How to calculate Japanese Inheritance Tax

The difference between Japanese inheritance tax and American tax is that it taxes on estate while the Japanese tax is on heirs. That is why the total tax will vary depending on how many heirs are there. The more heirs you have, the lower the inheritance tax will be.

If you live in Japan, you are likely to be taxable at least the assets in Japan. If you are married with Japanese spouse and have the spouse visa, you are treated in the same way as Japanese nationals who are taxed on their global assets.

The way to calculate the inheritance is a little bit tricky.

You will have to figure out how much the total valuation of assets are to be inherited from decedent. Land valuation is based on “the unit price per street” which is made publicly available by National Tax Agency.

If you have a building on it and you are renting it out to somebody third party, its valuation will be lowered by about 21%. The tenant cannot be your family member.

The land valuation can be discount to 50%-80% if it is used for residential, your own business, your company’s business. IF is rented

Building is usually assessed with the same valuation for the property tax. You will find it out in the property tax bill.

The assessment for publicly traded stocks are the lowest of the price at the day the decedent passes away, the average price of the month, the average price of a month before and two month before.

The valuation for a private company is complicated because there are two ways to calculate. But the net asset method is always one option. You need to be aware that the “net asset” should be based on its current value, not its book value.

Here is how to calculate the tax:


Cash 50,000,000
Residential House: 30,000,000
Rental Property #1 in Japan: 40,000,000
Rental Property #2 in US: 50,000,000

Decedent: Father


Scope of Inheritance Tax changed a lot since April 2017

Inheritance Tax Law changed a lot since April 2017. There are rules that make the scope of taxable assets both wider and narrower. Good news is that a person who came to Japan for work on an assignment from foreign countries becomes exempt from Japanese Inheritance Tax on overseas estate if she has lived in Japan no more than 10 years in the past 15 years. If this person obtains a visa that allows a permanent stay such as Permanent Residency and Spouse visa, she will be taxable on global assets.

改正案① : 課税の強化⤴


A person with Japanese nationality or foreigners with certain visa that allows to stay permanently who has not have domicile for more than 10 years in Japan will be exempt of inheritance tax on assets outside of Japan. (Assets in Japan are still taxable to Japanese Inheritance Tax.)

改正案②: 課税の緩和⤵


Foreigners with
Non permanent residents who live in Japan with ‘table 1’ visa under Immigration Law are only taxable on domestic assets if she has resided n Japan no more than 10 years in the past 15 years. (Assets outside of Japan are exempt from Japanese Inheritance Tax and Gift Tax Law).

改正案③: 課税の強化⤴


How to get consumption tax refund

If your business is to export goods or services from Japan, it is likely that you are able get consumption tax refund. However, you need to meet the following conditions:

1) you need to register your company business to Japanese Tax Office. 事業開始届 or 会社設立届
2) you are by default exempt of consumption tax if you are a sole proprietor or a company with paid-in capital less than 10 MM yen. It is usually a good thing for a small company because you do not have to pay consumption tax. The Japanese government encourage you to start your own business and give you such incentive to take the consumption tax that you receive as your own income.

But this will not be your choice if your business is to export goods/services. You want to file your consumption tax return and get refund. You have to choose to be a consumption tax filer by submitting an application form to become a tax filer (消費税課税事業者届出書). This has to be filed by the end of the first fiscal year for the first year to make it taxable (refundable) or before your fiscal year starts for the second fiscal year and later years.

3) Documentation. You need to get export permission under your (company) name. Its term has to be “FOB” or “CIF” and the ownership has to be transferred NOT in Japan. If the risk and ownership of your merchandises are transferred in Japan, it will be regarded as a domestic transaction, which is therefore taxable of consumption tax.

The worst is “EX-FACTORY” or “EX-WORK” where, according to wikipedia, the definition is like this:

EXW means that a buyer incurs the risks for bringing the goods to their final destination. Either the seller does not load the goods on collecting vehicles and does not clear them for export, or if the seller does load the goods, he does so at buyer’s risk and cost. If the parties agree that the seller should be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.

The reason of making export sales consumption tax free of Japanese Consumption Tax is because it will not be sold in Japan and therefore will not be “consumed” domestically. And it is to make the export placed in equal fitting against competitors from other countries.

If you have any questions, please feel free to ask us through the form available in this web site. We are happy to help you!






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