Tax on world wide income 5 of 10 years Qs

[Snoochibear]

Appreciate anyone's insight on several tax Qs

Moving to Japan on spouse visa end of this year, early next. My wife and I have been married for 38 years and are in our sixties and want to live in Japan semi-retired for next 5-10 years. I've lived in Japan for total of 10 years in the past (college student, Salary man, and US military).

Qs

1) I was stationed in Japan under SOFA from 2017 - 2019. If I start resident status from 2024, in which year will I be considered a resident for tax purposes in light of the 5 out of last 10 year rule?

2) If I transfer large sum of money (250K+ USD living expenses) to a Japanese bank in my first year, will that be considered taxable income?

3) 国民保険 (kokuminhoken): Can I declare zero income as long as I don't have any income earned in Japan and I don't transfer any income from overseas (other than the large sum from savings mentioned in Q2)?

Plan to work part time in the US for 3-5 months of the year, while maintaining residence in Japan, and hoping to keep Japanese tax and health insurance cost down for at least first 5 years.

Once again, appreciate anyone's insight/ideas/recommendations...

[Beaglehound]

1. It’s calculated on a monthly basis, so it would depend when in 2019 you were here until and when in 2024 you take up residence again. Not sure if military status has any relevance here.

2. The transfer itself is not necessarily taxable. However, if you are resident in Japan when it is made, you will be on the hook for any foreign-source income earned in that same year while you are resident in Japan. So if you earned a million yen overseas in 2024 and sent your large transfer, you would be liable for tax on the one million. It doesn’t matter if, for example, the transfer is sent from a different account from the one your earnings are paid into, you would be deemed to have sent that million yen as part of the transfer. My suggestion would be to try to send the cash before you become resident here, or if you arrive late next year it shouldn’t cost too much.

3. Yes, but see #2 for caveats.

[captainspoke]

On a spouse visa, aren't you considered to be a tax resident from the get-go? So any overseas income, even if not remitted to japan, has to be declared/taxed? In the past I've read comments on the differences between Table 1 and Table 2 visas (status of residence), which I think is relevant here.

Hopefully, for you, that is wrong...

[Snoochibear]

Captainspoke,

Thank you for your reply.
I checked the following link that you provided me last fall, which appears to say that I would be considered a "non-resident" for tax purposes until I have lived in Japan at least one year.

https://www.nta.go.jp/taxes/shiraberu/s ... df/050.pdf

(Reference 1) Classification of taxpayers
• In cases where an individual has not owned his or her domicile during the period from the date of entry
into this country to the date on which one year has elapsed.
 The individual mentioned above is deemed “a non-resident” until the date on which one year has
elapsed from the date of entry into this country and “a resident” after the date following that on which
one year has elapsed.
• In cases where an individual did not own his or her domicile in this country immediately after entry into
this country, but has owned his or her domicile during the period from the date of entry into this country
to that on which one year has elapsed.
 The individual mentioned above is deemed “a non-resident” until the date before that on which he or
she owned his or her domicile and “a resident” after the date on which he or she owned his or her
domicile.
• In cases where an individual is a resident of non Japanese nationality and the period during which he
or she has owned his or her domicile or residence in this country exceeds five years or more within the
last ten years.
 The individual mentioned above is deemed “a non-permanent resident” until the date on which five
years have elapsed and “a resident other than a non-permanent resident” after the date following


So regardless of "visa" status, for tax purposes if would appear from the above that I can transfer money within the first year without incurring taxation.
Is that not how you would read that?

Appreciate you reply.

[Beaglehound]

I don’t think you would be classed as a non-resident, I believe you would be classed as a non-permanent resident for tax purposes from the moment you have a ‘jusho’ here, which basically means the moment you register your presence at the local city/ward office. The information available on this in English is as clear as mud, but I think that is the case and, if I were you, I would not be relying on being able to transfer cash as a non-resident during the first year.

[captainspoke]

...

Sorry I didn't remember having posted a reply to you! (one of the privileges of being old?)


And if I didn't suggest it then, you might also browse/search the JapanFinance sub on reddit--of sign up and see what folks there say, too:

https://www.reddit.com/r/JapanFinance/

[Snoochibear]

Yes, of course, no problem & I will.

Also, just read this in the Status of Forces Agreement between the US and Japan, Article XIII, paragraph 2,

...Periods during which such persons are in Japan solely by reason of being members of the United States armed forces, the civilian component, or their dependents shall not be considered as periods of residence or domicile in Japan for the purpose of Japanese taxation.

https://www.mofa.go.jp/region/n-america ... ref/2.html

So the clock for my stay in Japan for 5 out 10 rule will only start once I arrive is Japan this next time around.