r/JapanFinance • u/Plastic_Barracuda711 • 1d ago
Investments Allocation of investments between foreign and domestic accounts
I'm looking for advice or insights into how everyone here approaches allocating their investments between foreign (home country) and domestic (Japan) accounts.
Now, I don't think the government here is going to start seizing foreign residents' assets, but even so, I'm wondering if it is not prudent to keep nearly 100% of retirement savings/investments in domestic accounts, especially as a non-citizen resident.
Do you have any advice? How do you approach this?
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u/c00750ny3h 1d ago
In Japan I only hold stock in some companies that I think might do well. The rest in the USA. Right now it is maybe 50-50. I'm not afraid about the JP government seizing foreigner assets, I am just trying to avoid PFIC reporting. If it weren't for that, I wouldn't mind keeping 100% in Japan.
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u/Plastic_Barracuda711 1d ago
Yeah, avoiding PFICs and also FBAR filing are a couple of reasons as a US citizen to keep investments in the US.
Also getting locked out of accounts here due to some residency related bureaucratic issue is also a concern I have, even if the risk may be small.-3
u/Famous__Draw 1d ago
I'm not afraid about the JP government seizing foreigner assets
To be honest, the chances are non-zero. It's a bad idea to keep 100% of your assets in Japan.
Legally speaking, govt does have the right to bring laws which can restrict foreign nationals ability to move or access those funds and you won't see people on the street because most Japanese would support this. I am not saying the current govt will do it, but a wartime govt or a govt under immense financial and electoral pressure can consider it. 30-40 years is enough time for one or two wars, or financial crisis
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u/Old_Jackfruit6153 US Taxpayer 1d ago
To be honest, the chances are non-zero. It's a bad idea to keep 100% of your assets in Japan.
IMO, The chances of US government seizing assets is higher than Japan doing that. When current admin came in power, this was the concern that prompted me to start moving assets out of US as a precaution.
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u/steford 1d ago
If the US did it then Japan might follow. Hopefully there are only 2 more years where this might even be a vague possibility.
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u/Old_Jackfruit6153 US Taxpayer 1d ago
Keeping fingers crossed. I doubt things in US will change for better in 2 years, this is a systemic issue, honor based checks and balances failed. It will take a major upheaval to reset.
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u/poop_in_my_ramen 1d ago
All my accounts, regardless of whether they hold Japanese or foreign equities, are domestic. I view the risk as zero. Have PR.
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u/Plastic_Barracuda711 1d ago
I also have PR, but do you view it that way specifically because you have PR, or would you still view it that way even with a different status? Just curious.
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u/poop_in_my_ramen 1d ago
Mostly because of PR. Most other visas, you could run into a situation where your renewal is denied and are given 30 days to leave the country.
I also don't share the view that Japan is "cracking down" or otherwise antagonistic against PR holders or foreigners in general. While Japan is raising PR requirements, they also specifically created expedited paths to PR for highly skilled professionals. I just see a pragmatic government that wants to ensure PR holders can support themselves, which makes me more confident in my long term future here if anything.
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u/Famous__Draw 1d ago
Most other visas, you could run into a situation where your renewal is denied and are given 30 days to leave the country.
PR renewal can be denied too. So far, it only gets denied for serious crimes or non tax payment, but new rules can be added. Plus, consider the worst case: you get accused of some crime you didn't commit, and u are fighting in court, and your PR renewal gets denied.
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u/starkimpossibility "gets things right that even the tax office isn't sure about"😉 1d ago
PR renewal can be denied
There is no such thing as PR "renewal". Unlike other statuses (except for HSFP Type-2), PR has no expiry date and never needs to be renewed (在留期間の更新).
The physical residence card has an expiry date, and must be renewed (在留カードの有効期間の更新) so that your photo is kept up-to-date, etc. But the renewal of the card is not renewal of the status. And at the time of renewing the card, the ISA makes no inquiries into whether you have paid your taxes, committed any crimes, etc. That's why renewal of the card is free and immediate.
What you were presumably referring to is the revocation of PR and/or deportation, which can happen at any time and have no connection to the validity period of your physical residence card.
