top banner image

Social security agreement between Sweden and Japan

On 1 June 2022, a social security agreement between Sweden and Japan entered into force. The agreement coordinates the Swedish and Japanese pension systems for state retirement, survivors’ and early pension (even sickness and activity compensation in Sweden) and determines whether a person is covered by such social insurance in Sweden or Japan. Having this agreement in place reduces the risk of a person losing the social insurance rights they have earned, primarily pension rights, when moving between the two countries.

The agreement between Sweden and Japan is a so-called pension treaty, which means that it encompasses pension benefits and pension-related employer’s contributions. As for other areas of social insurance, the national legislation of each country applies.

The general principle of the agreement is that an employer or self-employed person working in one of the countries that is a party to the agreement is only covered by the social insurance legislation of the country in which they work. This makes it easier for, say, a Swedish person working in Japan to qualify for a Japanese pension. However, there are exceptions to this principle, such as in the case of postings. Here, the concerned person is able to remain within their home country’s social insurance system. Since the agreement is also a so-called treaty of intent, it is the intention at the time of the posting that determines which country’s insurance system should apply. For a Swedish employer posting a Swedish employee to Japan, this means that the employer pays pension-related social security contributions in Sweden throughout the posting provided it is not expected to exceed five years. All other social security contributions are paid in Japan per Japanese regulations. If the posting is expected to exceed five years, the employee is encompassed by the legislation in Japan and no employers’ contributions are paid in Sweden.

Sweden has entered into similar pension treaties with countries such as the USA, Canada, South Korea, India and the Philippines.

If you intend to post an employee to Japan, contact the Swedish social insurance agency in good time to obtain a certificate of posting, also known as a certificate of coverage. This certificate confirms the country in which the employer’s social security contributions are to be paid and is to be available to the employer in both Sweden and Japan to ensure the correct reporting.

Do you have any questions concerning the regulations applicable to foreign personnel? If so, don’t hesitate to contact us here at Azets. We offer companies our expertise in payroll administration, accounting and HR.