Have you recently started working in Japan and noticed 20.42% income tax withheld from your salary? On monthly pay of ¥200,000, that comes to ¥40,840 in income tax alone.
You may have been told this is because you have not lived in Japan for a full year or because your initial training contract lasts only six months. However, neither the length of a training contract nor the period of stay printed on your residence card automatically determines your tax residency.
Why is 20.42% withheld?
Employment income earned in Japan by a person classified as a non-resident for Japanese income-tax purposes (非居住者) is generally subject to withholding at 20.42%, including the special reconstruction surtax.
For a tax resident (居住者), monthly salary withholding normally follows the official payroll tax tables, taking into account salary after social insurance and relevant dependent information. A tax resident earning ¥200,000 per month might have withholding of only a few thousand yen, depending on circumstances.
Tax residency is a tax-law concept, not the immigration status called “Long-Term Resident” (定住者). A one-year residence card also does not mean you automatically remain a non-resident for one year.
Can a six-month training contract still qualify?
Possibly. Under Japanese income tax law, a person whose main base of life (domicile) is in Japan may be a resident immediately upon arrival. Residence is assessed from objective factors such as accommodation, employment, family and assets.
Article 14 of the Enforcement Order of the Income Tax Act provides a presumption of Japanese domicile for a person with an occupation that ordinarily requires living in Japan continuously for at least one year.
The National Tax Agency also explains that a contract nominally lasting less than a year can sometimes be treated as effectively multi-year. Its published example concerns professional athletes, so the facts of other employment arrangements must be evaluated individually.
If the employer recruited you to work in Japan long-term, with the first six months only serving as training or probation, this is a reason to ask the employer to reconsider your classification. Merely hoping to stay longer, without evidence of a longer-term hiring plan, is not enough by itself.
What should you ask the employer to check?
- Request a review of whether you were a Japanese tax resident from your original employment start date.
- Look at the original job advertisement, offer letter, employment agreement, training schedule, employment documents used for immigration procedures and emails describing the expected employment after training.
- Explain your actual living arrangements in Japan and the employment plan in place when you arrived.
- If payroll remains uncertain, ask the employer to present the facts to its competent tax office and obtain clarification.
Who refunds tax withheld in error?
If the employee was a tax resident from the beginning and the employer mistakenly withheld 20.42%, the employer should recalculate payroll withholding and arrange to settle the excess amount with the employee. Separately, the employer can apply for a refund of overpaid withholding tax from the tax office or offset it against future payroll withholding tax under the prescribed procedures.
By contrast, withholding that was correctly applied during a genuine non-resident period does not automatically become refundable just because the person later signs a longer-term contract. Do not assume that year-end adjustment will resolve it.
What if your colleagues are in the same situation?
If several employees were recruited under the same “six months of training, followed by anticipated longer-term work” arrangement and all face 20.42% withholding, they can jointly ask HR or payroll for a review. Frame the request as ensuring correct tax treatment for employees hired under similar terms. Each individual’s tax residence still requires its own assessment.
Japanese message to send to your company
採用時から研修終了後の継続雇用を予定していた場合、税法上、来日時から居住者に該当する可能性があると知りました。国税庁の説明と採用時の資料に基づき、20.42％の源泉徴収が適切か再確認していただけますか。必要であれば会社から税務署に照会していただきたいです。
Official references
General information as of October 2026. Actual tax-resident status and corrections depend on individual facts. For professional tax filings or tax representation, consult the tax office or a licensed Japanese tax accountant (税理士).
Right Place Japan offers free initial consultation on understanding procedures and organizing Japanese-language questions for your employer. Contact us here.
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