みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo

みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo, tax tips, accounting, running business

Inheritance Tax Amended for 2017

time 2017/01/14

Change in scope of taxable heirs

The scope of heirs taxable under Japanese Tax Law is going to be changed. The Inheritance tax law will be amended from April 1st, 2017. Heirs taxable for Japanese tax have been following until today but its definition will be wider, meaning there will be almost nobody who has Japanese nationality who can escape Japanese Inheritance tax even if they live overseas and their inherited assets are located overseas.

1) Residents in Japan (no matter which nationality you have.) The definition of “resident” is who have home (domicile) in Japan or place to stay more than one year (including a hotel room),
2) Non-resident Japanese nationals who used to live in Japan in the past 5 years,
3) Non-resident of Japan living abroad whose decedent was a Japan resident.
4) Non-resident who inherits assets located in Japan (only taxable for the assets).

The law is amended to expand the period in #2 from 5 years to 10 years. You really need to go out of Japan and retire abroad and live long enough, if you seriously want to escape Japanese inheritance tax.

Mansion in very tall building

There are some other changes in the Inheritance Tax Law too.

One frequently mentioned change is about valuation of apartment room in very tall building (“tower mansion”). Because it is popular, everyone know that the higher your rooms are in floors, the more expensive its market price tends to be. But because valuation under Inheritance Tax Law, they are no different between the 2nd floor and 40th floor. Some smart people knew the gap and used to convert their money to apartment so that valuation will become much much lower than the original valuation of cash.

Valuation of company

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