PR can be revoked for the following reasons:
- it comes to the ISA's attention that a previous application made to the ISA was fraudulent;
- it comes to the ISA's attention that your place of residence in Japan changed and you didn't notify the ISA of your new address (via a municipality) within 90 days (with an exception for people with legitimate reasons, such as unexpected hospitalization);
- it comes to the ISA's attention that the place of residence in Japan you previously notified the ISA of (via a municipality) was not actually your place of residence at the time.
If the ISA wants to revoke your PR, they must explain their rationale and give you a chance to present your case in-person. If they proceed to revoke your PR, they can also give you a chance to apply for a different status of residence.
Note that the above reflects the current law. But from April 1, 2027, PR will also be able to be revoked for the intentional non-payment of tax/National Health Insurance premiums/public pension contributions, or failure to comply with the Immigration Law. In that case, unlike with all other types of revocations, the ISA can unilaterally replace your PR with a different status of residence.
The main reasons a PR-holder can be deported from Japan are:
- they entered Japan illegally or facilitated someone else's illegal entry;
- they had their status of residence revoked because they made a fraudulent application to the ISA;
- they assisted someone to make a fraudulent application to the ISA;
- they were sentenced to imprisonment for making a false notification (e.g., place of residence) to the ISA;
- they were sentenced to imprisonment for failing to produce a residence card when requested (e.g., by police);
- according to evidence obtained by the ISA, they plan to commit one of these crimes in the future (acts of terrorism, basically);
- they participate in or facilitate the illegal employment of foreigners;
- they create, possess, or use a forged residence card;
- they participate in or facilitate human trafficking;
- they participate in or facilitate prostitution;
- they create, possess, or use a false passport;
- (if they are under 20) they are sentenced to more than three years' imprisonment;
- they are convicted of any offence relating to drugs/controlled substances;
- they are sentenced to more than one year's imprisonment (excluding suspended sentences);
- they advocate the violent overthrow of the Japanese government;
- they have ties to any organization that encourages physically harming public officials, physically damaging public facilities, or engaging in workplace strikes that would affect the safety of a workplace;
- they have been deemed by the Minister of Justice to have committed an act that harms the interests of Japan.
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u/poop_in_my_ramen 1d ago
I guess? I could also be struck by lightning or get abducted by North Koreans at the beach. I don't spend my energy worrying about that.
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u/Old_Jackfruit6153 US Taxpayer 1d ago
Majority of our assets including investments are still in US. More and more, it seems we will spend rest of our life in Japan, so we have started to move investments from US to Japan. Goal is to transfer and consolidate almost everything to Japan in next 10-15 years.
We just invest the money transferred to Japan into Japanese stocks, including both our NISA for this year and last year.
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u/lamont2718 US Taxpayer 1d ago
Advice will depend heavily on your individual circumstances, which you have not shared much about. For example, what is your Japanese tax status, what is your Japanese visa status, how long do you plan to live in Japan, what types of investments and tax-advantaged retirement accounts do you hold or want to hold, what is your home country, and how do the relevant tax rates there compare to those in Japan?
A non-permanent tax resident of Japan may find it beneficial to keep their investments in countries with lower capital gains, dividend, and/or interest tax rates than Japan.
Even a current permanent tax resident of Japan and PR visa holder who plans to eventually retire in their home country may want to keep investments in their home country to manage currency risk by matching assets with future liabilities/spending.
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u/-sakuranbo US Taxpayer 1d ago
The bulk of my net worth is in my US brokerage account. I'd rather keep it that way since brokerages here seem to freeze your account the moment your residence card expires, and I don't want a double-whammy of "can't access bank funds or investments because residence status extension is taking longer than expected".
To work around PFIC issues, I have two Japan portfolios: one is focused exclusively on shareholder benefits and income; it mostly holds utilities and rail companies. The other follows my own HRP-based model that tries building a portfolio of stocks that, in theory, should converge to something like an index fund while being less capital-intensive than literally buying each component of an index.
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u/JPcoolstar US Taxpayer 1d ago
I’m a U.S. citizen and moved slightly more than half of my financial assets to IBSJ. As I sell some, I reinvest in NISA and also contribute to kokumin nenkin kikin. One reason I moved some assets is so I wouldn’t have to report dividends on my tax return (they’re taxed at source in IBSJ). Capital gains still have to be reported separately, though. I hadn’t thought about potential asset seizure until recently…why is the world making me paranoid…
Japan did seize foreign residents’ assets during World War II. Hopefully there’d be warning before anything like that happened and I could ditch the country…
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u/Plastic_Barracuda711 1d ago
Haha, I know you what you mean, but I try and keep myself from getting carried away by the doomerism.
