The National Taxation Bureau of Taipei, Ministry of Finance, stated that pension payments received by individuals are classified as Category 9 “separation income” under Paragraph 1, Article 14 of the Income Tax Act. After deducting the fixed exempt amount, the remaining taxable portion must be reported on the annual individual income tax return. For pension payments from a Taiwanese company, the company will provide a withholding tax statement that reflects the taxable amount after deducting the fixed exemption. Foreign taxpayers should report the “total amount paid” from this statement when filing their individual income tax return.

The Bureau explained that, under Category 9, Paragraph 1, Article 14 of the Income Tax Act, “separation income” is classified by the method of receipt: either a “Lump-sum Payment” or “Installment Payments.” For the 2025 tax year, the calculations are as follows:

A. Lump-Sum Pension Payments

If the total payment does not exceed NT$198,000 × years of service, the taxable amount is NT$0. The portion exceeding NT$198,000 × years of service but not exceeding NT$398,000 × years of service is taxed at 50% of that portion. Any amount exceeding NT$398,000 × years of service is fully taxable.

B. Installment Pension Payments

The taxable income is the total annual installments received, minus NT$859,000.

The Bureau further explained that if a foreign taxpayer provided services abroad for part of their career before retirement, any pension from a foreign employer must be apportioned. Only the portion of the pension attributable to service years rendered in Taiwan will be considered the R.O.C. source separation income.

For example, Mr. A retired from a foreign company after 30 years, during which the last 10 years were spent as an expatriate in Taiwan. In June 2025, he received a lump-sum pension payment equivalent to NT$15,000,000. Since he rendered 10 years of service in Taiwan out of a 30-year total tenure, the portion considered R.O.C-source separation income is NT$5,000,000 (NT$15,000,000 × 10/30). The exempt amount is NT$2,980,000[(198,000 × 10 years) + (398,000 − 198,000) × 10 ÷ 2)]. The taxable separation income is NT$2,020,000 (NT$5,000,000 − NT$2,980,000). When filing his 2025 individual income tax return, Mr. A must provide documentation verifying his years of service and the amount of pension payment received from the foreign employer. He should also include the NT$2,020,000 taxable portion in his total annual income.

The Bureau reminds foreign taxpayers that all pension income—whether paid by a Taiwanese company or a foreign employer—must be reported accurately on their tax returns. Taxpayers with questions regarding their filing requirements are encouraged to contact the Foreign Taxpayer Service Line at (02) 2311-3711, ext. 1116 for further assistance.

(Contact Person: Ms. Yang, Head of the Foreign Taxpayer Service Section, Individual Income, Estate, and Gift Tax Division; Tel: 2311-3711 ext. 1650)