17. Timing for Deducting Retirement Payments to Directors 役員退職金の損金算入時期

役員退職金の損金算入時期について英語でまとめてみました。（国税庁ホームページ）

Japanese Corporate Tax Law provides the timing for deducting retirement payments to directors as follows (source: National Tax Agency). For more about Japanese tax and accounting, click HERE:

I. General　原則

II. Exceptional treatment　例外

III. Notes　留意事項

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I. General

A reasonable amount of a lump sum retirement payment to a director is deductible for the fiscal year in which the amount of such a payment is approved at a shareholders' meeting or in another manner. 

For the deductibility of directors' compensation, read this.  

  

II. Exceptional treatment 

The deduction of a lump sum retirement payment to a director is also allowed for the fiscal year in which the payment is made provided that the payment is recognized as an expense for accounting purposes for the fiscal year of the payment. 

III. Notes

1. A lump sum retirement payment whose amount has been approved unofficially at a board meeting, but not officially yet is still not deductible even if the payment is recognized as an accrued expense.
2. A pension payment (i.e., regular payment) is deductible for the fiscal year in which the payment is made. Therefore, total pension payments calculated at the time of the director's retirement are not deductible even if the total payments are recognized as an accrued expense at that time.

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