RetireJapan

TokyoWart wrote: ↑Thu May 11, 2023 4:57 am Not inherently. Japan taxes both the interest payments you receive and the capital gains at the same 20.315% rate. If you buy a Treasury Bond and hold it to maturity there is no capital gain so you would be taxed on the coupon payments you receive each year. A bond fund will buy & sell bonds so it can have capital gains and losses in addition to the interest payments you receive so you can potentially have additional taxes on net capital gains realized by the fund itself before you sell your shares. Depending on how the bond fund is domiciled and your status as a non-resident alien or US citizen you can also face withholding taxes by the countries behind those bonds (e.g. the USA and the countries whose bonds are in the bond fund) but that is too complicated to give a simple answer given the variety of countries involved and their different withholding practices vis-a-vis people who live in Japan.

ToushiTime wrote: ↑Fri May 12, 2023 12:36 am

TokyoWart wrote: ↑Thu May 11, 2023 4:57 am Not inherently. Japan taxes both the interest payments you receive and the capital gains at the same 20.315% rate. If you buy a Treasury Bond and hold it to maturity there is no capital gain so you would be taxed on the coupon payments you receive each year. A bond fund will buy & sell bonds so it can have capital gains and losses in addition to the interest payments you receive so you can potentially have additional taxes on net capital gains realized by the fund itself before you sell your shares. Depending on how the bond fund is domiciled and your status as a non-resident alien or US citizen you can also face withholding taxes by the countries behind those bonds (e.g. the USA and the countries whose bonds are in the bond fund) but that is too complicated to give a simple answer given the variety of countries involved and their different withholding practices vis-a-vis people who live in Japan.

Thanks for that info.
I am a tax resident of Japan, and I am not American. In the case where I simply buy Treasuries instead of a mutual fund of various bonds, am I taxed on the Treasury coupons just in Japan, and not the US?

FYI: the bond mutual fund I am comparing it against is eMaxis Slim Developed Nations Bonds.

I am a tax resident of Japan, and I am not American. In the case where I simply buy Treasuries instead of a mutual fund of various bonds, am I taxed on the Treasury coupons just in Japan, and not the US?

TokyoBoglehead wrote: ↑Fri May 12, 2023 6:23 am

ToushiTime wrote: ↑Fri May 12, 2023 12:36 am

TokyoWart wrote: ↑Thu May 11, 2023 4:57 am Not inherently. Japan taxes both the interest payments you receive and the capital gains at the same 20.315% rate. If you buy a Treasury Bond and hold it to maturity there is no capital gain so you would be taxed on the coupon payments you receive each year. A bond fund will buy & sell bonds so it can have capital gains and losses in addition to the interest payments you receive so you can potentially have additional taxes on net capital gains realized by the fund itself before you sell your shares. Depending on how the bond fund is domiciled and your status as a non-resident alien or US citizen you can also face withholding taxes by the countries behind those bonds (e.g. the USA and the countries whose bonds are in the bond fund) but that is too complicated to give a simple answer given the variety of countries involved and their different withholding practices vis-a-vis people who live in Japan.

Thanks for that info.
I am a tax resident of Japan, and I am not American. In the case where I simply buy Treasuries instead of a mutual fund of various bonds, am I taxed on the Treasury coupons just in Japan, and not the US?

FYI: the bond mutual fund I am comparing it against is eMaxis Slim Developed Nations Bonds.

Same flat Japanese tax applies. The advantage to buying bonds directly is that (outside of the rather substantial currency risk), there is virtually no risk if you hold the treasuries to maturity.

The disadvantage is that the secondmarket in Japan is small and less liquid, and your rate is locked in.

Bond funds basically simulate bond laddering, and focus on coupons and not maturity.

TokyoWart wrote: ↑Fri May 12, 2023 1:18 pm

I am a tax resident of Japan, and I am not American. In the case where I simply buy Treasuries instead of a mutual fund of various bonds, am I taxed on the Treasury coupons just in Japan, and not the US?

My understanding is that the US has a withholding tax for dividends and bond payments that are going directly to an foreign entity such as a mutual fund or an individual who is a "nonresident alien" (i.e. anyone who lives outside the USA who is not a US citizen or green card holder).

TokyoWart wrote: ↑Fri May 12, 2023 1:18 pm

I am a tax resident of Japan, and I am not American. In the case where I simply buy Treasuries instead of a mutual fund of various bonds, am I taxed on the Treasury coupons just in Japan, and not the US?

My understanding is that the US has a withholding tax for dividends and bond payments that are going directly to an foreign entity such as a mutual fund or an individual who is a "nonresident alien" (i.e. anyone who lives outside the USA who is not a US citizen or green card holder).