Inheritance tax and re-entry permit

[needhelp]

Sorry if I am asking a question that somebody else already asked. A quick search doesn’t uncover any answers.

I am a US citizen with a Japanese spouse, no kids. We lived in Japan (I on a spouse visa, i.e. “Table 2” visa, renewed 5 times) for 25 years until last year. Now we are abroad and are thinking of the long term, including the option of returning to Japan.

But there is a catch. My 90-year-old father will probably leave me some money fairly soon, because his health is failing. I submitted the deregistration at departure (kaigai tenshutsu todoke 海外転出届), and I don’t have to pay "inhabitant tax" (juminzei) or health insurance, pension etc. But I still maintain a re-entry permit (i.e., my zairyu card), good for another 4 years.

Will the Japanese govt. thus consider me to have a de facto valid spouse visa, and thus to be “residing in Japan” for the purpose of inheritance taxes? In other words, after the inheritance has been finalized, will the GOJ try to charge me inheritance tax, even though I really live abroad? I don't think they would find out, but I wouldn’t even know how to go about paying it, or to whom, so long as I am out of the country.

And then, will the GOJ charge me inheritance tax if I move back within the validity period of the re-entry permit? Should I thus “return” the re-entry permit to the authorities, perhaps to the embassy, just to be safe? I don’t even know if that is possible.

Thanks in advance.

[Tkydon]

If it's less than Y36M, you don't need to worry.

[needhelp]

Thanks, don't know the exact amount yet, it will depend on expenses, etc., but might well be a more than that 3600-man, given today's exchange rate. That is why I worry.

[RetireJapan]

Thanks, don't know the exact amount yet, it will depend on expenses, etc., but might well be a more than that 3600-man, given today's exchange rate. That is why I worry.

Inheritance tax in Japan is applied in bands, so anything up to about 100m or so is not going to be excessively painful.

https://www.retirejapan.com/blog/japane ... nce-taxes/

[needhelp]

OK, thanks, I get it, but I am mainly wondering about the re-entry permit being considered a de facto visa. Even 20 or 30 percent tax will be a lot for me and my family, and if it means "returning" a spousal visa to get out of paying it, I would gladly do so, since we can, if necessary, continue to live abroad.

[Tkydon]

Sorry if I am asking a question that somebody else already asked. A quick search doesn’t uncover any answers.

I am a US citizen with a Japanese spouse, no kids. We lived in Japan (I on a spouse visa, i.e. “Table 2” visa, renewed 5 times) for 25 years until last year. Now we are abroad and are thinking of the long term, including the option of returning to Japan.

But there is a catch. My 90-year-old father will probably leave me some money fairly soon, because his health is failing. I submitted the deregistration at departure (kaigai tenshutsu todoke 海外転出届), and I don’t have to pay "inhabitant tax" (juminzei) or health insurance, pension etc. But I still maintain a re-entry permit (i.e., my zairyu card), good for another 4 years.

Your Zairyu Card is your Spouse Visa / Immmigration Status / Permission to Stay in Japan, and it is not a Re-Entry Permit.

If you went to Immigration to get a Re-Entry Permit (single or multiple) it will be valid until the expiry of your Zairyu Card.
It allows you to leave and return on your current Spouse Visa.

If you did not go to Immigration to get a Re-Entry Permit (single or multiple), but instead only ticked the box on the Departure Slip for the 'Special Re-Entry Permit' then that is only valid for 365 days, and cannot be extended.

If your Re-Entry Permit expires while you are outside Japan, then your Zairyu Card, Visa / Immigration Status / Permission to Stay are all cancelled on that day.

Will the Japanese govt. thus consider me to have a de facto valid spouse visa, and thus to be “residing in Japan” for the purpose of inheritance taxes? In other words, after the inheritance has been finalized, will the GOJ try to charge me inheritance tax, even though I really live abroad? I don't think they would find out, but I wouldn’t even know how to go about paying it, or to whom, so long as I am out of the country.

You still have a valid Spouse Visa until your Re-Entry Permit expires (in 1 or 4 years), or if you come back to Japan before then and renew your Permission to Remain and Zairyu Card.

You are not 'residing in Japan' as you have issued the Notice of Moving Out. You will be considered as Non-Resident until you return and register Moving In again at the City Hall.

And then, will the GOJ charge me inheritance tax if I move back within the validity period of the re-entry permit? Should I thus “return” the re-entry permit to the authorities, perhaps to the embassy, just to be safe? I don’t even know if that is possible.

Thanks in advance.

https://elaws.e-gov.go.jp/document?lawi ... #Mp-At_1_3

I mis-read the translation.

In the case of a non-resident non-Japanese National Heir and non-Japanese National Decedent, the non-resident non-Japanese National Heir is only liable for Inheritance Tax if the non-Japanese National Decedent had lived in Japan at any time in the 10 years preceding death.

[needhelp]

So if you are right, it is even worse than I thought. The GOJ will try to tax me for ten years, though I am living abroad, and my inheritance will come from somebody else living abroad? That sounds to me as if the Saudi government would say it will behead a Dutch man who smokes a joint in the Netherlands because he once lived in Saudi Arabia. Is the GOJ really that megalomanic?--that it thinks its laws apply and are enforceable globally, even to non-citizens, just because they once lived in Japan?

The charts that I have seen, however, make me wonder. They suggest that an inheritance going from a foreign donor (my dad living in the USA) to me, a non-Japanese citizen living abroad, will not be taxed. The various charts, repeated on many internet sites, only invoke the "ten out of the last fifteen year" residency rule for 1. donors of every sort; and 2. beneficiaries who are Japanese citizens with (past) residence in Japan (see attached png files).

