Receiving a large inheritance

[RetireJapan]

I'm generally in favour of inheritance taxes, but I can see that in some cases it would be best to try to minimise or eliminate them for an individual.

I don't think I am likely to receive a large inheritance. The only possibility would be from Germany, and the inheritance tax there is 20,000 euros tax-free and then 30% of the remainder (up to 6m euros).

I estimate this would be roughly the same or more than the tax owed in Japan. I guess the question would then become is there a tax treaty between Germany and Japan, etc. Assuming that there is there would be no point in leaving Japan to avoid paying taxes, as they would already be paid in Germany.

How about you? I'm guessing from comments that people with no inheritance tax in their 'home' country or with very high deductibles might feel differently (looking at you, Australians -no inheritance tax, or Americans -first $10m is tax free). Would you take steps to leave if faced with a substantial inheritance?

[Butterball]

Happy to see the poll is so far unanimous for not trying to dodge the tax. Reading reddit forums you'd think the Japanese government was waiting to pounce on you and send you into poverty the second your mother dies or you transfer a few yen to your spouse's bank account, but the fact is that if you're set to receive a "large" inheritance, it will still be "large" after taxes.

[TokyoWart]

How about you? I'm guessing from comments that people with no inheritance tax in their 'home' country or with very high deductibles might feel differently (looking at you, Australians -no inheritance tax, or Americans -first $10m is tax free). Would you take steps to leave if faced with a substantial inheritance?

One clarification about these taxes. There are estate taxes on the total estate before it goes to heirs and inheritance taxes which are assessed on the person who inherits. Japan's system, as I understand it, is an inheritance tax on the recipient. The US has no inheritance tax at the federal level (a few states do have inheritance taxes but the tendency has been to eliminate them because they are difficult to enforce and do not raise much revenue). You can inherit not just $10 million but $10 billion without paying taxes in the US. There is an 18-40% federal estate tax in the US with an exemption of $11.7 million (effectively twice that for married couple) but under current US law that exemption will decrease at the end of 2025. The problem for cross-border inheritance I suspect is that these taxes are different (they're actually applying to different entities, the estate vs the inheritor) so it isn't clear to me that there is any avoidance of double taxation.

[JimNasium]

I know these things can get complicated, but how much tax would we pay in Japan for an inheritance?

[RetireJapan]

I know these things can get complicated, but how much tax would we pay in Japan for an inheritance?

For the vast majority of people, nothing:
https://www.retirejapan.com/blog/japane ... nce-taxes/

Especially so with inheritances from overseas:
https://www.retirejapan.com/blog/overse ... -in-japan/

You'd need to be expecting a $1.5m+ inheritance from overseas to make it worth thinking about leaving Japan to avoid paying inheritance taxes here IMO.

[JimNasium]

I know these things can get complicated, but how much tax would we pay in Japan for an inheritance?

For the vast majority of people, nothing:
https://www.retirejapan.com/blog/japane ... nce-taxes/

Especially so with inheritances from overseas:
https://www.retirejapan.com/blog/overse ... -in-japan/

You'd need to be expecting a $1.5m+ inheritance from overseas to make it worth thinking about leaving Japan to avoid paying inheritance taxes here IMO.

That’s great news! (Although I wish I had the over $1.5m problem).

[TJKansai]

Unless it was a multi-million dollar inheritance I can't see the leaving Japan option as being worthwhile.

It is amazing though how Americans can pass on almost limitless amounts of money thanks to the step-up cost basis system.

One Japanese account told me rich Japanese use real estate in order to pass on wealth and avoid large tax bills. On the other hand, I have heard a couple of our neighbors who were once big landowners had to pay "nan-oku" in taxes, so YMMV.