Have PR, but living outside of Japan. Do I owe any Japanese taxes?

[gerdemb]

I have a Japanese PR, but have been living outside of Japan for the past two years. When we left Japan, I told the ward office I was moving outside of Japan and unregistered my address (jyuminhyou). Do I have any tax obligations to Japan while I am not living there even though I have a PR? Specifically, is there any tax on salary or investment income earned from sources outside Japan? I think the answer is no, but I’m not 100% sure….

Also, what about gift/inheritance taxes? If I can avoid the gift tax while I’m living outside of Japan, wouldn’t it make sense to receive gifts now before I return to Japan. Seems like a big loophole….? I plan to move back to Japan again in a few years and don’t want to run into any trouble when I do.

Finally, I think I’ve read several places that the tax on world-wide income begins after 5 years as a resident in Japan. Is that correct? I entered Japan on a spouse visa and converted to PR after three years, but my understanding is that the visas don’t matter and it is the 5 year rule that counts for taxes. Does anyone know how the calculation works after moving back to Japan after being abroad for a few years?

Thanks for any and all help. Yoroshiku onegaishimasu!

—Ben

[Beaglehound]

I think it’s being actually resident (living) in Japan, and having been so for 5 of the previous 10 years, that makes you liable for worldwide tax. The fact that you are not actually residing in Japan now means that you are free from obligations on income, local, health, pension etc, but I don’t think the clock resets when you become a tax resident here again; so depending when that is, you may find yourself taxed on any worldwide income straight away. But only from the date that you become resident here again, I don’t believe it to be retroactive, even if you move here mid-year.

Less sure on inheritance and gift questions, others will know more.

[gerdemb]

I think it’s being actually resident (living) in Japan, and having been so for 5 of the previous 10 years, that makes you liable for worldwide tax. The fact that you are not actually residing in Japan now means that you are free from obligations on income, local, health, pension etc, but I don’t think the clock resets when you become a tax resident here again; so depending when that is, you may find yourself taxed on any worldwide income straight away. But only from the date that you become resident here again, I don’t believe it to be retroactive, even if you move here mid-year.

So if I’m understanding correctly, you would basically have to be outside of Japan for more than 5 years to reset the “counter”? I left after just over 5 years there, so I would be required to start reporting again from the time I move back since I will be have been gone less than 5 years. Makes sense. Thanks!

[RetireJapan]

Worldwide inheritance and gift tax kicks in with a spouse visa or PR, or after 10 years on a working visa.

[adamu]

Worldwide inheritance and gift tax kicks in with a spouse visa or PR, or after 10 years on a working visa.

Ah-ha, so there is a downside to PR.

[Beaglehound]

Worldwide inheritance and gift tax kicks in with a spouse visa or PR, or after 10 years on a working visa.

Ah-ha, so there is a downside to PR.

Yes, that is interesting, assuming that applies also if you are not actually living in Japan but have PR.

[Beaglehound]

I think it’s being actually resident (living) in Japan, and having been so for 5 of the previous 10 years, that makes you liable for worldwide tax. The fact that you are not actually residing in Japan now means that you are free from obligations on income, local, health, pension etc, but I don’t think the clock resets when you become a tax resident here again; so depending when that is, you may find yourself taxed on any worldwide income straight away. But only from the date that you become resident here again, I don’t believe it to be retroactive, even if you move here mid-year.

So if I’m understanding correctly, you would basically have to be outside of Japan for more than 5 years to reset the “counter”? I left after just over 5 years there, so I would be required to start reporting again from the time I move back since I will be have been gone less than 5 years. Makes sense. Thanks!

Yep, that’s my understanding.

[gerdemb]

Worldwide inheritance and gift tax kicks in with a spouse visa or PR, or after 10 years on a working visa.

Ah-ha, so there is a downside to PR.

Yes, that is interesting, assuming that applies also if you are not actually living in Japan but have PR.

These are the official tax regulations from the tax authority:

https://www.nta.go.jp/taxes/shiraberu/t ... o/4432.htm

It seems pretty clear that my case (living outside of Japan and receiving a gift from someone who doesn't live in Japan) would fall into the bottom right box which means that tax would not be required for assets outside of Japan. Can this be right? It seems like a pretty big loophole, especially in my case as I'm currently living in a country with a very generous deductions for gifts......