Local inhabitant taxes/health insurance after retirement

[RetireJapan]

Read an interesting point on the ４５歳アーリーリタイア blog: the year after retirement you will have a large local inhabitants tax bill, and pay large health insurance payments.

However, if you leave Japan by Dec 31 of that year, you are not liable for those taxes.

Would it be possible to take a long trip the year after retirement and avoid these taxes? Then when you come back you would reset as no income and then low income due to retirement.

Would this be possible with PR? Japanese nationality?

[TokyoWart]

Read an interesting point on the ４５歳アーリーリタイア blog: the year after retirement you will have a large local inhabitants tax bill, and pay large health insurance payments.

However, if you leave Japan by Dec 31 of that year, you are not liable for those taxes.

Would it be possible to take a long trip the year after retirement and avoid these taxes?

Does leaving by December 31 of that year really get one out of the local tax bill? I had heard of the bill, which comes about because we don't start paying the local tax for year X until year X+1, but it's always been explained to me (or maybe I just assumed) that I would be required to pay up those local tax accounts before officially leaving Japan. My biggest cash "emergency savings" here is for that continency of having to leave the country and suddenly being presented with that large local tax bill.

[RetireJapan]

Apparently it does if you leave Japan at that point. Taxes are due in 2020, so if you leave Japan in 2019 you don't have to pay them. If you leave on Jan 1 2020 you do have to pay them.

The question is, could a PR holder leave Japan for a certain amount of time, not pay their taxes, then come back to zero income for their next year's taxes and take it from there?

[Tony]

I'm pretty sure the legal answer is no. To be exempt from those taxes, you would have to give up your residence in Japan, and doing so would also invalidate your PR. While as a PR (or any visa status for that matter) you can apply for a re-entry permit, which allows up to 5 years out of the country it is based on the fact that you would be coming back to Japan. Of course, whether they would actually catch you in your effort to do this, and revoke your PR is another matter altogether ... but would you want to risk your PR on it? When you retire you're likely to get your 退職金 which should be more than enough to cover that initial years tax and health premiums hit.

[RetireJapan]

I'm pretty sure the legal answer is no. To be exempt from those taxes, you would have to give up your residence in Japan, and doing so would also invalidate your PR. While as a PR (or any visa status for that matter) you can apply for a re-entry permit, which allows up to 5 years out of the country it is based on the fact that you would be coming back to Japan. Of course, whether they would actually catch you in your effort to do this, and revoke your PR is another matter altogether ... but would you want to risk your PR on it? When you retire you're likely to get your 退職金 which should be more than enough to cover that initial years tax and health premiums hit.

Does it though? "I'm coming back in 18 months" is not the same as resident, surely?

It's not a huge deal, but my wife and I are planning some long-term travel when we retire, and if we can save a million yen by timing it right, that's going to subsidise our trip

[ricardo]

It’s obviously dodgy.

It’s “not a big deal.”

So do the right thing.

[RetireJapan]

I don't agree that it is obviously dodgy. If we ever get to this point (10-25 years from now) we will obviously consult with the tax office and see what they say

It seems that the only point of contention is whether PR holders can do this or not. Japanese citizens seem to be able to under my understanding of the rules.

[Roger101]

It’s obviously dodgy.

It’s “not a big deal.”

So do the right thing.

I am no expert, but I agree

[ricardo]

We live in a semi-redistributive democracy.

No one likes to pay tax but we understand that we do it to help people who cannot help themselves.

To, legally or otherwise, avoid tax is imposing an extra burden on those who can’t. And potentially depriving poor people of the help to which they’re entitled.

I’m more Boris Johnson by instinct than Bernie Sanders, but the latter makes a compelling case sometimes and it is the reality in which we live together.

Just saying.

Lecture over.

[RetireJapan]

Fair enough, but I don't know anyone who pays more tax than they have to (apart from me, as I can't be bothered to reclaim my US withholding taxes on dividends from the JTA).