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Japanese payroll is built on the shakai hoken system, monthly remittance to multiple agencies, and a unique year-end tax adjustment (nenmatsuchōsei). Rippling automates the full cycle so your KK stays compliant.
Running payroll on a Japanese entity (KK or GK) requires registration with four bodies: the National Tax Agency for income tax, the Japan Pension Service and regional Health Insurance Society for shakai hoken, and the Labor Standards Inspection Office for Labor Insurance. Each has different registration procedures and monthly remittance requirements.
The shakai hoken system is the most payroll-intensive aspect: monthly contributions must be remitted by the last day of the following month. Standard monthly remuneration (hyōjun hōshū getsugaku) must be assessed annually and revised when salaries change significantly.
Japan's nenmatsuchōsei (year-end tax adjustment) is a December payroll process where the employer reconciles each employee's annual income tax liability, replacing individual tax return filing for most employees.
Rippling's Japan payroll module provides:
| Contribution | Rate | Notes |
|---|---|---|
| Health Insurance (Kenkō Hoken) | ~5% | Employer half. Rate set by prefecture/association. |
| Pension (Kōsei Nenkin) | 9.15% | Employer half. Up to ¥650,000 standard monthly remuneration. |
| Employment Insurance (Koyō Hoken) | 0.95% | Employer share. |
| Workers' Compensation (Rōsai Hoken) | 0.3%–8.8% | Employer-only. Sector-based. |
| Child and Childcare | 0.36% | Employer-only. Added in 2024. |
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| Contribution | Rate | Notes |
|---|---|---|
| Health Insurance | ~5% | Employee half. Rate varies by prefecture and Kenpō. |
| Pension (Kōsei Nenkin) | 9.15% | Employee half. Fixed rate up to ¥650,000/month. |
| Employment Insurance | 0.6% | Employee share. |
| Income Tax (Shotoku-zei) | 5%–45% | Progressive. Withheld monthly; reconciled via nenmatsuchōsei in December. |
| Resident Tax (Jūminzei) | ~10% | Based on prior year income. Withheld June–May. |
| Annual Taxable Income | National Rate |
|---|---|
| Up to ¥1,950,000 | 5% |
| ¥1,950,001–¥6,950,000 | 10%–20% |
| ¥6,950,001–¥9,000,000 | 23% |
| ¥9,000,001–¥18,000,000 | 33% |
| Over ¥18,000,000 | 40%–45% |
Resident tax (~10%) added on top. Nenmatsuchōsei reconciles the final annual liability in December payroll. Most employees do not file personal tax returns.
Final pay includes: all accrued unused nenkyu paid as cash, notice pay (30 days minimum), and any separation package. Shakai hoken and Labor Insurance obligations continue until the last day. Rippling calculates final pay including leave payout on offboarding.
Statutory: Shakai hoken (~16% employer), Labor Insurance.
Market standard: Housing allowance (jūtaku teate), commuting allowance (kōtsū teate — mandatory reimbursement), family allowance, summer + winter bonus (3–5 months total). Tech: stock options, flexible/remote work.
Nenmatsuchōsei (year-end adjustment) is Japan's annual payroll reconciliation in December, where the employer recalculates each employee's final income tax liability and adjusts December payroll. Most Japanese employees do not file personal tax returns because nenmatsuchōsei fully reconciles their liability. Rippling automates nenmatsuchōsei, collecting employee declarations and processing the adjustment in December payroll.
Standard monthly remuneration (hyōjun hōshū getsugaku) is the average monthly salary used to calculate shakai hoken contributions. It is reassessed annually in September based on the April–June average. When salary increases or commuting allowance changes, a mid-year revision may be triggered. Rippling tracks the figure and prompts for revision filings when changes exceed the threshold.
Year-end obligations include: nenmatsuchōsei (December payroll adjustment), withholding tax certificates issued to all employees by January 31, and the employer's aggregate withholding report filed by January 31. Rippling generates and submits all of these automatically.
Yes. Rippling's Japan payroll module handles shakai hoken monthly remittances, nenmatsuchōsei, withholding tax certificates, standard monthly remuneration tracking, and 36 Agreement compliance monitoring. thePeopleStack configures the full Japan payroll setup. Contact us to scope your Japan payroll configuration.
