I'm working for a small US company remotely from Japan. The company doesn't have a branch in Japan or anything, so American social security tax is still being deducted from my paycheck (payroll is all done under an American address)

However, since I don't have any plans to move back to the US in the next 5 years, and Japan and the US have a totalization agreement for social security, I should be paying the tax in Japan, and not the US (according to my research from Googling & from talking to the social security information desk in Japan). Currently I'm paying in both countries.

I can't seem to find any resources that explain what I need to do to stop paying social security in the US. What kind of paperwork needs to happen? Is it even possible when it's a small company with no Japanese branch?

  • “Payroll is all done under an American address” - your employer’s or yours? – Traveller Mar 13 at 10:18
  • @Traveller - both are under an American address. – Skeets Mar 13 at 21:45

If you want to stop paying social security in the US, then you need to be on a Japanese payroll, not a US payroll. The bottom line is that as long as you are a US payroll, then US social security must be withheld. Your US employer has no way to stop withholding this from your paycheck.

The way you are doing this now is what is called a 'remote payroll'(US payroll but foreign work location) and is not really compliant in most cases. The good new is that the US company does not have to have a Japanese branch to run a a Japanese payroll for you, and has three options:

  1. Put you on the payroll of a Japanese company that they have an existing relationship with, such as a supplier or customer. Then, the US company remits your salary to them, and they put you on their Japanese payroll and deduct taxes and social security.

  2. Pay you as an independent contractor rather than an employee, which means you would be self-employed in Japan, and would no longer be making social security payments in the US. You would have to register as self-employed and take care of your own Japanese taxes and contributions. The risk with this is that you could still be seen as an employee in Japan under local labor laws, if the company exerts control over your daily work methods and schedule.

  3. Use a Global Employment Organization (GEO) service (disclaimer: I consult with one), which uses a local employer of record that is already in place. The GEO becomes your defacto employer in Japan, but only for the purpose of employment administration, withholding and contributions. It is completely legal, and allows you to enjoy the benefits of being a Japanese employee and no longer paying US social security. The US company still manages your work and compensation, but will remit your salary to the GEO for the Japanese payroll.

Each of these options have their pros and cons, and if you want to know more you can take a look at this article: https://shieldgeo.com/how-do-you-pay-remote-employees-in-different-countries/

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