Relocating from the US to Japan

[Snoochibear]

Hi all,

I am totally new to the forum and would appreciate anyones experience or advice. I am a US citizen with Japanese spouse.

We are in our early 60's and would like to buy a second home in Japan to spend half our time between both countries. However, I plan to continue working in the US while not in Japan. Q is, can I apply for residency in Japan if I am traveling back and forth several times a year?

We are planning a month long trip to Japan next spring to scout out potential places to live. Is there anyway I can begin the residency process during that trip or do we need to have an "extended" stay in Japan to do that? Just not willing to quit my job in the US while trying to establish residency.
Also, is there a certain visa type I should apply for when traveling next spring which would more allow me to start the process?

I have other Qs but those are my most pressing at this time. Appreciate anyone who can steer us in the right direction.

[zeroshiki]

I cannot speak to residency requirements of going back and forth but you should be able to get a spouse visa. Only sticking point might be their economic check but if you're able to sufficiently prove you have enough money/income, that should be possible.

[WageSlave]

Hi,

I agree with zeroshiki - you should be able to come and go with no problems on a spouse visa. I think you would not be able to get a permanent resident visa (the Japanese version of a green card).

The main difference is that you will have to watch the validity dates on the spouse visa and make sure you do what the immigration people want in order to maintain your visa. Should not be a problem, but you will need to mind the details.

[captainspoke]

I think for japan, residency is decided on intent, or some questions that bear on what make a place your home (residence)--rather than a number of days per given year. So if you intend for japan to be your home, and that according to some practical common sense it is, then you will have tax residency in japan. Being married to a japanese and on a spouse visa, property, getting a residence card, normal bills like healthcare, and so on, would probably be enough to typically resolve that.

For your case tho, your wife has not been a resident here (presumably for some time), so that may not count in quite the same way. Also, you mention going back to the US to work--while usually working here would be a factor that would add to the cluster of things that would make you a resident.

If you are a resident of japan, you can certainly work for a foreign company, but there are some quirks/catches depending on your relationship with the company. If you are an employee--an actual employee--then as a resident of japan (i.e., working in japan) your employer needs to have a legal presence here. There is nothing that you can do personally to get around this. Some foreign companies do set up a subsidiary here, and for those companies, you'd be working for that subsidiary while here.

If the company does not want to set up a presence here, they can outsource that to a biz here that provides that service (maybe it's called EoR employer of record?), and yes, it does cost the company money. You would then be a formal employee of that company, rather than your company back in the US.

The way around that is if you are a contractor, not an actual employee. Also, people in the US would maybe set up an LLC for this purpose, BUT japan does not recognize such a pass through entity, and you're almost back to square one--the LLC, employing you, would then need to set up a legal presence here, be liable for corporate taxes, etc. I'm not an expert, really not even close, but I do know that an LLC is a disadvantageous way to go about this. Just be a contractor, without the LLC in between.

If you're a resident of japan, you shouldn't be paying state taxes at all (unless e.g. you're a property owner and have rental income), and I don't think you'd be paying federal income tax (or SS) until that got settled out on your year-end returns. (And there are two ways to go about that, either the FEIE, or the FTC, and depending on the numbers--the excluded amount, or taxes paid here--you may then be liable for US federal income tax.)

If you haven't come across them, there are a couple of reddit 'subs' that may have some reading. One is JapanFinance, the other is USExpatTaxes.

[sutebayashi]

We are in our early 60's and would like to buy a second home in Japan to spend half our time between both countries.

It’s not what you were asking, and maybe you were thinking about these things already, but I’d suggest just in case that you might like to consider the various Japanese taxes that you might want to navigate around.

Ideally I imagine you would hope to not be so resident as to attract extra taxes from the Japanese tax agency - income tax, inheritance tax (hopefully still decades off, but I am in my 40’s and started thinking hard about this recently), and exit tax. This may not be relevant if you don’t plan to be having much wealth, but if you will own two properties then I imagine it could be relevant in your case.

[Snoochibear]

Big thanks for everyone's quick reply and helpful suggestions to my inquiry about relocating to Japan. Sorry, for late acknowledgment due to different time zone.

The Spouse Visa (Zeroshiki and Wageslave), definitely seems the way to go. Looks like I can apply for one for up to 3 or more years.

Captainspoke, thanks for the info on employment and the reddit subs JapanFinance & USExpatTaxes. I'll start exploring those as taxes are and finance are obvious a big concern. Especially as Sutebayashi alluded to when pursing PR. Understand that Japan may want to tax my US income as a PR. But is it true that they will only consider resident status for tax purposes only if I've lived in Japan for 5 of the last 10 years?

[Tkydon]

After the country opens up, if you want to visit Japan you can do so on a Tourist Visa for 90 days at a time. Visa Waiver would mean you just have to turn up at the border.

