NISA or interactive brokers

[jpwood]

Hi,

My family and I moved back to Japan this March after living abroad for 10 years. I am a Brit and my wife is Japanese. We have built up savings in a US account in USD.

A substantial sum in a fixed term account will complete in April and we are looking how best to reinvest the money.

My thoughts are NISA accounts, or interactive brokers. My wife's job means we are likely to move to South Korea for 3 years or so in 18 months time. This may make NISA inappropriate as we could only invest in three years worth of contributions?

Am I right in thinking that if we invested in interactive brokers in an account in my name, we would not pay taxes until I have been resident for 5 years out of the last 10 in Japan if I do not remit money back to Japan?

Does anybody know if I open an account trough the Japanese office of interactive brokers can I pay directly in USD and does it effect the tax status as I am unsure if this would be classed as a Japanese based investment?

Sorry, I am new to much of this and apologise if these questions have been asked before. We would most likely return to Japan after our spell in Korea, but that is far from certain. Thanks.

[RetireJapan]

A few possible issues:

You may be asked to close investment accounts if you leave Japan, thus incurring capital gains taxes, etc.
The overseas income being tax free for the first five years only applies to income, not investing (which is now deemed to happen wherever the person lives, not where the investments are. Apparently this is new from 2017).
You have to send money to the US IB if you want to invest in USD. I believe you can only invest in Japanese markets through IB Japan.

No need to apologise for asking questions, that is what the forum is for!

[jpwood]

This is really useful to know thank you.
I think I need to read up more on NISA in that case.
My wife works for the Japanese government and would remain being paid in JPY when we relocate due to her work for the three years. I wonder if that would be a factor in forcing us to close accounts or simply preventing us from investing further...

[fools_gold]

It might be a problem if she withdraws her juminhyo. Otherwise for tax purposes she would still be appear to be living in Japan.

[jpwood]

Thanks.

Another question. When holding a NISA account with Rakuten, or another provider can you only purchase using japanese yen, or is there an option to transfer money into your account in USD?

[fools_gold]

Thanks.

Another question. When holding a NISA account with Rakuten, or another provider can you only purchase using japanese yen, or is there an option to transfer money into your account in USD?

You can change money into dollars in your Rakuten account and then buy US stocks and ETFs in a standard NISA (not a Tsumitate NISA though--that's only yen denominated investment trusts). If you already have US dollars you can transfer them into your account too.

[jpwood]

Thanks.

Another question. When holding a NISA account with Rakuten, or another provider can you only purchase using japanese yen, or is there an option to transfer money into your account in USD?

You can change money into dollars in your Rakuten account and then buy US stocks and ETFs in a standard NISA (not a Tsumitate NISA though--that's only yen denominated investment trusts). If you already have US dollars you can transfer them into your account too.

Thank you very much. Your answers have been really useful!

[jpwood]

Thanks.

Another question. When holding a NISA account with Rakuten, or another provider can you only purchase using japanese yen, or is there an option to transfer money into your account in USD?

You can change money into dollars in your Rakuten account and then buy US stocks and ETFs in a standard NISA (not a Tsumitate NISA though--that's only yen denominated investment trusts). If you already have US dollars you can transfer them into your account too.

Sorry, a further question. If I buy US ETFs in USD, would I be liable for the 10% withholding tax I have read about? Or are there non-US based ETFs which I can still purchase in USD?

The other question I am unsure of is am I likely to pay tax on any money I remit from overseas to the NISA account from which I would buy ETFs? The money is from savings from previous salaries and not investments. Thanks

[Beaglehound]

Regarding tax on money you remit to a Japanese account, If you have any foreign income (e.g. savings interest) in the year you remit, then you should declare that amount in Japan: e.g. say you remit 10k worth of savings to Japan next year and are paid 1k of interest overseas, that 1k is taxable in Japan, even if that’s not the actual money you send. The tax authorities here ‘deem’ that any overseas income for that year is included in the cash you remit.