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

Exit Tax

time 2017/03/01

Exit Tax came to place

Exit Tax is an important topic for foreigners living in Japan, especially for those who have their saving in stocks. This tax is newly introduced from 2016 to punish wealthy Japanese nationals moving overseas.

According to the newly introduced taxation, if you have stocks with unrealized gain, no matter which country those stocks belong to, you are taxable on those stocks when you move back to home country even though you have not sold them. It should probably sound very harsh based on a common concept among us that assets are not taxable until they are sold.

The Exit Tax was introduced because you would not be taxed by Japanese tax if you move to a country such as New Zealand, HK and Singapore and sell your stocks.

The below is the summary of the important points about Exit Tax:

Unrealized capital gain on stocks are to be taxed when a resident turns to be a non-resident (Properties are not subject yet).

To prevent a loop hole, gift and inheritance of stocks with unrealized capital gain will be taxable.

Tax can be suspended by an application for those who do not have cash to pay the tax.

Scope

(1) Person with her total assets in stock, derivatives etc over 100 million yen, and
(2) person who has been in Japan more than 5 years in the past 10 years (excluding a spouse of a permanent resident or Japanese national).

Tax rate

15.315 percent

Exception/ Exempt

This taxation seems to target mainly Japanese nationals moving out of the country after they made fortune, to avoid capital gain tax.

Foreign nationals with Japanese spouse seem to be exempt since June 2020. We have to follow any changes in regulation very closely not to miss anything.

Reporting requirement of foreign asset

If you have assets of more than 50 million yen in value overseas, you are required to reports them to the authority together with your tax return.