Withholding tax on translation fees in Japan
I would like a non-resident Japanese to translate my essay. Do I still need to withhold tax from the translation fee?
The income tax law in Japan requires that royalties for copyright be withheld as domestic source income. The question is whether the translation of the manuscript falls into the same category, which is considered a secondary task. In addition, under the income tax law in Japan, the decision of the domestic source income is to be decided based on where the manuscript is used. Therefore, even if you ask a non-resident to translate only, the general rule is still for it to withhold tax.
However, the treatment differs depending on the tax treaty laws of each country, and withholding may not be necessary depending on the country where the translator resides.