Sending Employees to Japan: Global Mobility Guide

Sending an employee to Japan means choosing the legal arrangement for an existing group employee to work in Japan: a secondment that keeps the home contract, a local hire by the Japan subsidiary, a dual contract with both companies, or a short business trip. Each choice decides which company is the employer in Japan, whether the Japan entity runs payroll and withholds income tax, whether the employee enters Japanese social insurance, and which status of residence fits.

This guide sets out those consequences for the HQ mobility, HR and finance teams that make the decision, before anyone books a flight.

Key Takeaways

• The model decides everything else. Contract, payroll, tax withholding, social insurance and visa route all follow from which company employs the person and who bears the cost.
• Tax residence is a fact, not a choice. An employee who has a domicile in Japan, or has lived there for a year or more, is a resident taxed under Japanese rules regardless of which country pays the salary.
• Pay from abroad is still Japanese income. Salary that HQ pays outside Japan to a resident is taxable in Japan; it simply escapes monthly withholding and has to be reported by the employee.
• Social insurance exemptions need a certificate. Japan has social security agreements in force with 24 countries, and an exemption applies only once the home authority issues a certificate of coverage.
• Short trips have hard limits. The treaty exemption for business visitors ends at 183 days in the treaty period, or earlier if the Japan entity bears the cost.

Four ways a multinational sends an employee to Japan, compared

A multinational has four arrangements for putting an existing employee to work in Japan: secondment on the home contract, local hire by the Japan entity, a dual contract, or a short business trip.

Secondment on the home contract. The employee stays employed by the parent or another group company, keeps home-country pay and benefits, and works in Japan under the direction of the Japan subsidiary. A secondment agreement between the two companies records the assignment, its length and any recharge of the cost. This is the usual choice for assignments of one to five years with a planned return.

Local hire by the Japan entity. The employee resigns from or suspends the home contract and signs a Japanese employment contract with the KK or GK, which becomes the employer for every purpose: Japanese labour law, payroll, withholding and social insurance. This suits open-ended moves and country managers who will run the entity; our guide to hiring a country manager in Japan covers the contract, title and director appointment for that role.

Dual contract. The employee holds a Japanese employment contract with the Japan entity for the work done in Japan and keeps a contract with a group company abroad, often to preserve a home pension, equity plan or a regional role performed partly outside Japan. Pay is split between the two companies.

Short business trip. The employee stays on the home contract and home payroll and visits Japan for meetings, training or a project, with no Japanese employment and no change of residence.

The decision table: what each model triggers in Japan

The table below compares the four models across employer, payroll, income tax, social insurance and visa, so HQ can see the consequences of a choice before committing to it.

Consequence in Japan	Secondment on home contract	Local hire by the Japan entity	Dual contract	Short business trip
Employment contract	Home contract plus a secondment agreement between the companies	Japanese contract with the KK or GK	Japanese contract with the KK or GK plus a home contract	Home contract only
Legal employer for Japanese labour law	Japan entity for working hours and day-to-day direction; home company for the contract	Japan entity	Japan entity for the Japanese role	Home company
Salary paid from	Home payroll, Japan payroll, or both	Japan payroll	Both payrolls	Home payroll
Japanese tax residence	Usually resident from arrival when the assignment is expected to last a year or more	Resident	Resident	Non-resident
Japanese income tax on Japan work	Taxable; withheld only on pay delivered through a Japanese payer	Withheld monthly by the Japan entity	Withheld on the Japan entity's pay; the home-paid share is reported by the employee	Exempt under most treaties if the 183-day and cost conditions are met; otherwise taxable at 20.42%
Year-end adjustment by the Japan entity	Only if the Japan entity pays salary and holds the dependants declaration	Yes, unless salary exceeds JPY 20 million (Income Tax Act Article 190)	On the Japan entity's pay only	No
Health insurance and pension	Enrolled if employed by the Japan entity in substance, unless a certificate of coverage applies	Enrolled, unless a certificate of coverage applies	Enrolled through the Japan entity, unless a certificate of coverage applies	Not enrolled
Typical status of residence	Intra-company Transferee	Engineer/Specialist in Humanities/International Services, or Intra-company Transferee if moving within the group	Usually Intra-company Transferee or Engineer/Specialist in Humanities/International Services	Temporary Visitor, which does not allow pay for work in Japan from a Japanese source
Main risk for HQ	Untaxed home pay and missed enrolment	Loss of home benefits and pension continuity	Under-reported home share and two sets of employment terms	Overstaying the treaty limit or recharging the cost to Japan

The model is chosen on the facts that will exist in Japan, not on the label in the contract. When a secondee reports to the Japan country manager, works Japanese office hours and is paid through the Japan entity, the pension office looks at those facts, not the secondment letter, when it decides whether the Japan entity must enrol them.

