These are examples of consultations we have handled. We help foreign residents of Japan and people with income or assets overseas, by email and online meetings.
About these examples
Nationalities, amounts and years have been changed so that no one can be identified. The tax treatment depends on the facts, such as when you came to Japan and how you moved money. Similar situations can lead to different conclusions, so please contact us about your own case.
Case 1: Rental income from a home overseas was not reported in Japan
The question
The client rented out a house in their home country that they owned before coming to Japan, and filed tax returns there every year. Some years had not been reported in Japan, and they wanted to correct this properly.
What we did
- Based on the time since arrival, we found that the client was likely a non-permanent resident for the first five years. During that period, overseas income is taxed only to the extent it is remitted to Japan.
- For each year, we collected transfers from the overseas account and card spending in Japan with an overseas credit card, and calculated the taxable amount.
- We recalculated depreciation of the building under Japanese rules, rather than using the figures on the overseas return.
- We summarized, year by year, whether a late return, an amended return or a request for correction was needed, with an estimate of the additional tax.
Key points
A non-permanent resident is not taxed on all overseas income. However, card spending in Japan can count as a remittance. Filing voluntarily before the tax office contacts you can reduce or remove penalty taxes.
Case 2: Parents abroad helping with the purchase of a home in Japan
The question
The client planned to receive several million yen from parents living in their home country to buy a house in Japan, and asked whether Japanese gift tax would apply.
What we did
- From the client's visa status and time in Japan, we confirmed that a gift from parents abroad was likely subject to Japanese gift tax.
- We explained the special exemption for funds to acquire a home, including the year of the gift, the deadlines for handover and moving in, and the need to file a return the following year.
- We showed how much could be received tax-free by combining the exemption and the basic deduction.
Key points
Gift tax is determined by the residence and visa status of the person who receives the gift, not the giver. The exemption has deadlines and filing requirements, so we recommend consulting before the money is transferred.
Case 3: Working remotely from Japan for an employer abroad
The question
The client's spouse planned to keep a full-time job with a company abroad and work from home after moving to Japan. Which country would tax the salary?
What we did
- We explained that salary is generally income of the country where the work is done, so work performed in Japan is likely taxed in Japan.
- We checked the employment income article of the tax treaty between Japan and the other country, and explained how double taxation would be adjusted.
- We explained the need to file a tax return in Japan, the effect on the spousal deduction, and estimated the take-home pay.
Key points
Even if the employer is abroad, work done while living in Japan is generally Japanese income. Tax treaties differ by country, so the specific treaty needs to be checked.
Case 4: Sorting out income tax and resident tax before leaving Japan
The question
The client planned to return home early the following year, and asked how to handle this year's tax return and the resident tax bill that would arrive after leaving.
What we did
- We explained that income tax for the year of departure can be filed before leaving, or the following year through a tax agent (nozei kanrinin).
- Resident tax is charged by the city where you lived on January 1, so a tax agent also needs to be registered with the city to receive the bills. Some cities require approval.
- We clarified what our firm would do as the tax agent and who files the notifications.
Key points
Income tax (tax office) and resident tax (city office) are separate procedures. We recommend preparing early once your departure date is set.
Case 5: Lived in Japan before, unsure how long non-permanent status lasts
The question
The client had lived in Japan several years earlier and wanted to know how long they would be a non-permanent resident after returning.
What we did
- Non-permanent status is based on the total time lived in Japan during the past ten years, so we included the earlier period in the calculation.
- We showed how the remaining non-permanent period changes depending on the date of arrival.
Key points
An earlier stay counts if it falls within the ten years before the current year. Consulting before you decide when to move gives you more options.
Case 6: Is an overseas assets report required?
The question
The client owned a house and a bank account overseas. The tax office mentioned the overseas assets report, and the client was unsure whether they had to file it.
What we did
- We explained that the test is whether total overseas assets exceed 50 million yen at December 31.
- Real estate can be valued at market value or at an estimated value (for buildings, the value after depreciation, for example), so the total depends on the method. We decided whether filing was required on that basis.
- We also confirmed that non-permanent residents are not required to file.
Key points
The deadline is June 30 of the following year. Even if you missed it, filing before the tax office notifies you of an examination may help you avoid unfavorable treatment.
If you are in a similar situation, please contact us through the contact form. See also our FAQ.