum Withdrawal Payment system, a valuable resource for foreign nationals employed in Japan or those who have already left. This beneficial system is essential for foreign employees to know. Continue reading to learn more about this system and how our office can provide the assistance you need.

※In the case where your home country has a social security agreement with Japan, it may be possible to combine the pension system and pension participation period of your home country (you can check the contents of each country’s agreement here).

 

Overview of the Lump-sum Withdrawal Payment System

Foreigners working in Japan without Japanese nationality will have employee pension expenses deducted from their salary and bonuses. However, those employed in Japan for short periods may not be able to fully exercise their right to receive pension benefits. To address this issue, the lump-sum withdrawal payment system has been established.

This system enables foreigners who lose their qualification as insured persons under the National Pension to claim a lump-sum withdrawal payment from their employee pension within two years of losing their address in Japan.

For more information and application forms, please visit nenkin.go.jp.

 

 

Does the 20.42% Income Tax Apply?

For non-residents receiving a lump-sum withdrawal payment, a 20.42% withholding tax is applied under Japanese tax regulations. Nevertheless, this payment is categorized as retirement income, which typically results in a larger tax deduction compared to other income types. Consequently, most withheld taxes are refunded upon filing a tax return.

Foreign nationals who have received a lump-sum withdrawal payment in the past and have not yet filed a tax return may still be eligible for a refund. The eligibility window extends up to five years from January 1st following the year the payment was obtained.

 

 

How to receive a refund?

To receive a withholding tax refund, you must appoint a tax agent and file a notification form for the tax agent before leaving Japan or at the same time as filing the tax return. This is necessary because tax refunds are limited to bank accounts located in Japan.

Our office is dedicated to assisting foreign nationals in preparing income tax returns. We understand the complexities of the Japanese tax system and the challenges faced by foreign nationals when navigating this process. We will guide you through each step, ensuring a smooth and efficient experience.Please kindly check our service fees here.

If you require assistance or have any questions, please feel free to contact us anytime.