TBS wrote: ↑Mon Mar 08, 2021 1:04 pm
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Thanks for your reply, TBS
> Whether transferring the money this way is worthwhile will depend on the rates of capital gains tax abroad, the continued dividends taxes you could expect to pay if kept the ETFs abroad, how much you could potentially save on Japan capital gains tax now and future Japan dividend/capital gains taxes by re-buying in Japan etc.
Just thinking of trying to calculate this put my head in overload.
If you know of professional accountants who eat these kinds of things for breakfast, I would
be glad to receive a recommendation!
> If the capital gains tax you will have to pay abroad is higher than the 20.315% rate here, there is potentially no benefit as I guess the double taxation treaty/foreign taxation credit will make the Japan-side taxes zero or minimal.
It is indeed higher 25%.
I am not sure what you are saying about the double tax treaty, but interestingly enough I just have another thread on this forum (titled "Keisan NTA e-tax form ignores double tax treaties?")
where I mention that I tried filling the e-tax form hypothetically for if I was earning on selling assets and paying 25% capital gain tax overseas to see what happens, and the calculation
does not differ between dividends and capital gain tax, i.e. I still pay to Japan tax in addition to the 25% overseas and the form does not even take into consideration which country
the tax was paid to so there is no way for it to heed double tax treaties.
Since you just mentioned "the Japan-side taxes zero or minimal", I wonder do you have some
experience with this? Is there a process to adjust the miscalculation of the e-tax form that
you are aware of?
> Also remember the tax office assumes any remittances you make will be taxable income first regardless of whether it is existing cash or not. So if routinely you are making transfers between the country where you currently hold the ETFs and Japan every year, the above strategy will not work.
I am not sure what you mean about "if routinely". If it is not routinely then no problem?
Also, how about instead of remitting money and buying through Rakuten, how about transferring
the asset to an international broker such as Interactive Brokers? I never used them before,
but would that be a viable option? Is the reason to prefer a Japanese mutual-fund lies in the
ability to reinvest dividends? I assume that with capital gain tax would not be held at source,
and then I just pay to Japan 20.315% and am done with it? Also it would provide some flexibility if I end living in a different country if something were to happen in Japan?
> Furthermore the joint name account issue is a complicating factor, as Japan does not recognize jointly held assets. The tax office might ask for some evidence as how to separate the ownership of the ETFs in the foreign account appropriately, e.g. original payment statements.
The original payment statements are under the same joint name but the original source of the money in the account is all my paychecks so that should be easily proven. Even if not, if push comes to shove, the partner in the account will just leave the account and it will go back
to being just under my name, but I will only do this if I decided to move all the assets over.
> If you are consider re-buying the same ETFs in Japan, also look at mutual fund equivalents. These can be more tax efficient here as they are allowed to reinvest dividends net before Japanese tax.
Indeed! That is what I currently do with the money I earn in Japan. Thanks!