Year-End Tax Adjustment in Japan Explained for Foreigners

By Admin

Life in Japan / Taxes

If you work in Japan as a salaried employee, you will almost certainly hear the term 年末調整 (nenmatsu chōsei) every November or December. For many foreigners, it’s confusing, paperwork-heavy, and often misunderstood. This guide explains what the year-end tax adjustment is, who it applies to, and what you need to do—using real, anonymized situations commonly faced by foreign residents in Japan.

What Is the Year-End Tax Adjustment (年末調整)?

The year-end tax adjustment is Japan’s system for reconciling income tax that was withheld from your salary throughout the year.

In simple terms:

Your employer estimates your income tax each month
At the end of the year, they calculate the exact amount
Any overpaid tax is refunded
Any underpaid tax is collected

For most full-time employees, this process replaces the need to file a tax return.

Who Needs to Do Year-End Tax Adjustment?

You are covered by year-end tax adjustment if:

You are a company employee in Japan
Your employer withholds income tax from your salary
You have one main employer

You usually do NOT need to file a separate tax return if this applies to you.

Common Foreign Employee Example (Anonymized)

A Sri Lankan IT engineer in Tokyo worked full-time at one company for the entire year. His employer handled the year-end tax adjustment, and he received a ¥48,000 refund in December without filing any forms himself.

Who Is NOT Covered?

You may need to file a final tax return (確定申告) if:

You have multiple employers
You changed jobs and your new company didn’t complete adjustment
You earned side income over ¥200,000
You are self-employed or freelance
You left Japan mid-year without adjustment

Foreigners often miss this and later receive tax bills from the tax office.

Key Forms You’ll Be Asked to Submit

Your employer will usually ask for these forms in November:

1. Declaration of Dependents (扶養控除等申告書)

Used to declare:

Spouse
Children
Parents (including overseas dependents, with conditions)

⚠️ Overseas dependents require proof of relationship and remittance.

2. Insurance Deduction Form (保険料控除申告書)

Used if you pay:

Life insurance
Earthquake insurance
Private pension insurance

National pension and health insurance are usually auto-reflected if deducted from salary.

How Refunds Are Paid

If you overpaid tax:

The refund is usually included in your December salary
Sometimes shown as a separate line item

If you underpaid:

The difference is deducted from your salary

Real Case (Anonymized)

A foreign ALT in Osaka didn’t submit her insurance documents on time. Her tax refund was smaller than expected, but she later recovered the amount by filing a tax return the following year.

Does Visa Status Matter?

Your visa type does not directly affect the year-end tax adjustment.

However:

Short-term contracts often lead to missing adjustments
Job changes increase the risk of errors
Dependent visas may involve overseas dependent scrutiny

Your residency status affects residency tax, not income tax calculation itself.

Year-End Adjustment vs Resident Tax

Many foreigners confuse these two:

Type	What It Covers	When It’s Settled
Income Tax	National tax	Year-end adjustment
Resident Tax	Local tax	Billed the following year

Even if your year-end adjustment is complete, you may still receive resident tax bills later.

Common Mistakes Foreigners Make

Ignoring employer emails (often in Japanese)
Missing submission deadlines
Assuming refunds happen automatically
Not declaring overseas dependents correctly
Forgetting side income

These mistakes can result in lost refunds or tax notices months later.

What If You Miss the Adjustment?

If you miss it:

You can file a 確定申告 (final tax return) between January–March
Refunds can still be claimed up to 5 years later

This is common and fixable.

Final Thoughts

Japan’s year-end tax adjustment system is efficient—but only if you participate correctly. For most foreign employees, it’s a refund opportunity, not something to fear. Pay attention to employer requests, submit documents on time, and ask questions early if something is unclear.

Tools you can use for check:

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