[Part 4: Leaving & Returning to Japan] Tax Procedures When Leaving Japan

When people leave Japan due to returning to their home country or an overseas transfer, many assume that "once you leave the country, your tax obligations end too." This is a mistake.

Under Japan's tax system, there are several situations where tax obligations remain even after you leave the country, and getting the order of procedures wrong can lead to irreversible losses. In particular, if you don't take action before leaving Japan, you could lose hundreds of thousands of yen in refunds from the pension lump-sum withdrawal payment.

This article is structured so you can check what to do starting three months before departure.

For information on residency status, which determines the scope of taxation, please see Part ① (General Overview).

1. Why Tax Obligations Remain Even After Leaving Japan

There are two reasons.

① Income tax — Income earned from January 1st of the year you leave until your departure date is naturally subject to income tax. Company employees who leave partway through the year do not receive the year-end tax adjustment, so their taxes have not yet been settled.

② Resident tax — Since this tax is levied based on the previous year's income, at the time of departure there is often "unpaid tax from the previous year" still outstanding.

This article focuses on how to handle these two matters before leaving Japan.

2. The Resident Tax "January 1st Rule"

Resident tax is levied by the municipality where you had an address as of January 1st of that year, based on your income from January to December of the previous year.

In other words:

If you were in Japan on January 1st → that year's resident tax is fully charged based on the previous year's income Even if you leave partway through the year, this tax obligation does not disappear

Example

If you return to your home country in March 2026:

For the FY2026 amount, you must either pay the full amount in one lump sum before leaving Japan (originally scheduled to be paid in installments from June to the following May), or hand it over to a tax administrator to manage.

Differences Depending on Timing of Departure

If you leave Japan during December and submit a moving-out notification, you will have no registered address as of January 1st the following year, so you will not be taxed for that following year's resident tax. However, if you leave on January 2nd, you will be taxed. Since a difference of just a few days can affect a full year's worth of resident tax, if you have flexibility in choosing your departure date, this is worth considering.

3. Appointing a Tax Administrator

To have someone handle tax procedures in Japan on your behalf after you leave, you can appoint a tax administrator. Since the procedures are separate for income tax and resident tax, you need to complete both.

Who Can Be Appointed

There are no qualification restrictions, as long as the person is an individual with an address or residence in Japan, or a corporation with an office in Japan.

A friend or acquaintance staying in Japan Your former employer (if the company is willing to help) Your spouse or a relative A licensed tax accountant (zeirishi)

The person taking on this role will be responsible for receiving and forwarding documents, and making tax payments on your behalf if necessary. Be sure to explain the situation to them in advance and get their consent before submitting the notification.

Timing of Submission

You must submit this before leaving Japan. If you realize you need this after you've already left, the following procedures will no longer be available to you.

4. Income Tax Procedures to Complete Before Leaving Japan

Option A: File a Quasi-Final Tax Return (Complete filing before departure)

By your departure date, file a tax return covering income from January 1st of that year through your departure date. Deductions are calculated only for the period up to your departure date.

Option B: Appoint a Tax Administrator and File the Following Year as Usual

If you file a notification appointing a tax administrator, you can file a return covering the full year during the normal filing period (February 16 to March 15 of the following year).

Generally, Option B is more advantageous. This is because income deductions for that year (social insurance premium deduction, life insurance premium deduction, dependent deduction, etc.) can be applied on an annual basis. The difference can be significant, especially if you leave Japan in the latter half of the year.

For Company Employees Who Resign Partway Through the Year

When you resign, your company will not perform the year-end tax adjustment for you. Since the withheld tax amount remains only an estimate, in many cases a final tax return will result in a refund. Be sure to receive your withholding tax statement (gensen choshuhyo) from your employer before leaving Japan.

5. Pension Lump-Sum Withdrawal Payment — The Order of Procedures Matters

Foreign nationals who have contributed to Japan's pension system for at least 6 months can claim the lump-sum withdrawal payment within 2 years of leaving Japan. For Employees' Pension Insurance, up to 60 months of contributions are eligible.

20.42% Is Withheld at Source

When the lump-sum withdrawal payment is made, 20.42% is withheld as income tax at the source. For a payment of 1,000,000 yen, approximately 200,000 yen would be deducted.

How to Receive a Refund

If you have appointed a tax administrator before leaving Japan, once you receive the payment decision notice for the lump-sum withdrawal payment, your tax administrator can file a final tax return on your behalf to claim a refund of this withheld tax. In most cases, nearly the entire amount is refunded.

Conversely, if you leave Japan without appointing a tax administrator, you will not be able to receive this refund.

