“I received a retirement allowance from a Japanese company, but Japanese income tax was deducted. Is there any way to recover this tax?” This article explains the taxation of retirement allowances received by non-residents in Japan, tax refunds, the notification of a tax agent, and the required attachments for tax returns.
1. Non-Residents and the Scope of Taxable Income
Of the retirement allowance received by a non-resident, the portion corresponding to the period of employment while they were a resident is considered Japan-sourced income and is subject to taxation in Japan. In principle, taxation is completed at the time of payment through withholding tax at a rate of 20.42%.
For explanations on the classification of non-residents and others, as well as the scope of taxable income, please refer to this article.
2. Income Tax Refund
By electing to have the retirement allowance treated as if it were received as a resident and filing a tax return in Japan, the taxpayer can obtain a refund of the withheld income tax.
3. Notification of a Tax Agent
A non-resident must appoint a tax agent and notify the tax office in order to file a tax return.
4. Attachments for the Tax Return
When submitting a tax return, a statement proving the withholding tax must be attached to the return.
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