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

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Scope of Japanese estate tax for non-Japanese. And types of visa you should not have

time 2018/01/23

Japanese Inheritance Tax law was amended recently to protect foreigners living in Japan on working visa (as opposed to spouse  visa or Permanent Resident visa).

Before the amendment of the law in March 2017, foreigners living in Japan with working visa were subject to Japanese Inheritance Tax even on foreign assets if they die in Japan during their stay. For example, if they were sent from their headquarter to work in Japan as an expat for a few years and passed away here, they would be taxable to Japanese Inheritance even on their  estate in heir home country. The rule was very simple. If you are a resident of Japan, you will be taxed globally. If you are not, you only get taxed on estate located in Japan.

The changes are:

(1) Foreigners with working visa (e.g. humanity, engineer, investment, management. See the table #1) will be only taxed on their Japanese estate unless they have spent more than 10 years in the past 15 years. Their estate at home country will be untouched.

(2) Japanese person living abroad is still subject to global tax until 10 years passes in abroad for the both decedent and heir. Foreigners with visa in the table #2 below are treated the same as Japanese national.

I hope this posting will help but please let us know if you have any questions.

Table #1 (1) 外交、公用、教授、芸術、報道 Diplomacy, Official, Professor, Artist, Journalist
(2) 投資・経営、法律・会計、医療、研究、教育、技術、人文知識・国際業務、企業内転勤、興業、技能Investor/Business Manager, Legal/Accounting Services, Medical Services, Researcher, Education, Engineer, Specialist in Humanities/International Services, Inter-company Transferee, Entertainer, Skilled Labor
(3) 文化活動、短期滞在、Cultural Activities, Temporary Visitor
(4) 留学、就学、研修、家族滞在 College Student, Pre-college Student, Trainee, Dependent/Family

The below table shows the visa categories that are treated in the same way as those with Japanese national for the inheritance tax.

Table #2 (1) 永住者, Permanent Resident
(2) 日本人の配偶者等
Spouse or Child of Japanese National
(3) 永住者の配偶者等
Spouse or Child of Permanent Resident
(4) 定住者
Long-Term Resident

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