Tax on Fully Franked Dividends

[TokyoWart]

Exactly . Thanks for making me feel better.

[ichiokuen]

(Tokyowart) For my US dividends I have to pay 23.8% tax to the US Internal Revenue Service and then an additional 10% tax to Japan

I have never had to pay any taxes to the US on my dividend income since I have never had more income generated from dividends and capital gains than my allowable exemptions. So my question is, if I receive enough tax exemptions(married with dependants) on my dividend/capital gains income in the US to zero out the balance, do I have to still pay taxes on said (US) dividend/capital gains in Japan?

[TokyoWart]

So my question is, if I receive enough tax exemptions(married with dependants) on my dividend/capital gains income in the US to zero out the balance, do I have to still pay taxes on said (US) dividend/capital gains in Japan?

The calculation for Japan (the 10% they will charge on your US dividends) never takes into account how much tax you paid in the US so my guess is if you are a tax resident in Japan they will apply the usual tax.

[ichiokuen]

I am using the Freee accounting software, and there is an area where you can input dividends and capital gains but I don't think the algorithm it uses takes into account whether the stocks are US held companies or not, so it would probably see them as regular Japan held companies and tax them accordingly at 20 percent rather than the US tax of 10 percent! Waiting online right now for a rep from Freee to help me.

[ichiokuen]

The help rep couldn't give me an answer, and will contact me by email later. I will post the answer here when I get it in case anyone else out there is interested in using Freee.

Seems like a pretty big ask for them to support US tax guidelines, but who knows?

Anybody else out there using Freee or other Japanese accounting software?

[captainspoke]

...
The calculation for Japan (the 10% they will charge on your US dividends) ...

Gee, I hope you meant 20% there, otherwise I seem to have been overpaying...!

(at least that's what I've been paying on divvies from stocks/ETFs held and paid into an account in the US)

[TokyoWart]

You get to claim 10% as your US tax payment so you wind up paying 20-10=10% at least that’s what my zeirishi has on my tax return. Are you claiming any foreign tax credit?

[captainspoke]

Ah, I see. I'm US (nothing withheld there), so I pay the full 20 here. I thought I might be missing something.

A week or so ago at the tax office I did claim some foreign tax paid on a couple ADRs (withheld at source)--one canadian, one the netherlands.

[TokyoWart]

Ah, I see. I'm US (nothing withheld there), so I pay the full 20 here. I thought I might be missing something.

I am not sure this will help you but I hope it does . I'm also a US citizen and my US taxes on investment income are not withheld at source, but I do wind up paying both through quarterly payments and sometimes additional taxes when I actual file. Here is how the credit for US tax plays out on my Japanese 確定申告:

On "外国税額控除に関する明細書" under "外国所得税額の内訳" I have an entry for 米国 (US) 配当 (dividend) 連邦税 (federal) and then under "相手国での
課税標準" the dollar and yen equivalent amounts of US dividends received and under "左に係る外国所得税額" basically 10% of that amount (in my case it's a little more because some of those dividends also had taxes withheld at source by France/Germany/UK etc for stocks like Novartis/Bayer/GSK). I paid more than 10% (mostly through quarterly payments but sometimes also with a top-off when I file) to the US but that 10% is the maximum Japan lets me claim. That feeds into the calculation for 外国税額控除 (foreign tax credit).

If you actually don't pay any taxes in the US, this might not help, but the fact that I am paying taxes to the US IRS on those US dividends is one of the few things that seems to be readily accepted by my local tax office here.

Good luck! I met with friends in Singapore today and they told me that country doesn't tax dividends or capital gains at all! Might be time to move...

[RetireJapan]

Can someone explain to me what I need to do for paying taxes on my overseas ETF dividends? I'm on a work permit, but have lived in Japan since 2010. My ETFs have generated about 1 million Yen over the last 5 years. My dividends are from ETFs traded on the Toronto Stock Exchange, and my account is in Europe. I think my brokerage in Europe takes taxes from dividends. Anyway, I have not reported these dividends to the Japan tax authority. Recently I've been thinking that I should. I'd like some advice on how to go about making sure I've paid necessary taxes to the Japanese government on my ETF dividends. If I have to pay taxes on my overseas ETF dividends, where would I pay it?

The easiest thing is probably to go to the tax office with all your records and have them help you figure it out. They tend to be pretty helpful and less antagonistic than tax officers in other countries.