Tax implications of interest in a foreign bank account

[Jake]

Supposedly interest in the UK is informed to HMRC who then pass on the data to the relevant tax authority, obviously for us, Japan. This is the CRS reporting thing.
I got a certificate of interest from my UK bank (cost 25 quid) and used market rate to exchange for the tax form. I took the certificate of interest with me to the tax office, just in case. Not aware of any ￥200,000 allowance, and taxman didn't mention it.

[inaka_rob]

Woah... Hold on a sec. My mind is caving in from this. I just learned this as well.

I have an investment account overseas.

Let me get this straight.

I get a paycheck in Japan. Japan takes their 25% or so tax out of it. I send $5,000 to the USA. I buy a mutual fund. 10 years later I sell that mutual fund for $10,000. USA takes their cut (let's say i am in the 15% capital gains bracket). I have $9250 left and I have to tell Japan about that as well, and then pay ANOTHER 25% tax to Japan on that?!) So my investments get DOUBLE taxed?!

I can put money in my wife's nisa account, but only up to 1.1 million yen. After that, I\we have to pay gift tax.

And my US account is earning 40-50% interest!!! while the Nisa is only earning 3-20%.

So I am also making dividends, like 700$ right now, in the USA. I have to declare this every year in Japan? So my US dividend get double taxed as well?

[Jake]

Woah... Hold on a sec. My mind is caving in from this. I just learned this as well.

Not sure what you just learned, but in my case as a Brit I don't pay tax on any interest there, but I should declare any earnings here.
IF I get taxed in the UK on anything, there is a double taxation treaty which allows me to either:
1: Reclaim the UK tax, then pay the tax here or
2: Use the tax paid in the UK to reduce/eliminate any tax due here.

Something like that anyway. You can send money anywhere you like, if that money creates wealth while you are living here, that increased wealth is taxable as income.

Research double taxation first, then... help your fellow gaijin, where the fook do you earn 40~50% interest on a US account?

[inaka_rob]

40-50% (life-time profit) from various Fidelity mutual funds. Just performing REALLY well.

I have to pay tax on interest earned. But I just found out Japan also has a foreign earned income tax break. So the double taxation won't be so bad.

[RetireJapan]

But I just found out Japan also has a foreign earned income tax break. So the double taxation won't be so bad.

Foreign earned income is just that, income from a job. Japan doesn't tax it for the first five years of residence, provided it is not remitted here.

Income from investments, dividends, interest, real estate, etc. is taxable from day 1 I believe.

[Beaglehound]

But I just found out Japan also has a foreign earned income tax break. So the double taxation won't be so bad.

Foreign earned income is just that, income from a job. Japan doesn't tax it for the first five years of residence, provided it is not remitted here.

Income from investments, dividends, interest, real estate, etc. is taxable from day 1 I believe.

The NTA guide talks of foreign source income rather than earned income. And I can’t find anything saying that the types of income you mention are treated differently. There was a change to capital gains on non-listed shares and shares acquired while living in Japan from 2017 (see link below). As I am a non-permanent resident who currently doesn’t declare overseas interest, I would be interested to know if I am doing it wrong

https://www2.deloitte.com/content/dam/D ... 0.pdf?nc=1

[ctdummy9]

But I just found out Japan also has a foreign earned income tax break. So the double taxation won't be so bad.

Foreign earned income is just that, income from a job. Japan doesn't tax it for the first five years of residence, provided it is not remitted here.

Income from investments, dividends, interest, real estate, etc. is taxable from day 1 I believe.

The NTA guide talks of foreign source income rather than earned income. And I can’t find anything saying that the types of income you mention are treated differently. There was a change to capital gains on non-listed shares and shares acquired while living in Japan from 2017 (see link below). As I am a non-permanent resident who currently doesn’t declare overseas interest, I would be interested to know if I am doing it wrong

https://www2.deloitte.com/content/dam/D ... 0.pdf?nc=1

Interesting callout regarding Foreign SOURCED Income vs Foreign EARNED Income. You are right, the NTA doc refers to Foreign SOURCED Income, with no documented differentiation between ways such income is sourced (i.e. job earnings vs interest, dividends, rental prop income, etc). I'm in the same boat, been here less than 5 years (so a tax non-permanent resident) and not declaring overseas income of any sort until now. Of course, when we cross the 5 year mark, it is clear, all foreign income must be declared in Japan whether or not it is remitted so the complexity increases drastically for me in a couple of years!

[judomarshall]

I'm not a tax person, but I think there's an up-to-¥200,000 allowance that this might fall within. I think that's usually for some minor side income, a kind of miscellaneous category.

Can anyone confirm if there is in fact a 200,000yen allowance? Would be excellent news.