Leaving Japan - General Guide

[FIRE-Rookie]

I tried to scrap information from a number of old posts (as per my best understanding) and share the combined wisdom here but again, feel free to correct me if I made mistakes in any section and I will edit accordingly.

If you are planning to leave Japan temporarily or permanently, there are roughly 10 areas to consider:
1-- Banks & Brokerages
2-- Re-Entry Permit
3-- Pension
4-- Residence Tax
5-- Income Tax
6-- Social Insurance
7-- MyNumber card
8-- Life Insurance policy
9-- Health Insurance
10-- Exit Tax

I tried to include all aspects but if there are areas I totally missed then I will be happy to include them. Now covering each item in detail:
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1-- Banks & Brokerages
Generally speaking, if you leave Japan and become non-resident then you are supposed to close all bank and brokerage accounts. Although Banks don't usually check and most people opt to keep it open.
NISA has to be closed so must be liquidated. (At a capital gain or loss)
Generally speaking, iDeCo can't be liquidated and can remain active even outside Japan but your contributions are only accessible once you are 60, there is an exception to the rule that you can do a lump sum withdrawal under certain conditions, one being that you contributed for less than 5 years.

IBKR brokerage is a lucrative option but they don't do tax withholding and reporting like Japanese brokerages so if you ever come back to Japan, you must perform these tasks on their own or hire an accountant to do it.

As pitiful as it might be, Japanese brokerages don't have an agreement that allows you to transfer assets to IBKR even though products are similar (e.g. E-Maxis S&P500 or S&P500 ETF) however if you sold your Japanese brokerage assets & bought similar products in a relatively short time then you will be only liable for capital gain. (Painful necessity)

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2-- Re-Entry Permit for 5 years
A must do if you got PR, if you don't have PR and are still on normal working visa then basically you close everything.
If you surrender your Zairyu Card, you would have to consider the Exit Tax.

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3-- Pension
Shared wisdom is that you don't request lump-sum if you have worked and paid taxes in Japan for over 5 years. If you requested a lump-sum, then you can reimburse only if you have been contributing less than 5 years worth of payment but anything above that 5 years contributions will be cancelled/lost.

If you contributed to at least 120 months then you are entitled to partial Japanese pension & you can no longer get a refund.. (That means 10 years working and paying contributions)

Moreover, depending on your next country and if your next country have a shared tax treaty with Japan (e.g. Totalization) then you might get some pension benefits instead from starting from scratch elsewhere.

For people planning to come back, if you keep a registered address in Japan (e.g. Extended family) while you're overseas, you could keep the national pension payments going (16,610円 a month), but then you will be liable for residence tax & health insurance.

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4-- Residence Tax
Shared wisdom states that you better lose/de-register your Japanese address by December in the year you are leaving. You will still be liable to pay resident taxes on that current year (Payable from June of current year till May of next year)

You will have to nominate a tax Representative, and you will still be liable for Resident's Taxes for about 18 months after you leave. NTA will send your Proxy payment slips to pay either in one shot, or quarterly.

If you keep a registered address in Japan (e.g. Extended family) while you're overseas, you will be liable for residence tax & health insurance.

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5-- Income Tax
You need to pay for last year even after you leave Japan.

Moreover, this is a grey area but if you keep a registered address in Japan (e.g. Extended family) while you're overseas, you are technically a resident and will be liable for income tax on world wide income.

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6-- Social Insurance
Any payments made so far will be lost as per my understanding.

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7-- My Number card
Your card will be invalidated but not the number. About the number, I am not sure if there a process to reactivate if you ever come back to Japan.

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8-- Life Insurance policy
Any premiums you have paid so far cannot be taken out.
Technically speaking, you can continue paying the premiums while not physically being in the country because insurance reps will most likely not check or find out. Also, most life insurance policies are valid even when you are not in the country but you probably want to have residency status because you might not be able to make a claim unless you do.

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9-- Health Insurance
This is for supplementary health insurance and I assume it is the same as above and it requires residency in Japan to make a claim.

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10-- Exit Tax
Basically if you have more than Y100M in assets, then you would have to mark to market and pay Capital Gains Tax on the paper gain...but not if you keep your PR.
Covered in detail here:
https://retirewiki.jp/wiki/Exit_tax

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[Michel]

Timely post, this is going to be me next year away for 3 years!

[rasselbiluga]

1-- Banks & Brokerages
iDeCo can't be liquidated and can remain active even outside Japan but your contributions are only accessible once you are 60!

I believe you can do a lump sum withdrawal under certain conditions, one being that you contributed for less than 5 years. See https://www.ideco-koushiki.jp/library/2022kaisei/

3-- Pension
Shared wisdom is that you don't request lump-sum if you have worked and paid taxes in Japan for over 5 years. If you requested a lump-sum, then you can reimburse 5 years worth of payment but anything above that 5 years contributions will be cancelled/lost.

