Is Japanese pension taxed?

By | 01/03/2023

Persons residing in Japan – Tax withheld (Gensen Choshu) and need submitting tax returns for over 4 million yen’s pension income

Japanese tax code regards pensions as incomes, so you need to pay an income tax from them.
Persons who reside inside Japan are withheld their pension’s income taxes before receiving (Gensen Choshu).
If your annual pension is under 4 million JPY and you don’t receive other incomes, then you don’t have to submit a tax return (Kakutei Shinkoku).
However, if your annual pension is over 4 million JPY and/or you receive other incomes over some minimum amount, then you have to submit a tax return year by year.

On the other hand if you expect to receive a tax refund from your pension payment because of, for example, an exemption for your medical payment, it is OK to submit a tax return for that.

Persons residing out of Japan – Tax withheld (Gensen Choshu) but can be exempted under tax treaty

If you reside outside Japan, withheld tax is also deducted from your pension. Its rate is 20.42% regardless of the pension’s amount (as of year 2023).
But it can get exempt if you reside in counties with the treaty regarding tax payments between Japan. You need to submit a form to apply the treaty to Japan Pension Service. The treaty regarding tax payments is being concluded in order not to impose taxes on one person’s income in two countries (*).

(*) For countries that conclude the treaty regarding tax payments between Japan, please see the link below.

Lump-sum Withdrawal Payments – Tax withheld (Gensen Choshu) but can be refunded

A withheld tax is deducted from pension’s Lump-sum Withdrawal Payments too, whose rate is 20.42% regardless of the amount (as of year 2023).
However, this tax can be refunded almost fully through a tax return. If you reside outside Japan, you can make your tax agent claim a tax return of Lump-sum Withdrawal Payments.

For Detailed Information..

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We have staff of Labor and Social Security Attorney, Administrative Scrivener, and Tax Accountant.

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