No.13001 Submission of Application Form for Income Tax Convention (items related to withholding)
1 Common Items
In the case where a non-resident or a foreign corporation (hereinafter referred to as a "non-resident, etc.") who receives domestic source income subject to withholding has an intention of applying for a reduction or exemption of income tax and special income tax for reconstruction which are withheld in Japan under the Income Tax Convention, an "Application Form for Income Tax Convention". (hereinafter referred to as the "form")（租税条約に関する届出書） must be submitted.
This form has different formats depending on the contents of the payment: major types are (1) relief from income tax and special income tax for reconstruction on dividends (Form 1); (2) relief from income tax and special income tax for reconstruction on interest (Form 2); and (3) relief from income tax and special income tax for reconstruction on royalties (Form 3).
This form must be submitted in duplicate to the withholding agent, who has to file the original with the district director of the competent tax office in the place where the payer resides, by the day before the payment of the incomes are made for the first time. (*)
* Provision of the form and documents attached thereto (hereinafter referred to as the "form, etc.") by electromagnetic method
On and after April 1 of 2021, a non-residents, etc. is able to provide the matters to be described in the form, etc. by electromagnetic method, instead of submitting the form, etc. in writing, to the withholding agent if certain conditions (Note) are met.
And, the withholding agent is able to provide to the district director of the competent tax office through e-Tax the electromagnetic data including pdf format image files that were made by scanning the matters to be described in the form, etc., instead of submitting the form, etc. in writing.
If the matters to be described in the form, etc. are provided by electromagnetic method, it is treated as if the form, etc. has been submitted.
(Note) To provide the matters to be described in the form, etc. by electromagnetic method, a non-resident, etc. is required to take measures to clarify its name. And, the withholding agent is required to take the following all measures.
(1) Measures to receive appropriately the matters to be described in the form, etc. which are provided from a non-resident, etc. by electromagnetic method,
(2) Measures necessary to verify the identity of a non-resident, etc. who provides the matters to be described in the form, etc. by electromagnetic method and
(3) Measures necessary to send to a computer screen and a printer the output of the matters to be described in the form, etc. which are provided from a non-resident, etc. by electromagnetic method
If a non-resident, etc. has not submitted the form, etc., in writing or by electromagnetic method, to the district director of the competent tax office through the withholding agent by the day before the payment of incomes are made, the payer must withhold tax at a tax rate that is prescribed in Japanese laws when the payment is made instead of applying an applicable tax rate that is prescribed in each Income Tax Convention concluded with Japan.
However, the non-resident, etc. may apply for a refund of the difference between the withholding tax amount in the case where a reduction or exemption would be applied and the amount of tax withheld at a tax rate that is prescribed in Japanese laws by submitting both the "form" and an "Application Form for Refund of the Overpaid Withholding Tax in accordance with the Income Tax Convention (Form 11) (PDF/303KB)"（租税条約に関する源泉徴収税額の還付請求書（様式11）） through the payer at a later date to the district director of the competent tax office.
And if there are any changes (amendment) in the matters described in the form that has been submitted, it is required to submit the form again to state the changes no later than one day prior to the date on which the first payment is received after the change (amendment) occurred.
However, the submission of the form again to state the change may be omitted in certain cases (e.g., the change is an increase or a decrease in the "Quantity of Principal" of the dividends on which the reduction of income tax is sought.).
2 In the Case of the Income Tax Convention with Limitation on Benefits Article
In the case of the Income Tax Convention with Limitation on Benefits Article which prescribes conditions for residents who may be entitled to the benefits accorded by the Convention, the procedure is almost the same as "1 Common Items". However, in the case where a person applies for a reduction or exemption of income tax under the Convention with Limitation on Benefits Article, both an "Attachment Form for Limitation on Benefits Article (Form 17)"（特典条項に関する付表（様式17）） and the "residency certification (a document proving that the person (or corporation, etc.) is a resident of the other contracting country)" are required in addition to the form.
"Attachment Form for Limitation on Benefits Article (Form 17)" is a document which determines if a person is a resident who is entitled to the benefits accorded by the Income Tax Convention, and it must be submitted as an attachment to the form in the case where the person seeks the application of the Income Tax Convention with Limitation on Benefits Article. (Note)
A non-resident, etc. is required to attach the original residency certification to the form or present it to the withholding agent.
If the original copy is presented the withholding agent, the withholding agent is required to state "the fact of confirmation," "name and affiliation of the individual who is making the confirmation," "the date of confirmation" and "the date of issue of the certification" in the "others" section of the form. The withholding agent is also required to make a copy of the residency certification and keep this copy in its office, etc. located in Japan for five years from the date that the certification is presented. In this case, the residency certification is valid only issued within one year prior to the presentation.
In the case where an entity is treated differently for tax purposes between Japan and the other contracting country (for example, in the case where the entity is taxed as an entity in the other contracting country while members of the entity are taxed in Japan), "List of the Members of Foreign Company or List of the Partners of Entity (Form 16)(PDF/115KB)"（外国法人の株主等の名簿 兼 相手国団体の構成員の名簿（様式16）） must be attached to make it clear who is entitled to the benefits accorded by the Income Tax Convention.
(Note) On and after April 1 of 2021, a non-resident, etc. is able to provide the matters to be described in "Attachment Form for Limitation on Benefits Article (Form 17)" by electromagnetic method, instead of submitting it in writing, to the withholding agent, just like as mentioned in "* Provision of the form and documents attached thereto (hereinafter referred to as the "form, etc.") by electromagnetic method " of "1" above.
Reference: Related codes
- 13002 Application for Refund of the Overpaid Withholding Tax in accordance with the Income Tax Convention
- Consultation service for national tax is available at the Phone Consultation Center of the Regional Taxation Bureaus. Please take a look at "IF YOU NEED FURTHER INFORMATION, PLEASE CONTACT" and try the phone consultation service.
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