That is why I am worried about the zairyu card that I still have, valid for 4 more years, despite the fact that I live abroad. Will holding that put me in the column of a beneficiary with an "address in Japan"?

Where am I going wrong? or are these charts all wrong or incomplete?

PS I don't see the attached files so here is one URL
https://www.leowealth.com/ja/japanese-e ... -overview/

[captainspoke]

The purpose of the rules is for Japanese, so that people don't just leave Japan to get an inheritance out of the way, and then (probably) come back. Foreigners just happen to be caught up in it, too.

I have some sympathy for Japan's approach. It attenuates intergenerational wealth transfer and accumualtion, while (as mentioned above) up to ¥100M or so is not really taxed very heavily--and that's still a significant amount, IMO.

Frankly speaking, if you don't like it, leave now. Give up all connections to Japan and go live where you can inherit it all tax free. That seems to be your desire/priority.

If you are unwilling to give up on Japan like that, it must be because it's a nice place and has more advantages than disadvantages for you.

So make your choice--leave and get your big inheritance, or stay here, where (IMO), life is pretty nice.

*

Since you mention your dad is in the US, keep in mind that the US and Japan are very open to each other in terms of banking and tax information--if Japan wants to know something about your tax returns in the US, or something about your bank/investment accounts, this kind of information is an 'open book' to the tax authorities here. It's easy and quite simple and quick for them to get access to that (no bureaucracy at all). And it works both ways--the US also has access your financial data here.

So again, make your choice, and accept what making that choice entails.

[sutebayashi]

It attenuates intergenerational wealth transfer and accumulation

Well Japan could use some more wealth accumulation and capital formation, I think.

I’m holding out hope that these taxes are abolished before I have to pay them. (Yes I don’t fancy the odds, but with property prices rising in Tokyo there’s more and more people facing a future bill)

ChatGPT reckons I might be looking at a 10s of millions of yen inheritance tax charge, if the timing of natural events etc is poor. I could keep working in Japan and not pay that much in income tax over my remaining working years, or leave and do the same work elsewhere but retain control of the money and do good things with it. It would go quite a long way for me, but not so much for the governments coffers. Or I could leave my share to relatives overseas to avoid the hefty charge.

And the weaker yen is making the situation potentially worse. Hopefully the yen appreciates by 1000%…

Putting my own best interests aside, I can’t see how this situation really benefits Japan either. If they could have me, assets and all, would it be detrimental to others here? Am I more valuable to Japan by taking measures to ensure that I don’t have to spend huge amounts of time and effort or money to pay a huge tax charge?

So if you are right, it is even worse than I thought. The GOJ will try to tax me for ten years, though I am living abroad, and my inheritance will come from somebody else living abroad?

I personally am skeptical that they would chase after foreigners like that, although that might be how the rules read. They don’t know how old your overseas parents are or keeping tabs on their death etc, methinks.

Their shenanigan’s appear to be targeted at successful Japanese business families that also balked at the writing on the wall.

If I were you I’d reluctantly look for someplace else to retire. The money will compensate the good aspects of life in Japan that you forgo.

[Tkydon]

So if you are right, it is even worse than I thought. The GOJ will try to tax me for ten years, though I am living abroad, and my inheritance will come from somebody else living abroad? That sounds to me as if the Saudi government would say it will behead a Dutch man who smokes a joint in the Netherlands because he once lived in Saudi Arabia. Is the GOJ really that megalomanic?--that it thinks its laws apply and are enforceable globally, even to non-citizens, just because they once lived in Japan?

The charts that I have seen, however, make me wonder. They suggest that an inheritance going from a foreign donor (my dad living in the USA) to me, a non-Japanese citizen living abroad, will not be taxed. The various charts, repeated on many internet sites, only invoke the "ten out of the last fifteen year" residency rule for 1. donors of every sort; and 2. beneficiaries who are Japanese citizens with (past) residence in Japan (see attached png files).

That is why I am worried about the zairyu card that I still have, valid for 4 more years, despite the fact that I live abroad. Will holding that put me in the column of a beneficiary with an "address in Japan"?

Where am I going wrong? or are these charts all wrong or incomplete?

PS I don't see the attached files so here is one URL
https://www.leowealth.com/ja/japanese-e ... -overview/

Sorry , I mis-read the translation I was looking at.

https://elaws.e-gov.go.jp/document?lawi ... #Mp-At_1_3

In the case of a non-resident non-Japanese National Heir and non-Japanese National Decedent, the non-resident non-Japanese National Heir is only liable for Inheritance Tax if the non-Japanese National Decedent had lived in Japan at any time in the 10 years preceding death.

第一条の三　次の各号のいずれかに掲げる者は、この法律により、相続税を納める義務がある。
...
二　相続又は遺贈により財産を取得した次に掲げる者であつて、当該財産を取得した時においてこの法律の施行地に住所を有しないもの
...
ロ　日本国籍を有しない個人（当該相続又は遺贈に係る被相続人が外国人被相続人又は非居住被相続人である場合を除く。）

Article 1-3 A person listed in any of the following items is obligated to pay inheritance tax pursuant to this Act.
...
(2) A person listed below who has acquired property through inheritance or bequest, but who does not have a domicile in Japan at the time of acquiring said property.
...
(b). Individuals who do not have Japanese nationality (regarding inheritance or bequest
+>>> Excluding cases where the decedent is a foreign decedent or a non-resident decedent.)