Leaving Japan - General Guide

[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.

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?

Hmm... the KPMG website does say this:

出入国管理及び難民認定法別表第一の在留資格（技術・人文知識・国際業務、企業内転勤など）により在留していた期間は、国内に住所又は居所を有していた期間から除かれることとされているため、別表第一の在留資格（たとえば、いわゆる就業ビザ等）により一時的に日本に滞在する外国人駐在員は、本制度の適用対象者から除かれることとなる。

which implies time under a category 1 visa (not PR or spouse, but working) wouldn't be counted. I'm clearly way over my head though but this is KPMG speaking.

[mighty58]

I've recently gone through a lot of this, so thought I'd share a bit. Some background: After working in Japan for over 20 years now, I was recently sent overseas by my company (Jpn company) on a typical kaigai-tenkin assignment, which means I don't know how long it'll be before I'm recalled, but the assumption is that I definitely will be returning to Japan. Personally (and although I can't predict all potential permutations for the future) I do intend to return to Japan at some point. So my comments don't apply to those making a permanent move abroad.

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)

I've got a few different bank accounts.
- Shinsei - my main account for 20yrs+. Had a lot of things tied to this account, so wanted to keep it as-is, but Monex informed Shinsei(!) that I was leaving the country. I assume it's due to their tie-up (I enjoy Shinsei Diamond status due to my Monex account balance). Shinsei did not insist I close the account, but I had to make it dormant. The restrictions (deposits ok, no withdraws/furikomis) make it inpractical though. Paperwork was tedious and took awhile. I am keeping the account but changed almost all of the payments connected to it.

- MUFG - They have a service called "Global Direct", aimed at people going abroad for work. Basically it allows you to use your Japanese account normally while a non-resident. There are some quirks, such as when I furikomi to a Jpn domestic account, they inform the bank that it's actually a transfer from overseas) but it works good. You need to apply for Global Direct specifically, it takes 4-6 weeks to set up, and you need a letter from your company.

- Mitsui Sumitomo Trust - account I have for a mortgage on an investment property. I told them early I was going abroad, but interestingly they had no problem with it, with no paperwork/declarations required. As such, it is going as-is, and I use it to receive rental income and pay the mortgage for that property.

- Other banks: Seven Bank, Yokohama Bank, Sony Bank, Yucho Bank - These are secondary accounts I use for specific purposes. Did not inform any of them I'm going abroad, so far no problems.

NOTE: You need to maintain a physical address to receive mail from banks if you are not informing them. Returned mails will raise red-flags, and you will be found out. For myself, I am renting out my home for short-term rentals, allowing me to keep receiving mail at my home address.

Security Account/NISA:
- Monex - Although their official policy is "you must close the account and sell everything", they cannot actually force you to sell. You must tell them two things to keep your account: 1. you are intending to return to Japan, 2. you wish to keep the holdings for long-term growth. You can neither add to nor sell your holdings while abroad, but you can at least keep it and it will continue to grow. Also note you can only have an ippan account, so tokutei-kouza gets closed, and all holdings moved to a new ippan account.

NISA - you must close NISA accounts. Any domestically domiciled funds/stocks can be kept, but must be transferred to your ippan account. Once it's in your ippan account, that is your "new" purchase price. If you have foreign domiciled funds or stocks, you MUST sell immediately. This is the only thing they force you to sell. I had a few US stocks in my NISA, and was forced to realize losses on many of them.

Junior NISA - Junior NISA must also be closed. Domestic holdings are moved into dormant ippan accounts in the children's names. The children's accounts are tied to Yucho bank accounts in their names, and I did not inform Yucho we are leaving Japan.

Other:
- Wise - very useful, best solution for moving money from Japan overseas, and can use easily as point-of-purchase solution. Downside is you can only keep 1m yen on the account at a time, so if you're moving large amounts it's tedious.
- Paypal - was surprised to learn that Paypal is country-restricted, so I can't add non-Japanese credit cards to my Japanese Paypal account.

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.

I have a term life-insurance plan, and I specifically asked when I signed up about what happens if I ever get transferred abroad. Plenty of Japanese get transferred abroad all the time, and you can indeed claim if something happens while a non-resident. You will need a method to continue paying premiums in Japan of course.

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

My company informed us that we're all (Japanese or not) liable, and while I don't meet the liquid assets threshold, I was also not asked at any point about this, making me wonder how they actually enforce this.

[Tkydon]

FIRE-Rookie wrote: ↑Wed Aug 10, 2022 4:32 pm
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

My company informed us that we're all (Japanese or not) liable, and while I don't meet the liquid assets threshold, I was also not asked at any point about this, making me wonder how they actually enforce this.

Only certain Visa types are subject to the Exit Tax;

Table 2 of the Nationality Law:
Status of Residence - Status or Status Held in Japan
Permanent Resident - Permanent Resident Approved by the Minister of Justice
Japanese Spouse, etc. - Spouse or Special Adoption of a Japanese National, or a person born as a child of a Japanese National
Spouse of Permanent Resident - Spouse of a Permanent Resident, or a person who was born in Japan as a child of a permanent resident, etc. and continues to reside in Japan after that
Long-Term Resident - A person whose residence is approved by the Minister of Justice for a certain period of stay in consideration of special reasons

and only if you have more than Y100M in assets, and only when you terminate your Visa / Permission to Remain. i.e. Leave, never planning to return, and surrender your Zairyu Card on Exit, in which case they will check whether you have completed the mandatory exit procedures laid down by law.

If you have Permanent Residency (Immigration Status) (or other Status listed above), and you leave with the intention of coming back, i.e. with a Valid Re-Entry Permit, then you are not terminating your Visa / Permission to Remain, and are therefore not subject to the Exit Tax at that time. You would have to appoint a Tax Representative to handle outstanding National Tax and Residents' Tax issues while you are away. If your Re-Entry Permit later expires, your Visa / Permission to Remain will be cancelled, and you may become subject to the Exit Tax at that time.

If you have Permanent Residency (Immigration Status) (or other Status listed above), and you leave with the intention of never coming back, i.e. without a Valid Re-Entry Permit, then you are subject to the Exit Tax if you have more than Y100M in assets.
You would have to follow all exit procedures laid down by law. All Japanese accounts would have to be liquidated prior to leaving, and would therefore be subject to taxes on liquidation. You would have to appoint a Tax Representative to handle outstanding National Tax and Residents' Tax issues after you have left. You or your Tax Representative will be responsible for reporting unrealized gains and paying tax on those assets.