The Correct Order

① Before departure — Submit the tax administrator notification to the tax office ② Departure — Submit a moving-out notification (remove your resident registration) ③ After departure — Apply to the Japan Pension Service for the lump-sum withdrawal payment ④ Receive the payment decision notice ⑤ Tax administrator files a final tax return → refund of withheld tax

If you skip step ①, you cannot reach step ⑤. The only procedure you can complete before leaving Japan determines the outcome of the largest refund available to you.

Note that once you receive the lump-sum withdrawal payment, your pension enrollment record for that period is erased. If you might return to Japan in the future, or if you are from a country with a Social Security Agreement with Japan (which allows pension enrollment periods to be combined with your home country's system), it may be more advantageous not to claim this payment.

6. Systems to Check If You Have Significant Assets

Statement of Overseas Assets

Residents (excluding non-permanent residents) who hold overseas assets with a total value exceeding 50 million yen as of December 31st of that year are required to submit a Statement of Overseas Assets by June 30th of the following year.

Once you become a non-resident due to leaving Japan, you are no longer subject to this requirement, but the obligation may still apply for the years before your departure.

Exit Tax (Taxation Upon Departure)

This system applies income tax on unrealized gains for certain residents who hold securities worth 100 million yen or more when they leave Japan. It applies only to those who have lived in Japan for more than 5 years within the past 10 years.

This does not apply to most general residents, but if you hold stocks or investment trusts with a large appraised value, you should check this in advance. There is also a special provision for deferring tax payment (which requires appointing a tax administrator), so if you think this may apply to you, consult a tax accountant early.

7. Additional Procedures for Sole Proprietors

If you have been working as a freelancer or sole proprietor, the following are also required.

Before closing your business bank account, decide how you will receive any refund. Since you cannot receive a refund without a bank account in Japan, you will need to either designate your tax administrator's account or keep your own account open until the refund process is complete.

8. Pre-Departure Checklist

3 Months Before ☐ Ask someone to be your tax administrator and get their consent ☐ Check whether the exit tax applies to you (for those with assets of 100 million yen or more) ☐ Check whether your home country has a Social Security Agreement with Japan (to decide whether to claim the lump-sum withdrawal payment)

1 Month Before ☐ Submit the "Notification of Tax Administrator for Income Tax and Consumption Tax" to the tax office ☐ Notify your municipality of your resident tax administrator ☐ Check your remaining resident tax balance and decide whether to pay in full or hand it over to your administrator ☐ Sole proprietors: submit business closure-related notifications

Immediately Before Departure ☐ Receive your withholding tax statement from your employer ☐ Submit a moving-out notification to your municipality ☐ Secure a bank account to receive refunds (your tax administrator's account or your own account kept open) ☐ Keep your pension handbook and basic pension number on hand ☐ Keep copies of past tax returns and remittance records

After Departure ☐ Apply to the Japan Pension Service for the lump-sum withdrawal payment (within 2 years) ☐ Forward the payment decision notice to your tax administrator ☐ File a final tax return through your tax administrator (February 16 to March 15 of the following year)

9. Frequently Asked Questions

Q. I received a resident tax payment notice after returning to my home country. What happens if I ignore it? A. Late payment penalties will accrue, and if you have assets in Japan, they could be seized. Unpaid taxes can also negatively affect visa renewal or change of status applications, so this is especially important if you plan to return to Japan in the future.

Q. I'm going on a short-term overseas transfer and will eventually return to Japan. A. If your planned time abroad is less than 1 year, you will generally continue to be treated as a resident. If it is planned to be 1 year or more, you will become a non-resident from the date you leave. Whether your family remains in Japan is also a factor in this determination.

Q. I have rental income from real estate in Japan after leaving the country. A. This is taxed as domestic-source income for non-residents. The tenant may be required to withhold 20.42% at the time of payment, and this is settled through a final tax return. In this case, appointing a tax administrator is effectively mandatory.

Q. I don't have anyone I can ask to be my tax administrator. A. You can hire a licensed tax accountant for a fee. If your lump-sum withdrawal payment refund is large, in many cases your net amount received will still be higher even after paying the accountant's fee. Be sure to sign a contract before leaving Japan.

Q. Can I leave Japan without submitting a moving-out notification? A. If your resident registration remains, you will continue to be charged resident tax and National Health Insurance premiums even though you no longer actually live there. Be sure to submit this notification.

Series Overview ① General Overview — Residency status, scope of taxation, tax treaties ② For Company Employees — Employment income deduction, year-end tax adjustment, dependent deduction ③ For Freelancers & Side Business — Final tax return, expenses, invoice system ④ Leaving & Returning to Japan (this article)