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.

http://www.rosenka.nta.go.jp/

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:

Assets:

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

Heirs:
Wife
Son
Daugher