If you contributed to at least 120 months then you are entitled to partial Japanese pension. (That means 10 years working and paying contributions)

It's important to check whether your country has a pension agreement with Japan. If there is an agreement, it is possible that you are entitled to partial Japanese pension even if you contributed for less than 10 years. If there is a totalization agreement, then Japan will take into account your contributions in the other country. Say you contributed for 7 years in the other country and 3 years in Japan, the total contribution is 10 years, so you are eligible for Japanese pension. In such a situation, lump sum withdrawal might not be a good choice. See https://www.nenkin.go.jp/international/ ... dance.html

[mikele3]

Great post, thanks for sharing.

Is this something that could be on the wiki for future reference?

[FIRE-Rookie]

I believe you can do a lump sum withdrawal under certain conditions, one being that you contributed for less than 5 years. See https://www.ideco-koushiki.jp/library/2022kaisei/

Updated, thank you!

It's important to check whether your country has a pension agreement with Japan. If there is an agreement, it is possible that you are entitled to partial Japanese pension even if you contributed for less than 10 years. If there is a totalization agreement, then Japan will take into account your contributions in the other country. Say you contributed for 7 years in the other country and 3 years in Japan, the total contribution is 10 years, so you are eligible for Japanese pension. In such a situation, lump sum withdrawal might not be a good choice. See https://www.nenkin.go.jp/international/ ... dance.html

I already mentioned this in the same section so no need to be re-added.

[rasselbiluga]

It's important to check whether your country has a pension agreement with Japan. If there is an agreement, it is possible that you are entitled to partial Japanese pension even if you contributed for less than 10 years. If there is a totalization agreement, then Japan will take into account your contributions in the other country. Say you contributed for 7 years in the other country and 3 years in Japan, the total contribution is 10 years, so you are eligible for Japanese pension. In such a situation, lump sum withdrawal might not be a good choice. See https://www.nenkin.go.jp/international/ ... dance.html

I already mentioned this in the same section so no need to be re-added.

Sorry, didn't read carefully enough!

[tokyojoe]

Many thanks - this is a great idea for an article, since a significant proportion of foreigners in Japan
do leave Japan, either forever or for some time.

10-- Exit Tax
Basically if you have more than Y100M in assets, then you would have to mark to market and pay Capital Gains Tax on the paper gain...but not if you keep your PR.
Covered in detail here:
https://retirewiki.jp/wiki/Exit_tax

-Regarding this exit tax, the wiki you refer to agrees with articles I have read elsewhere in saying that if you
are in Japan on a visa (at least one of the listed ones, which include for example the 'Professor' visa that covers
most people working at universities) then you are exempt from this tax, however long you have been here (if your visa status
has remained on the 'excluded' list throughout your stay). I guess, again as written in the wiki, this is one thing to be
considered when contemplating applying for PR or not.
- Another point to make though is perhaps this tax is not necessarily as onerous as it seems, depending on what investments
you have. For example if you are holding index funds in a securities account then you will have to sell these when leaving Japan
anyway, and would then have to pay CGT anyway, even with the exit tax exemption?

[sutebayashi]

I second that, great article. Thank you.

This Exit Tax is a new concern. No problems paying capital gains tax on investments, but if there is a straight out wealth tax component, then it sends a certain type of message that doesn’t bode well.

When I was younger, I guess I thought I might be in Japan for good.
But times and circumstances (personal and otherwise) they have changed lot, and while retirement is still many years off for me, recently I am starting to think that the best long term strategy for myself and family would be to retire back in my place of birth.

But times, they may be a-changing again, before I get to the stage where I decide I’m done working… sure hope things change for the better, but hope isn’t a great strategy so suddenly I am seeing value in buying lots of options.

[Tkydon]

If you decide to leave Japan and terminate your residence without a Re-Entry Permit, and submit your Zairyu Card, you would have to complete the exit procedures, which include paying up the year's taxes and the previous year's Residents' Taxes (2021).
If you are still in Japan on 1 Jan 2023, you will also be liable for Residents' Taxes on 2022 income.

This is different than the 'Exit Tax', which only applies if you have Total Assets in excess of Y100M, with some caveats.

If you do not terminate you Visa Status and instead maintain your visa and take a (Multiple) Re-Entry Permit (Max 5 Years or to the End of your Visa Permission to Stay - renewable outside Japan) or Special Re-Entry Permit (Max 1 Year or to the End of your Visa Permission to Stay - not renewable), then they may consider that you have not broken your domicile and are still resident and taxable in Japan.

You will also have to tell your Bank and other Financial Service Companies that you are moving abroad, and they may curtail service or make you close your accounts when you leave.

You would have to appoint a Tax Agent to deal with taxes after you have left.

[Yokohama]

Regarding exit tax, if somebody leaves Japan, won't Rakuten, SBI, etc. require you to close the account? And therefore, you are forced to sell and you would pay tax over realized gains anyway (regardless if the exit tax law/policy applies to you or not)?