RetireJapan

I would like to invest in some index funds which I have read can be a passive income with compound interest build up over the years. The longer I keep it in, the more interest will build up. I currently invest in NISA and active mutual funds on MUFG but I am planning on changing over to rakuten from the start of the new financial year and transfer my NISA account to rakuten. Does rakuten offer index funds? If not, I was hoping to open an IB account but not sure how to start. If I have dual citizenship, what are the benefits of choosing one citizenship over the other to invest with?

Welcome to the forum!

Rakuten has a broad range of funds/invesetments.
You cannot transfer your current NISA holdings, but can change brokers for future NISA years.
With regards to dual citizenship, you don't get to choose: you have both. As long as you don't have US citizenship it won't make any difference anyway.

Dual citizenship is an incredibly large grey zone in Japan (assuming you're dual through birth. Not possible to be dual through naturalization).
Japan is one of the only countries in the world (only one in the G7) that disallows dual citizenship. Full stop. Dual citizens through birth are kind of a special case in that since they didn't choose to acquire their citizenship, Japan in practice gives them some slack. However, everyone, even dual citizens by birth, are required to choose their nationality when they reach 20.

Basically, I wouldn't play around with the tax stuff by being a dual citizen because I can easily imagine a scenario where the NTA then starts sniffing around, they'll find out you haven't chosen a citizenship and then refer you to the MOJ.

Important to keep in mind that dual citizens by birth can choose Japan at 20 and then happily keep all their other citizenships without consequences.

Only applies to people born with it unfortunately. Acquiring a second citizenship as an adult can result in losing Japanese citizenship immediately.

zeroshiki wrote: ↑Mon Sep 20, 2021 12:31 pm Basically, I wouldn't play around with the tax stuff by being a dual citizen because I can easily imagine a scenario where the NTA then starts sniffing around, they'll find out you haven't chosen a citizenship and then refer you to the MOJ.

Not sure what kind of scenario you have in mind here, but Japan does not tax based on citizenship (only three countries in the world do: US, Philippines, and Eritrea). Taxation here is based purely on resident status.

mighty58 wrote: ↑Mon Sep 20, 2021 5:26 pm Japan does not tax based on citizenship

That's true, although the exit tax applies to citizens more that foreigners. Only foreigners with table 2 residence statuses (PR, spouse, long-term) are liable (more precisely, residence under table 1, all other statuses, does not count towards the residence period for calculation of the tax).

RetireJapan wrote: ↑Mon Sep 20, 2021 2:17 pm Important to keep in mind that dual citizens by birth can choose Japan at 20 and then happily keep all their other citizenships without consequences.

This isn't exactly true. They require you to choose Japan and they expect you to lose the other one. Granted, they probably don't check but if you become rich and famous (like Naomi Osaka) they will check. By the letter of the law, choosing Japanese citizenship means you need to lose your other citizenship except in countries who do not allow their citizens to lose it. In that case, the Japanese government asks you to promise not to use your other citizenship.

zeroshiki wrote: ↑Tue Sep 21, 2021 1:38 am They require you to choose Japan and they expect you to lose the other one.

Expect, perhaps, but not check or enforce. As far as I know, there has never been a penalty enforced on a dual national by birth for not renouncing their other citizenship(s). Once someone 'chooses' Japan they are home free, unless they go into politics (like Renho when she got caught out).

Very different treatment from someone who acquires another citizenship by choice.