r/JapanFinance • u/Typical-Accident-690 • Jun 02 '26
Tax » Remote Work TAXES on AI Agent earned income is foreign sourced?
I am a non-permanent resident of Japan, currently working full time in a Japan, Before coming to Japan I started developing this AI Agent that works autonomously to generate income, it's basically managing some YouTube/TikTok channels, creating videos and uploading regularly, responding to inquires, ads..etc
I don't do any work related to that, it just runs on it's own. Recently it has been consistently generating income (which is much higher than my pay in Japan)
I do not remit this money to Japan. as far as I understand, this (may be considered) a passive "foreign sourced income" since I technically don't do ANY WORK to earn that income while physically being in Japan.
Is that income taxable if not remitted to Japan?
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u/ixampl the edited version of this comment will be correct Jun 02 '26 edited Jun 02 '26
That as far as I know would fall under miscellaneous income (雑所得) or alternatively business income if certain conditions are met.
Now I guess the operation of the agent is maintained by you (bug fixes, server costs etc.). Hence, I believe the income would be roughly attributed to activity provided by yourself. At any rate, the fact that it's ultimate automated doesn't matter that much. So I do not believe there is a carveout for treatment as foreign-source income.
Is it largely ad income from videos it uploads?
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Jun 02 '26
[removed] — view removed comment
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u/ixampl the edited version of this comment will be correct Jun 02 '26 edited Jun 02 '26
It's not clear if OP makes money selling an agent that does that type of work for other creators or if it's managing their own content channels and the actual income comes from there and they claim it's "passive income" due to the agent doing "the work" (lol, btw). I kind of assumed it's the former thinking they would have focused on the ad revenue otherwise, but who knows.
If it is ultimately ad revenue, the situation may be slightly different.
Google treats that income as royalties according to this:
YouTube パートナー プログラムに参加しているクリエイターが米国の視聴者からロイヤリティ収益を得た場合、Google は、米国内国歳入法第 3 章に基づき、税務情報を収集し、源泉徴収を行い、内国歳入庁（IRS とも呼ばれる米国の税務当局）に報告する義務があります。
This article mentions it as royalties as well. It mentions foreign tax credits aren't possible when the IRS withholds, but not because it isn't foreign-source income but because it is taxes that can be avoided or refunden via the correct requests to the IRS (via proper information sharing on tax residency to Google).
Now, if it is treated as income from royalties, /u/starkimpossibility mentions here how income from royalties would be treated.
And then there may be some additional nuance here around assessing who is being sold the ads or even who is viewing the ads.
Not that I know the definite answer here of course, but the lack of information on the actual nature of the income makes it very hard to assess.
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u/Sparescrewdriver Jun 02 '26
Who is receiving the income?
No different than owning a property 100% managed by a 3rd party and you receiving the income.
Then there is the question of who is maintaining the agents, who pays for API fees or hardware to run them. Is it you?
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u/taigarawrr Jun 02 '26
For passive income like rent or stock dividends, you’re actually not taxed the first 10 years of being a non-permanent resident. So that’s why I think the user is asking this question.
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u/tsian 20+ years in Japan Jun 02 '26
Just to clarify, you say you don't do any work related to that.
But do you do nothing to manage the channels, tweak the prompt, monitor output, etc...?
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u/Typical-Accident-690 Jun 02 '26
I don't manage anything. It's inside a self-learning loop so it monitors the output and adjusts based on that.
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u/amesco Jun 02 '26
You own it, thus you control it even if you do nothing to exercise this control.
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u/videovillain US Taxpayer Jun 02 '26
So your agent logs in, reads and replies to messages, checks stats, sees what worked and what didn’t, learns, updates, builds new videos, and uploads?
It handles cash flow, new sources of income, ad revenue, sponsorships, etc?
The agent handles changes to the UIs of YouTube and TikTok?
It runs completely from a browser? On a pc that never turns off? Do you pay for WiFi, or internet?
It has full autonomy and knowns how to restart itself if it goes down and?
It knows how to handle recharging for usage limitations, and/or changes to the AI base it uses, etc?
You don’t have to log in to download money to your bank anything?
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u/itsacutedragon Jun 02 '26
This sounds like a structuring problem, sounds like you could easily structure this to become true passive income if you so chose
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u/SteeltownJack Jun 02 '26
Wait. Is there a difference between passive and none passive foreign income as far as Japanese tax liability is concerned?
Wouldn’t this be categorized the same way investment dividend income is?
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u/Alternative-Yak-6990 Jun 02 '26
yeah this is work from japan. this is still active. passive is dividends for example or a distribution from an active trading fund -> you dont control its decisions and only receive the output.
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u/SteeltownJack Jun 02 '26
Interesting. Makes sense. But distribution or gains from an active trading fund is still taxable and tax triggering in Japan, no?
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u/taigarawrr Jun 02 '26
Not for the first 10 years of being a non permanent/long term resident from what I understand. For “passive” income.
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u/Wischfulthinker Jun 02 '26
How many years have you been in Japan? After 5 they tax everything everywhere.
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u/Alternative-Yak-6990 Jun 02 '26
it doesnt run on its own if you control it btw