Non-Resident Payroll Accounting


The payroll accounting for non-resident employees varies greatly depending on the employee’s residence status. This is because of the method of collection and consequently the handling of income tax is different from those of resident employee. Because of that, for non-resident employees it is necessary to perform a set of different net calculation from that used in the normal payroll calculation.

Important Terms Which are Used in This Help Document:

Overseas employee

Employee who sent to work abroad at branches, factories or foreign corporations located outside Japan. All overseas employee do not necessary non-resident employees. It depend on employee’s resident status.

Resident status

From the taxation point of view, there are two types of residence status:

Domestic resident and Non-resident

Domestic resident is the status of those taxpayers who reside or have resided for one year or more in Japan. This includes overseas employees whose planed assignment at overseas is less than one year and also employees who come from outside Japan and plan to stay (reside) for more than one year.

Non-resident status includes all other types of taxpayers.

Overseas salary

Salaries paid to overseas employees.

Overseas basic salary

The portion of the overseas salary which corresponds to the domestic basic salary.

Domestic source income

The portion of the salary which compensates works performed domestically, that is, inside Japan. (Income tax law, 161 HAI)

See also:

Target Employees of Non-Resident Payroll Accounting

Application Area

Administrating Master Data for Non-Resident Employee

Payroll Accounting Function