Tax residence decides how the employee is taxed

An employee sent to Japan is taxed as a resident if they have a domicile in Japan or have lived there for one year or more, and as a non-resident otherwise; nationality and the paying country do not matter.

The National Tax Agency's Tax Answer No. 2010 defines three categories. A resident (居住者, kyojusha) has a domicile in Japan or has had a residence there continuously for one year or more. A non-permanent resident (非永住者, hi-eijusha) is a resident without Japanese nationality who has had a domicile or residence in Japan for a total of five years or less in the past ten years.

Everyone else is a non-resident (非居住者, hi-kyojusha). The Income Tax Act's presumption rules treat a person who arrives to take up work expected to last a year or more as having a domicile from arrival, so a three-year secondee is a resident from the first day, not from the first anniversary.

Category	Who falls in it	Income taxed in Japan	What it means for the assignment
Non-permanent resident	Resident, not a Japanese national, 5 years or less of domicile or residence in Japan in the past 10 years	All Japan-source income, plus foreign-source income paid in Japan or remitted to Japan	Most first-time assignees; home investment income stays outside Japanese tax unless paid in or remitted to Japan
Resident other than non-permanent	Japanese nationals, and foreign nationals past 5 years in the 10-year window	Worldwide income	Long assignments and returning assignees cross into worldwide taxation, including home investment income
Non-resident	No domicile in Japan and less than 1 year of residence	Japan-source income only	Business travellers and short project staff; salary for days worked in Japan is Japan-source

Salary is sourced to where the work is done. Pay for days worked in Japan is Japan-source income even when the contract, the payer and the bank account are all abroad, so moving the payroll offshore does not move the tax.

Payroll and withholding in each model

The Japan entity withholds income tax only on salary that it pays, so any part of the package paid by HQ abroad needs its own route into the Japanese tax return or the Japan payroll.

Under the Income Tax Act, the duty to withhold falls on the payer of salary in Japan. The Japan entity withholds tax each month on what it pays and remits it by the 10th of the following month, as set out in our guide to withholding tax (gensen choshu) in Japan.

A parent company with no office in Japan that pays a resident's salary from abroad has no Japanese withholding duty, so that pay arrives gross. The employee must declare it in a final income tax return (確定申告, kakutei shinkoku) and pay the tax in one sum.

Groups handle the home-paid share in one of three ways:

• Move the whole package to the Japan payroll. The Japan entity pays everything and recharges the cost to HQ, or bears it. Monthly withholding then covers the full salary, and the year-end adjustment can settle the year.
• Keep pay at home and let the employee file. No Japanese withholding happens on the home-paid share. The employee files a return by March 15 of the following year, and the group usually funds the payment under its tax policy.
• Split pay. The Japan entity pays a local salary through Japanese payroll and HQ pays the rest at home. The Japan payroll withholds on its share only; the employee reports the home share in a return.

Non-residents follow different rules. According to the NTA's Tax Answer No. 2884, salary paid to a non-resident for work in Japan is withheld at a flat 20.42%, with no year-end adjustment.

The NTA's Tax Answer No. 2885 adds that when a payer with an office or place of business in Japan, such as a registered branch, pays Japan-source income abroad, the payment is deemed paid in Japan and must be withheld, with the tax due by the last day of the following month.

The year-end adjustment covers only residents paid by the Japan entity who filed the dependants declaration, and excludes anyone whose annual salary exceeds JPY 20 million under Article 190 of the Income Tax Act; our year-end adjustment runbook sets out the exclusions.

Resident tax (住民税, juminzei) is charged by the municipality where the employee lives on January 1 on the previous year's income, so an employee arriving mid-year has no resident tax to deduct until the following June, as explained in our guide to resident tax payroll deduction. Parent-company equity vesting during the assignment is also Japanese employment income; our post on global bonus and equity plans applied to Japan employees covers the reporting.

Short business trips and the 183-day treaty exemption

A business traveller who stays on the home payroll pays no Japanese tax on salary for days worked in Japan only if a tax treaty applies and all three of its conditions are met.

Most of Japan's tax treaties follow Article 15 of the OECD Model Tax Convention. Salary for work in Japan is exempt from Japanese tax when the employee is present in Japan for not more than 183 days in the period the treaty sets, the pay comes from an employer that is not resident in Japan, and the pay is not borne by a permanent establishment the employer has in Japan.

The counting period differs by treaty: many recent treaties use any 12-month period, while some older ones use the calendar or tax year, and arrival and departure days count as days present.

