Leaving Japan - General Guide

[sutebayashi]

That’s a good point, but you can be resident in Japan and have securities accounts open with overseas brokers. I guess those might be the main focus.

Also I see I was confused about the exit tax, at least it seems to only be on unrealized capital gains.
https://www.eytax.jp/pdf/newsletter/201 ... 2015_e.pdf

The 100 million yen threshold might seem like it is only for reasonably wealthy people, but if the yen continues to decline then it will be increasing those in scope.

Conversely, another way to think about it, is that it may be better to exit Japan when one’s financial assets are worth LESS than 100 million, and then be exempt from paying the unrealized capital gains tax… if I understand it right. So it might be the “get out while you can more cheaply tax”, rather than the “exit tax”.

Japanese capital gains tax at 20% is not too bad, I think, but all these extra rules make things more complicated. I do wonder if it is worth it.

[Tkydon]

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)?

Yes. but the point is you if you have more than Y100M in overseas assets, you have to mark to market and pay taxes on the Capital Gains, whether you liquidate or not.

[Yokohama]

Thanks, sutebayashi and Tkydon. Very helpful. I was mostly thinking how the exit tax could be applied to me. I only have securities with Rakuten and SBI. I hadn't considered the case where someone has a significant amount of assets abroad.

[Tkydon]

Thanks, sutebayashi and Tkydon. Very helpful. I was mostly thinking how the exit tax could be applied to me. I only have securities with Rakuten and SBI. I hadn't considered the case where someone has a significant amount of assets abroad.

The 'Exit Tax' refers to those who have more than Y100M in overseas assets, that would be taxable as if they were sold (marked to market) on exit.

'Exit Procedures' refer to everyone leaving Japan, where you have to pay any outstanding tax for income earned in the last 2 years (This Tax Year for National Income Tax, and last tax year for outstanding Residents' Taxes), and Capital Gains Tax for any liquidated Japan investments.

[sutebayashi]

I think it is 100m in all financial assets, including Japan based ones, based on what the EY link above says, no?

[RetireJapan]

I think it is 100m in all financial assets, including Japan based ones, based on what the EY link above says, no?

True, but if you are leaving Japan you would have to close your accounts and liquidate your Japan based investments, so in practice the exit tax would only affect you if you have more than 100m yen's worth of overseas investments. For people close to that amount, they should just sell enough to get under the 100m yen.

For people with a lot more, they can probably afford proffesional advice

[sutebayashi]

Ah, good point. Selling all the Japanese stuff would help since cold hard cash isn’t included in the 100m of financial assets to be assessed.

In practice I doubt they would be checking the assessed value of assets by all those departing, anyway… seems like they may want to have this as a big stick to use, if they see some big fish trying to get away.

[jhr1054]

A couple of other questions on the Exit tax.

1. Understood it is for those with 100 million yen and higher. However does the tax apply to worldwide investments or only investments held in Japan? For example, I have retirement accounts in the U.S.: an IRA and a Roth IRA and a taxable brokerage account. Are these accounts subject to the Japan Exit tax?

2. Also I have been in Japan for just over five years. However the first three years I had a company sponsor my visa as a Highly Skilled Professional. After those first three years, I got a permanent residence visa through my wife. From what I read the clock ticking on my Japan Exit tax would begin from when I got my PR. In my case that would be a little over two years so I would not have to pay the Exit tax? That's my understanding from what was written previously here but just want to check again and make sure.

Thanks everyone.

[zeroshiki]

I'm not sure why you think the first 3 years doesn't count. The rule of thumb is 5 years living in Japan for the last 10 years.

[RetireJapan]

I'm not sure why you think the first 3 years doesn't count. The rule of thumb is 5 years living in Japan for the last 10 years.

Exit tax only applies to PR or spouse holders, so one might assume that the clock starts when you acquire one of those statuses.

Of course, we all know what happens when you assume

Is it just status when you leave Japan that matters?