How to tax managed fund profits?

[Maido]

I have a managed fund that recently matured and made about 8,000,000 yen in profit. Can you tell me how this should be taxed in Japan?

My accountant says that it is income and should be added to my other income resulting in a very large juminzei and kenko hoken bill.

I think it should be treated as capital gains.

I’m a long term resident in Japan and am self-employed.

Thanks

[RetireJapan]

Interesting. So you are permanently resident for tax purposes, and the fund is abroad? What kind of fund was it? Did you sell it or was it some kind of weird 'insurance' type wrapper thing? Your accountant is Japanese?

[TokyoWart]

I have a managed fund that recently matured and made about 8,000,000 yen in profit. Can you tell me how this should be taxed in Japan?

My accountant says that it is income and should be added to my other income resulting in a very large juminzei and kenko hoken bill.

I think it should be treated as capital gains.

I’m a long term resident in Japan and am self-employed.

Thanks

I'm not sure what a "managed fund" is but when I have sold funds whether inside or outside Japan where the financial institution did not take out the local and national Japanese tax at source, my Japanese accountant reported the basis and sales price on the form entitled "株式等に係る譲渡所得等の金額の計算明細書"　in a field called "特定口座以外で譲渡した株式等の明細". The net amount of all such transactions does feed into the tax calculation on 第三表 of the tax return but it is being assessed at the lower rate for capital gains and dividends rather than earned income. That is only the roughly 15% national tax and those figures are then reported by the national tax office to your local tax office which collects their roughly 5% tax over the following tax year.

If that fund is from overseas you might be able to claim a foreign tax credit. In my case (US tax treaty applies) I'm being taxed at about 10% instead of 15% by Japan on investment income from activity in the US.

[Maido]

It was a savings plan (I’ve seen them called managed or pension plans) where I saved a monthly amount for 20 years. The matured money went into my UK bank account but no tax has been paid in the UK.

[goodandbadjapan]

I had one of these a few years ago that I cashed in. I just declared it as Capital Gains in my tax return. Gave my accountant the details of the gain and let her deal with it. I only had about 1,500,000 profit as I cashed in early but never heard anything back so assume it was all okay. That said, I never actually checked whether the accountant put it as income or CGT, but I think she put it as CGT as requested. My kenkohoken was very, very expensive, but it always seems to be anyway, and I'm not sure an extra 1.5million declared as income would have made a big difference. 8 million, though, would be worth getting right! My money also went to my UK account so I had to figure out the exchange rate at the time of transfer.

I would have thought only received dividends etc get classed as income but a policy left to mature would be CGT.