Foreign Pension Tax Ramifications

[emikami]

...
Questions:

1. So for section (a) if you make, for example, only ¥2 million foreign pension you do not have to file a tax return?

2. Section (b): Which pensions are they talking about that are and aren’t subject to Japanese tax withholding? Isn’t everything “subject”?

3. Section (c): So if you make ¥2 million public pension and ¥100,000 add a side gig, you don’t have to file a tax return?

4 then it says “* Even if you are not required to file a return for income tax etc., you are required to file a return for income tax etc.” are they totally contradicting themselves or is that just a bad translation? What in the world does that mean?

Thanks again for your help.

1. No. If you have only pension which tax is withheld automatically to Japan (usually means Japanese pension), and it is below 4 million yen, and you don't have more than another 200,000 yen in other miscellaneous income excluding the pension, then you don't have to file a Japanese tax return.

2. Does your foreign pension automatically withhold tax paid to the Japanese government. I think not. So pretty much any foreign pension do not withhold Japanese tax. You have to file the Japanese tax return and pay the tax yourself for those types of income. So the income is subject to Japanese tax but is not deducted directly from your pension automatically. The later is called a tax withholding and the former is the tax liability.

3. If you had 2 million yen in Japanese pension only and had a side income that qualifies as miscellaneous income category of 100,000 yen, and no other income, then yes, you don't have to file a Japanese tax return but tax may already have been calculated and deducted for you anyway...but...

4. I bet it is talking about the over-withholding feature of the automatic deduction. It may be wise to file a tax return even if you are not required to in order to receive a refund which was withheld automatically - your actual tax liability.

But in general, if you don't have a Japanese pension, none of this applies to you. In fact, if you don't have Japanese work income nor Japanese pension, even if you had less than 200,000 yen of miscellaneous income other than the Japanese pension and Japanese work income, you'll have to file a Japanese tax return. It's kind of an extra perk for those working in Japan or receiving Japanese pension.

[bbkennyd]

The problem is that in Article 2 lists only "income tax" and "corporate tax" as covered by the tax treaty. In Japan, there's shotoku zei (national income tax) and also jyumin zei (local inhabitant tax).

I am very curious about the jyuminzei mentioned above. It makes sense that a resident of a municipality would be expected to pay towards the services they are using. In this case, however, for an American with a government sponsored pension, the question becomes whether jyuminzei is based on total worldwide income not concerning the tax status of that income or is it based solely on income that is taxable in Japan? Further, do different municipalities interpret these rules differently?