竹田＆アソシエイツ税理士事務所 - [For foreigners working in Japan] Application for Lump-sum Withdrawal Payment

In this article, we would like to introduce a system for foreigners who are working in Japan or who have already left Japan.

I think it would be a good system for foreigners and HR departments of Japanese subsidiary companies to know, so I hope you will continue reading until the end of this articles.

So, what kind of system is…

It is a Lump-sum Withdrawal Payment.

Please be aware that the lump-sum withdrawal payment system itself does not apply to the corporation, but to employees.

Index

1. What is the Lump-sum Withdrawal Payment

If you do not have Japanese nationality and you are working in Japan, the employees’ pension expense will be deducted from your salary and bonus. However, foreigners working in Japan for a short period of time may not be able to fulfill their right to receive pension benefit in Japan.

That is why there is a lump-sum withdrawal payment system recover this.

The lump-sum withdrawal payment system is a system that allows foreigners who have lost their qualification as an insured person of the National Pension to claim lump-sum withdrawal payment of employees’ pension within 2 years from the day he/she no longer has an address in Japan.

2. Requirements for receiving a lump-sum withdrawal payment

In order to receive the lump-sum withdrawal payment, all of the following requirements must be met.

(1) You do not have Japanese nationality

(2) You have been paying Employee Pension insurance premiums for at least 6 months

(3) You do not have an address in Japan*1

(4) You have never had the right to receive a pension (including disability allowance)

*1 If you submit a Moving-out Notification to the municipality, you can claim for the Lump-sum Withdrawal Payment after leaving Japan with a re-entry permit/deemed re-entry permit. However, suppose you have not submitted the Moving-out Notification. In that case, you are considered as an insured person in the National Pension insurance, that’s why you cannot claim for the Lump-sum Withdrawal Payment until your re-entry permit expires.

3. Required documents

Following documents are required to apply.

(1) Copy of your passport (copy of page verifying your name, date of birth, nationality, signature, and status of residence)

(2) Documents verifying that you no longer have an address in Japan (Deleted residence record, etc. *1)

(3) Documents verifying the “Bank name,” “Branch name,” “Branch location,” “Bank account number,” and “Bank account holder’s name – showing that the bank account holder is the claimant himself/herself” (certificate issued by the bank, etc.). (Or the bank may verify your account information by placing a certification stamp in the “Bank stamp for verification” column).

(4) National Pension Book and other documents verifying your Basic Pension Number

*1 If you submitted the Moving-out Notification to the municipality of your residence before leaving Japan, we can confirm that you do not have an address in Japan from the deleted information in your residence card. Therefore, you do not need to attach the documents mentioned in point ②. 【Notes on submission】 If you wish to submit your Claim for Lump-sum Withdrawal Payment in Japan before departing Japan.

Specific details and application forms can be found below;

To foreigners departing from Japan (nenkin.go.jp)

4．Individual income tax implications

Since the amount received as a lump-sum withdrawal payment is paid to a non-resident, it is subject to withholding tax at the rate of 20.42% for Japanese tax purposes.

The lump-sum withdrawal payment is treated as retirement income for Japanese individual income tax purposes. However, the deduction for retirement income is larger than the other income, most of the taxes withheld will be refunded by filing tax return.

If you have received the lump-sum withdrawal payment in the past and have not filed tax return, you may be eligible for a refund within 5 years from January 1 of the year following the year you received the lump-sum withdrawal payment.

5. Procedures for receiving refund of withholding tax

In order to receive a refund of withholding tax, since there is a requirement that you don’t have an address in Japan, you need to appoint a tax agent and file a notification form for tax agent before leaving Japan or at the same time as filing tax return mentioned in 3 above.

Another reason to appoint a tax agent is that tax refund is limited to bank accounts located in Japan.