The exemption fails in three common ways. The first is the day count: a run of project visits that pushes the total past 183 days in the treaty period removes the exemption for all the days, including those already worked.

The second is cost: when the Japan subsidiary reimburses the traveller's salary through a recharge, the OECD Commentary on Article 15 treats the entity bearing the cost as a factor in identifying the real employer, which puts the exemption at risk. The third is the country: an employee from a country without a treaty with Japan has no exemption from the first day.

The treaty is claimed by filing the treaty relief form (租税条約に関する届出書, sozei joyaku ni kansuru todokedesho) with the tax office. A traveller whose exemption fails owes tax at the non-resident rate on salary for the days worked in Japan. Frequent travel by sales staff can also expose the parent itself to Japanese corporate tax; our post on permanent establishment risk in Japan explains when.

Social insurance and certificates of coverage

An employee employed by the Japan entity enters Japanese health insurance and employees' pension from day one unless the home country has a social security agreement with Japan and a certificate of coverage has been issued.

Japanese health insurance and employees' pension cover a person employed (使用される, shiyo sareru) at an enrolled workplace. The pension office decides employment on the facts: who directs the work, sets the hours and pays the salary. A secondee who works under the Japan entity's direction and is paid through its payroll is enrolled in the same way as a local hire.

The employer must file the enrolment within 5 days of the start of employment, and employment insurance enrolment at Hello Work is due by the 10th of the month after hiring. Our step-by-step guide to enrolling foreign employees in shakai hoken covers the forms.

Programme	Total rate	Split	Covered by a certificate of coverage?
Employees' pension insurance (Japan Pension Service)	18.3%	9.15% employer, 9.15% employee; pension stops rising above a standard monthly remuneration of JPY 650,000	Yes, under every agreement in force
Health insurance, Kyokai Kenpo Tokyo	9.85%	Half each	Only where the agreement covers health insurance
Nursing care insurance, Kyokai Kenpo (ages 40 to 64)	1.62%	Half each	Follows health insurance
Child-care support levy (kodomo kosodate shienkin), collected with health insurance	0.23%	Half each	Follows health insurance
Child-rearing contribution (kyoshutsukin)	0.36%	Employer only	Follows pension
Employment insurance, general business (MHLW)	1.35%	0.85% employer, 0.50% employee	No; social security agreements do not cover labour insurance
Workers' accident insurance	Set by industry	Employer only	No

Rates are for fiscal 2026, as published by the Japan Pension Service, Kyokai Kenpo and MHLW. Our guide to standard monthly remuneration explains how the premium base is set and reset each July.

The Japan Pension Service lists social security agreements in force with 24 countries, including the United States, Germany, the United Kingdom, France, Canada, Australia, India, China and Korea, the latest being Austria from December 1, 2025.

The agreements with the UK, Korea, China and Italy only prevent double premiums and do not total pension periods. Under the agreements, an employee temporarily sent to Japan for a period expected to be five years or less in principle stays in the home system only.

The exemption is not automatic. The Japan Pension Service's procedure for workers coming from agreement countries requires the employer in the home country to apply to its own social security authority for the certificate of coverage, and a new certificate is needed if the assignment is extended.

Until the certificate exists, the Japan entity must enrol the employee and pay premiums. An employee who leaves Japan after paying into the pension can claim a lump-sum withdrawal, covered in our post on Japan pension for expats.

Visa and status of residence by model

The status of residence follows the employment model: a transfer within the group usually uses Intra-company Transferee, and a direct contract with the Japan entity usually uses Engineer/Specialist in Humanities/International Services.

Intra-company Transferee covers an employee transferred for a fixed period from an office of the same organisation outside Japan to an office in Japan, to do work of the kind the Engineer/Specialist in Humanities/International Services status allows. It requires a period of prior employment at the overseas office, so it fits secondees and dual-contract employees already on the group payroll.

Engineer/Specialist in Humanities/International Services is based on a contract with the Japanese employer and suits local hires and new joiners. Both statuses are granted for periods of 5 years, 3 years, 1 year or 3 months under the Immigration Services Agency's tables.

A business traveller enters as a Temporary Visitor, which permits meetings, negotiations and market research but not work paid by a source in Japan, so the visitor model cannot be used to staff the Japan entity. A representative director who will live in Japan needs a status that allows managing the company. Our walkthrough on sponsoring a work visa as a foreign-owned company covers the employer's documents, and our guide to choosing the right Japan work visa compares the categories.

Allowances, tax equalization and the real cost of an assignment

Assignment allowances, housing, schooling and any tax the employer pays on the employee's behalf are Japanese employment income, so the cost of an assignment includes the Japanese tax on those benefits.

