In the Japan U.S. Tax treaty Article 18 Section 2 paragraph (a) it says the following:
"Any pension and other similar remuneration paid by, or out of funds to which contributions are made by, a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that Contracting State or a political subdivision or local authority thereof, other than payments made by the United States under provisions of the social security or similar legislation, shall be taxable only in that Contracting State"
After reading several posts in this subreddit related to VA Disability being taxable in Japan, I would like to understand why many people are saying it is taxable in Japan and why it doesn't fall under the provision " and other similar remuneration".
- Can someone please define what exactly falls into this "other similar remuneration" non-taxable category? Something has to fall within this "other" category or it would never have been added to this treaty.
- VA Disability is literally " remuneration paid by, or out of funds to which contributions are made by, a Contracting State….to an individual in respect of services rendered to that Contracting State". The VA Disability I receive is literally medical compensation that I have to live with in respect to medical conditions for services rendered to the U.S. So why does it not count?
In fact my specific case I tested positive for Tuberculosis while stationed less than 50 KM from Tokyo. I tested negative in 1998 when I joined the Air Force and then when I was stationed in Japan from 1999 – 2003 I tested positive for Tuberculosis in 2001. Then I was diagnosed with 2 more medial issues that have causal links to Tuberculosis. I now receive VA Disability for all 3 of those medical conditions.
EDIT: VA Disability is considered a pension at least it was in part for military retirees when Article 18 was last negotiated especially if you take the history into account.
by Throwaway4567894246