Permanent Residency for Immigration Purposes is different than Permanent Residency for Taxation Purposes.

Permanent Residency for Immigration Purposes: If you apply for a Spouse Visa, then renew your Spouse Visa, you should then be eligible to make an application for Permanent Residency. Spouses are fast tracked, and you need more than 1 year left of you Visa in order to make the application.

Permanent Residency for Taxation Purposes:
You may want to check last year's Tax Guide here
https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

There are three stages of Tax Residency status:
On a Visitor's Visa
1. Non-Resident
On a Spouse Visa
Before your 1 year anniversary or before establishing a permanent resident, whichever is sooner
1. Non-Resident
After your 1 year anniversary or after establishing a permanent resident, whichever is sooner, and before your 5 year anniversary
2. Resident - Non-Permanent Resident for Tax Purposes
After your 5 year anniversary or after accumulating 5 years in the last 10 years
3. Resident - other than Non-Permanent Resident for Tax Purposes (Previously know as Permanent Resident for Tax Purposes)

See the Tables in the Doc on pages 5-9

1. Work done when you are in Japan will be taxable, whether payable in Japan or overseas. Work done when you are in the US will not.

2. Work done when you are in Japan will be taxable, whether payable in Japan or overseas. Work done when you are in the US will not. Other sources of Income in Japan will be taxable. Other sources of Income overseas will not be taxable unless you remit the funds to Japan.

3. All sources of Global Income will be taxable regardless of whether or not you remit the funds to Japan.

Any Taxes paid in the US can be claimed as a Foreign Tax Credit against Japanese Taxes, and any taxes paid in Japan can be claimed as a Foreign Tax Credit against any US Taxes.

Once you have your visa and have established your place of residence (your second home) in Japan it will be hard to claim that any part of a year spent out of Japan should not be taxed. You could claim that any period covering an entire tax year was not taxable in Japan, if your house is not available for your / your family's use during that time (maybe rented out, or under construction), but if your your house is available for your / your family's use during that time, the Tax Office may not accept that claim.

Your wife, on the other hand, is a Citizen, and will be taxable immediately on return to Japan.

As a US Citizen, you also have to be aware of the Bilateral Taxation Treaty between the US and Japan:
https://www.mof.go.jp/tax_policy/summar ... _ST_en.pdf

Whilst for other countries' tax treaties, pensions are only taxable in the country of residence, the US maintains the right to tax its citizens...

You would probably need to consult with a professional regarding your specific situation and plans, before making any decisions.

Another thing, may or may not be relevant:

Gifts between spouses are taxable in Japan.
Gift tax is levied on the recipient.
If the total amount of gifts received in a tax year is less than the annual allowance of Y1.1M then the recipient is not subject to Gift Tax and the gifts are Tax Free.
There is also a One-Time Tax-Free Gift Allowance Between Spouses of more than 20 years for the specific purpose of purchasing a primary residence of Y20M. You might consider this when buying...
Combined with the annual tax-free gift allowance of Y1.1M, that means that you could transfer Y21.1M value of the house Tax Free to your spouse in tat tax year.

You would probably need to consult with a professional regarding your specific situation and plans, before making any decisions.

[Snoochibear]

どうも、ありがとう for such a detailed and informative response Tkydon!

Sounds like getting a Spouse Visa would work best for what we are trying to do. Do I have to renew the Spouse Visa to apply for PR, or can just apply for PR after 1-yr if I have a 3-yr Spouse Visa?

Your break down of Stages of Tax Residency and the Tax Guide are super helpful! Looks like I can maybe able to postpone taxation of US income for at least a couple of year (<5) as a PR. Is that right?

Bilateral Taxation Treaty (perhaps need a tax layer to fully understand) seems like it would help avoid double taxation. I used to file FEIE many years ago when I was an employee of a Japanese company. Assume I can do so if I decide to work in Japan. I've thought about part- time work in Japan maybe teaching at a Japanese University. But my fantasy is opening a small business venture like a local coffee shop or brew pub.

Overall though, our goal is to begin cutting back on work and start semi-retirement life and we wanted a place where friends and family could come stay at in Japan.

Once again, your detailed, thought-out response is so well appreciated! Hope I can do likewise for someone else in the future.

[Beaglehound]

You can apply for PR after a year of residence with a 3-year spouse visa.

[captainspoke]

You can apply for PR after a year of residence with a 3-year spouse visa.

That's faster/sooner than I would have guessed.

For OP, note that a 3yr term for a spouse visa is neither automatic nor guaranteed--some people seem to get stuck in the rut of 1yr cycles and it can be hard to break out of that (I've read complaints to that effect).

Also for OP, for PR they ask you for paperwork that substantiates pension payments, taxes, and I think maybe healthcare(?). If you've missed something in there, even a late payment, it's highly likely that they'll say no. Again, for PR they can be sticklers for all details, you do need to have an unblemished record.