This article is written by a Japanese local.
When global companies transfer expatriates to Japan, it is highly common to split the salary payments between the “overseas parent company (dispatching organization)” and the “domestic subsidiary (receiving organization).” This is often done to maintain the employee’s home country salary level, continue their social security benefits, or mitigate exchange rate impacts.
Here, Human Resources (HR) departments frequently face a critical legal question: “Does splitting the salary violate visa requirements?” The short answer is that it is completely legal. However, proceeding with this arrangement carelessly can lead to severe consequences during visa renewal. This article thoroughly dissects the legality of split payments for the Intra-company Transferee (ICT) visa, the objective logic required to pass the Immigration Services Agency of Japan’s screening, and the fatal risks triggered by exchange rate fluctuations.
1. Conclusion: Splitting Salary Between the Home Country and Japan is Completely Legal
Under Japan’s Immigration Control Act, split salary payments for the ICT visa are officially recognized as legal.
For a standard work visa (e.g., “Engineer/Specialist in Humanities/International Services”), the general rule is that the applicant must sign a direct employment contract with a Japanese company and receive 100% of their salary from that domestic entity. However, because the ICT visa is premised on a “transfer or secondment from an overseas office,” there is no absolute legal obligation to form a new, exclusive employment contract with the Japanese receiving organization.
Whether the salary is paid 100% by the overseas dispatching organization, 100% by the Japanese receiving organization, or split between the two at a defined ratio, the visa will be legally approved.
2. The Absolute Condition: “Equal or Greater Pay” and Calculation Traps
While split payments are legal, the “validity of the remuneration amount” is scrutinized most strictly by Immigration. To maintain an ICT visa, the following absolute conditions must be cleared.
① The Total Combined Amount Must Be “Equal to or Greater Than a Japanese National’s Salary”
The total sum of the portion paid from overseas and the portion paid in Japan must be equal to or greater than the remuneration a Japanese employee would receive for performing the exact same duties at the host company. This is a mandatory statutory provision designed to prevent the exploitation of foreign nationals through unjustifiably low wages.
② Allowances: What Counts and What Doesn’t
During the screening process, only items such as base salary and bonuses can be combined as “remuneration.” Allowances that possess the nature of “reimbursement for actual expenses”—such as commuting allowances, housing allowances, and dependent allowances—are generally excluded from the remuneration calculation. You must guarantee that the base amount, excluding these allowances, meets or exceeds the salary of a Japanese equivalent.
3. Troubleshooting Case Study: The Terror of “Requirement Failure” Due to Exchange Rates
【Practical Troubleshooting Case】
Mr. H was transferred from a Southeast Asian group company to a Japanese branch on an ICT visa. His contract stipulated a split salary: “70% from the home country (in local currency) and 30% from Japan (in JPY).” Upon his initial arrival, the combined amount exceeded the salary of his Japanese peers. However, over the next two years, the local currency depreciated significantly against the Yen.
When he submitted his actual salary records to Immigration for his visa renewal, it was discovered that the Yen-converted value of his home country payment had drastically decreased. The combined total no longer met the “equal to a Japanese national” standard. Due to this failure to meet the statutory requirement, his renewal was mercilessly denied.
【Countermeasures to Completely Eliminate Denial Risks】
Even if the shortfall is caused by an external factor like exchange rate fluctuations, Immigration will not offer any special relief. When implementing split payments, it is absolutely essential to establish a remuneration package with a sufficient “buffer” above the Japanese salary standard from the very beginning to absorb future currency risks. Setting the salary exactly at the minimum legal borderline will only strangle your operations during future renewals.
4. Structuring an “Assignment Letter” to Legally Prove Split Payments
To prove the fact and legality of split payments to Immigration examiners using objective physical evidence, you must meticulously draft the “Secondment Agreement” between the two corporate entities, as well as the “Assignment Letter” issued to the expatriate. Ensure the following elements are explicitly stated:
- Clear Breakdown of Payments: Explicitly state the breakdown, e.g., “Of the total base salary of XXX JPY, the overseas parent company will pay XXX local currency (equivalent to XXX JPY), and the Japanese corporation will pay XXX JPY.”
- Exchange Rate Application Rules: Document the specific exchange rate used for the Yen conversion at the time of application (e.g., “Calculated using the TTM rate of XXX Bank as of [Date]”) to provide a solid basis for the figures.
- Division of Tax and Social Security: Clearly outline in the contract which legal entity is responsible for withholding income tax and paying social security premiums, demonstrating that labor management is being conducted in full compliance with the law.
5. Frequently Asked Questions (Q&A)
Q. The portion paid from the home country is deposited into a local bank account in the local currency. How do I prove this payment history to Japanese Immigration?
A. During the renewal process, in addition to the Japanese payslips (or withholding tax certificates), you must submit copies of the payslips issued in the home country AND the “bank statements” showing that the corresponding amounts were actually deposited into the home country account. This objective evidence proves that the split salary is being fully paid as stated in the contract.
Q. Can the ICT visa be approved if 100% of the salary is paid by the overseas parent company, and the Japanese subsidiary pays zero Yen?
A. Yes, it is possible. Whether it is a split payment or 100% paid from overseas, as long as the JPY-converted amount is “equal to or greater than a Japanese national’s salary” and you can objectively prove this fact through an assignment letter and financial records, the visa will be legally approved under the Immigration Control Act.
6. Conclusion: Build a Robust System that Factors in Currency Risks
Split salary payments for the Intra-company Transferee visa represent a highly effective and legal tool for flexible global HR management. However, this system is underpinned by the strict statutory safeguard that “the combined amount must equal or exceed that of a Japanese employee.”
Refining the rate calculations at the time of application, designing a salary structure with a built-in buffer for exchange rate fluctuations, and packaging this into an objectively verifiable assignment contract—perfecting these steps in advance is the only rational approach to protect expatriates from visa denial and to drive your business forward legally and stably in Japan.