Cash allowances for housing, cost of living, schooling and home leave are taxable salary in Japan. Housing that the Japan entity leases and provides to the employee has its own valuation rules, under which the employee's rent contribution determines the taxable benefit. Japanese social insurance premiums are calculated on salary including regular allowances, up to the caps of each programme.

Under tax equalization, the employee bears a hypothetical home-country tax and the group pays the actual Japanese tax. Japanese tax the employer pays for the employee is itself taxable income, so the payment has to be grossed up, and the gross-up is taxable in turn. For a resident paid partly at home, the group's tax provider settles the final figure through the employee's return.

The budget for an assignment therefore needs four lines that a home payroll does not show: Japanese income tax on the grossed-up package, the employer share of Japanese social insurance (unless a certificate of coverage applies), resident tax in the second year, and the cost of preparing the return. Our post on budgeting a Japan subsidiary in yen covers the statutory cost lines.

A recharge of a secondee's salary from HQ to the Japan entity is treated as salary for consumption tax, so no consumption tax arises on either side, as our post on consumption tax on intercompany HQ charges explains. Whether the recharge is deductible for corporate tax depends on the secondment agreement and the work done for the Japan entity.

From decision to first payroll: the sequence in Japan

The Japan-side work starts well before arrival, because the status of residence, the certificate of coverage and the payroll set-up each depend on the employment model being settled first.

Stage	Legal requirement or deadline	Documents and data needed	Common mistake
Choose the model	None; the facts in Japan decide the treatment	Assignment length, reporting line, pay split, cost bearer	Picking secondment while planning to run all pay through Japan
Contracts	Written working conditions at hire under the Labor Standards Act	Secondment agreement, or Japanese employment contract and offer letter	Home contract terms that conflict with Japanese working-hours rules
Status of residence	Certificate of Eligibility, normally obtained before the visa is issued abroad	Employer company documents, assignment letter, employee CV	Starting work in Japan on a Temporary Visitor entry
Certificate of coverage	Issued by the home social security authority before the exemption applies	Home employer application, assignment dates	Applying after arrival and paying Japanese premiums meanwhile
Social insurance enrolment	Within 5 days of the start of employment	My Number or basic pension number, salary, start date	Treating a secondee as exempt without a certificate
Employment insurance	By the 10th of the month after hiring	Contract, hours, residence card details	Missing it for a dual-contract employee
First payroll	Withholding remitted by the 10th of the following month	Dependants declaration, resident or non-resident status	Using resident withholding tables for a non-resident
Home-paid salary	Final return by March 15 of the following year	Annual home pay statement, equity vesting records	Assuming home withholding settles the Japanese tax
Leaving Japan	Year-end adjustment at departure; tax agent appointed if a return is due after departure	Final pay data, departure date, forwarding details	Leaving before resident tax for the year is settled

Departure reverses the sequence. A resident who leaves mid-year has the year's tax settled through a year-end adjustment in the final Japanese payroll, social insurance is cancelled from the day after employment ends, and resident tax for the current year remains payable because it is based on the January 1 address.

A secondee with home-paid salary who must still file a return appoints a tax agent (納税管理人, nozei kanrinin) before leaving. Our guide to Japan payroll for foreign employees covers the monthly mechanics once the employee is on the Japan payroll.

FAQ

What statutory insurances are required for foreign employees working in Japan?

A foreign employee of a Japanese entity is enrolled in health insurance, employees' pension, employment insurance and workers' accident insurance on the same terms as a Japanese colleague. Nursing care insurance is added from age 40. A certificate of coverage can remove pension, and sometimes health insurance, but never the two labour insurances.

How are compensation and benefits for expatriates taxed in Japan?

Salary, allowances, bonuses and equity earned for work in Japan are Japanese employment income, whichever company pays them. Company-leased housing is valued under separate rules, and tax that the employer pays for the employee is added to taxable income.

Is a certificate of coverage needed for Japan?

Yes, if the employee is to stay in the home social security system. The home authority issues it on the home employer's application, and the Japan entity keeps it as evidence for the pension office. Without it, Japanese premiums are due from the first month.

Can an employee get Japanese pension contributions back after leaving Japan?

A non-Japanese employee who paid into employees' pension for at least six months can claim a lump-sum withdrawal payment within two years of leaving, covering up to 60 months of contributions. Employees from an agreement country should first check whether counting the Japanese periods toward a home pension is worth more, because a withdrawal gives those periods up.

Working with AQ Partners. Our Tokyo team provides social and labour insurance enrolment, monthly payroll coordination with a licensed sharoushi, and year-end adjustment for the employees on your Japan entity's payroll, along with the Japanese employment contracts and offer letters behind them. Book a consultation to review your plan for sending employees to your Japan subsidiary.