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I will start remote work for a Japanese company from Italy. I am non-Japanese nationality residing outside of Japan.

Am I subject to the flat non-resident tax of 20.42%? The company said I will start with that, and then I will be reduced to 10.21%.

If I then have to pay income tax in Italy as well, isn't this double taxation? Or am I exempt from Italian tax part?

Many thanks for your help!

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    I'm not familiar with either Japan's or Italy's tax system specifically, but generally speaking most countries have tax treaties which ultimately reduce the chance of true 'double-taxation'. You might need to initially pay tax to one country and then be reimbursed by the other, but it is very unlikely you get no recognition for the foreign taxes paid. How it works in your case between Japan and Italy [how to file, who gets first right to tax, etc.] I have no idea. [no affiliation, and I have not verified accuracy: ]workarea.et-gw.eu/et/WG5-Management/bilateral-conventions/… Oct 4 '21 at 12:45
  • This is the source of the common phrase, "Withholding is hell". WIth some countries, say the US, it's often/usually possible to get out of withholding. With other countries like Japan, it's difficult or impossible :/
    – Fattie
    Oct 5 '21 at 19:10
  • @Grade 'Eh' Bacon after searching more, I think the reimbursement seems the most hopeful strategy I've got. Will double check with Italian offices
    – azra
    Oct 7 '21 at 9:19
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I have often worked for companies in Japan, and they have just "sent me the money". So, I'd email them an invoice for €XX,000 and they'd (eventually!) wire €XX,000 to me.

(Then, obviously, and unfortunately, me or my company would pay all the usual taxes wherever I was living.)

It could be that the missing ingredient in your formula is you need some sort of company entity? (Often very simple to set up, even in Italy.) BUT many/most Japanese companies would be Troubled by such an arrangement.

Note that Italy-Japan, of course have the usual "double-taxation-avoiding" tax treaty, example

https://www.eu-japan.eu/taxes-accounting/taxation-outline/tax-treaties

(Just search on "Italy" on the page.)

I have indeed heard that overseas "employees" unfortunately do pay about 20% tax, to Japan (although, basically, they'll "allow for that" in Italy) You can (unfortunately) easily google this anywhere, eg https://home.kpmg/xx/en/home/insights/2011/12/japan-income-tax.html

I have never heard of it "reducing" to 10%? That seems odd (unless you are moving there or something?)

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  • thanks for the answers!
    – azra
    Oct 7 '21 at 9:12
  • I've asked some accountants and www.eu-japan.eu as well (thanks for the link @Fattie), they have been super helpful pointing me to articles and links, and they also think that shouldn't be any withhold tax... but might also depend on what kind of work I do and in what country the bank account I will be paid in is. They are now digging more information and will update me.
    – azra
    Oct 7 '21 at 9:19

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