Pension lump-sum withdrawal tax
Eligibility, employee-pension withholding, the tax-agent refund, and treaty considerations.
A departing foreign worker can claim a lump-sum pension withdrawal; employee-pension lump sums generally have 20.42% Japanese withholding, but a refund of much of it can often be claimed through a Japanese tax agent by applying retirement-income treatment.
Effective: 2026-01-01 to 2026-12-31
Professional review pending — treat as draft and confirm with the authorities.
Key points
- Departing foreign workers may claim a lump-sum pension withdrawal.
- Employee-pension lump sums generally have 20.42% withholding.
- A tax-agent refund can apply retirement-income treatment.
- Weigh the withdrawal against future pension rights and totalization.
Claiming and the refund
Eligible departing foreign workers can apply for a lump-sum withdrawal payment of pension contributions. Employee-pension (厚生年金) lump sums are generally subject to 20.42% Japanese withholding at payment. However, by appointing a Japanese tax agent and filing to apply retirement-income treatment (with its deduction and one-half rule), a large part of that withholding can often be refunded.
Weigh it carefully
A lump-sum withdrawal ends the related Japanese pension rights, so weigh the cash now against future pension entitlement, and check any social-security (totalization) agreement between Japan and your country — coverage periods may be combinable so you keep rights instead of cashing out. Review before claiming.
Who this is for
- Foreign workers leaving Japan
- People deciding to cash out pension
What this is not
- People staying long-term in Japan
- A withdrawal forfeits future pension rights; check totalization agreements first.
Frequently asked questions
How does tax residency work in Japan?
For tax, Japan classifies you as non-resident, non-permanent resident, or permanent resident — separate from your immigration status. Broadly: non-residents are taxed only on Japan-source income; non-permanent residents (in Japan under 5 of the last 10 years, without permanent intent) are taxed on Japan-source income plus foreign income paid in or remitted to Japan; permanent residents (for tax) are taxed on worldwide income. This affects foreign income and investments, so confirm your category with the NTA or a tax accountant.