Withholding Tax on Salaries and Bonuses Paid to Employees after Departure from Japan

　If a bonus is paid to an employee after he/she becomes a non-resident of Japan, and the calculation period of the bonus includes the period of service in Japan, withholding tax at the rate of 20.42% is required on the amount of the bonus corresponding to the period of service in Japan (calculated by dividing the number of days) as salary, etc. paid to a non-resident. On the other hand, after becoming a non-resident, the tax withholding rate will be 20.42%.

　With respect to salaries paid after becoming a nonresident, if a nonresident becomes a nonresident in the middle of the calculation period of salaries, etc., salaries corresponding to domestic service and salaries corresponding to overseas service may be paid together in one month. In such cases, withholding tax is not required even if the salary includes the period of service in Japan, as long as the period of service is less than or equal to one month. This rule is applicable to cases where both domestic and foreign service corresponding salaries are paid together. Therefore, if the entire amount of salary, etc. corresponds to service in Japan, withholding tax at 20.42% is required.

　In some cases, such as when overtime allowance is paid one month later than the basic salary, the calculation period for the basic salary and the overtime allowance are different, and in some cases, the basic salary corresponds to work in Japan and the overtime allowance corresponds to work outside Japan, while the overtime allowance corresponds to the full amount of work in Japan. In such cases, there is no need to separate the overtime allowance from the basic salary to determine the domestic source income, and the total amount of the basic salary and overtime allowance can be determined based on whether the entire amount is attributable to domestic service.