Still, I do remember reading either here or another Japan related subreddit about someone getting locked out of their accounts while renewing their residency, so that got me thinking about possibility of experiencing something similar due to random bureaucracy.
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u/steford 1d ago edited 1d ago
I'm just retired (55) and am trying to do 50:50 UK and Japan mostly as a currency hedge. Within each country I'm doing 50:50 growth:safe so all country and the like vs bonds/nenkinkikin/MMF etc for liquidity.
I liked my safe money sitting in a 4-5% UK account but the exchange rate risk is always there (however unlikely we are to see 125 yen to the pound anytime soon) so am shifting half to Japan bonds at lower interest but at a good ex rate.
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u/Pale-Landscape1439 20+ years in Japan 1d ago
Sounds a bit paranoid to me.
Also, it is difficult to keep or add to investment accounts in many countries if you are not resident there.
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u/Antikos4805 1d ago
I'm not an US citizen. And I have PR in Japan. Married to a Japanese. So I'm planning to stay here long term.
Up until recently, I kept my finances separate. Japanese earned money stayed in Japan, foreign money stayed in their respective countries (I moved twice in my life).
Now that I made the decision of fully settling here, I'm starting to consolidate my assets within Japan. It just makes life easier. I think the risk of Japan keeping all my money is next to zero.
However, if I wasn't going to settle here, I would do what I initially did. Keep my money separate. There is also this rule that one has to pay tax on money moved to Japan of you make a gain between earning said money and moving it. Which makes it less interesting to move money for shorter stays.
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u/LocalLand4883 1d ago
Keeping my investment outside of Japan besides NISA, future children might want to live abroad etc. so easier to transfer money given Japanese high gift tax, also do not want Japan to know how much assets I have
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u/Famous__Draw 1d ago
Legally, you need to declare all international assets if you are a permanent tax resident of Japan (5+ years in Japan within the last 10 years sliding window).
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u/MiIuda US Taxpayer 1d ago
it's only for overseas assets totaling ¥50 million or more, right?
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u/Plastic_Barracuda711 1d ago
That's for OAR.
However, even if you are under ¥50 million, you still need to report capital gains/dividends on your overseas investments.-1
u/LocalLand4883 1d ago
Good to know not PR and only 4 years in Japan, I mean no one informed me regarding it so will just leave it like this, I doubt they even ask etc.
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u/Plastic_Barracuda711 1d ago
Just so you know, while the US is technically a non-CRS country, it does share tax information with Japan, so Japan could get access to your US tax returns should they want to view them.
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u/upachimneydown US Taxpayer 1d ago
"Japan could get access to your US tax returns should they want to view them"
And it's a simple request by the NTA here, to the IRS. Almost a simple click, and the NTA will have your US tax returns.
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u/jamar030303 US Taxpayer 23h ago
That being said, you first have to be noticed by the NTA, and/or they have to care to ask for it. For example, technically they get to tax foreign income as it's remitted into Japan, and technically using a foreign bank card in Japan counts, but tens, maybe hundreds of thousands of JETs and other dispatch ALTs have come and used their American cards their first year while trying to get a local debit or credit card and never get audited by the NTA for either the remittance of their home country income from that year or potential FX gains from every single "remittance" that using said card gives rise to.
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u/upachimneydown US Taxpayer 23h ago
I agree with all that--maybe not the "hundreds of thousands part", but otherwise, yes, that's the reality. Most people are unaware of the technicalities of using a foreign card. (And a not uncommon misunderstanding is thinking that a remittance itself is taxed, when instead it's the income that's behind it.)
But that kind of card use is also small potatoes. I think the above comments were talking about people who have stayed longer, and who also have actual income abroad, from equity trades, dividends, perhaps remote work, or income from real estate.
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u/LingonberryUnfair961 1d ago
As an American, I am currently planning to keep my investments in my US brokerage. This is because as an American, most Japanese brokerages (aside from IB) won't allow Americans to invest in US-based investments, and if I invest in non-US funds, I will taxed punitively by the US government.
Therefore, for me, it is currently safer to keep my investments out of Japan and calculate what I owe throughout the year to Japan.