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How to claim income tax refund on Lump-sum Withdrawal Payment for foreigners

Persons who do not have Japanese Nationality, when they lose their qualification as an insured person in the National Pension or Employee’s Pension and depart from Japan, can claim a Lump-sum Withdrawal Payment (Social Insurance) within two years from the date they no longer have an address in Japan.
The procedure to claim Lump-sum Withdrawal Payment is not complicated and you can apply yourself if you can prepare the following documents.

Document to be submitted

・Lump-sum Withdrawal Payment Claim Form

・Copy of your passport pages (verifying your name, date of birth, nationality, signature, and status of residence)

・Copy of your passport page (verifying your departure date from Japan)※

・Bank account information for the transfer of the Lump-sum Withdrawal payment

・National Pension Handbook and other documents verifying your Basic Pension Number

 
※If you submit your claim before your departure, please prepare 1) copy of resident card with registration of Moving-out Notification and the planned deletion date or 2) resident’s card exemption.

 

 

Income tax on Lump-sum Withdrawal Payment

For Lump-sum Withdrawal Payment for the National Pension, the income tax is not withheld at source.

However, for the Employees’ Pension, income tax at the rate of 20.42% is withheld at the time of payment. In other words, you will receive only about 80% of the amount of the Lump-Sum Payment.

In order to claim this withholding tax refund, you need to submit the “Tax Return for Refund Due to Taxation on Retirement Income at the Taxpayer’s Option” to the tax office.

By doing so, you will get a tax refund.

As soon as the Lump-sum Withdrawal Payment is remitted, the “Notice of Lump-sum Withdrawal Payment Determination” is sent to your home country.

Please send the original “Notice” to your Tax Agent. If your Tax Agent is a tax accountant, you can ask him or her to file your tax return and claim your refund immediately.