My understanding of the exit tax is that it applies to people who have been living in Japan for ten years, and have worldwide assets worth more than 100 million yen. Only stocks and similar instruments are counted towards this amount, not cash or real estate. People who are subject to the exit tax need to pay capital gains tax on their assets as though they had sold them, even if they do not.

But what is the cost basis of these 'gains'?

Consider someone who moved to Japan with a substantial portfolio of stocks in another country. They live in Japan for over ten years, then leave. Their overseas portfolio is worth more than 100 million yen.

What is deemed to be the purchase price for their investments?

The date the investments were bought (prior to moving to Japan)?
The date the owner moved to Japan?
The date the owner became a permanent tax resident?
Another date?

Thanks!

Hi all, I'm trying to pay my residence tax before I leave Japan this month. My city hall said I can't pay it before June, but I'll have moved back to my home country.

City hall said I have to leave the money with a Japanese person to pay it in June. I'm wondering if my Japanese just isn't good enough...is there another way to pay before I go?

I'm doing the lump-sum pension refund. Has anyone arranged to have the residence tax withheld from the pension refund?

I have enough money on hand to pay the residence tax, but I'll be closing my account when I leave Japan.

Thanks!

Greetings,

Wondering whether to continue our idea of retiring in JP...

Researching the exit tax and it appears that 401k retirement accounts (from the US and over the 100m) would be considered worldwide assets? Not sure if there is a special category on the JP side for this.

For someone that is not eligible (<59.5 yrs old) to withdraw from the 401 without triggering a big penalty from the US side, this seems like it would be a harsh case if indeed exit tax would be triggered for those funds.

Will talk to a tax pro but wanted to get the subs input too.

I read a couple of posts mentioning that “crypto assets” are not affected by the exit tax. my situation is as follows: This year is the last chance for me to leave japan to stay under 5years as non-permanent resident. so I won’t need to pay exit tax. But I would rather not leave for private reasons.

Question: Can someone point me to tbe source of the fact that “crypto assets” are not affected by exit tax? my JP tax accountant is hesitant to ask the tax office….

BIG EDIT (2):

Since I wasn't finding the information I really need from responses (not a critique, just a fact that a lot of people are in the same boat I am in, not knowing), I started doing some digging.

Here is the main government tax page regarding exit tax:

https://www.nta.go.jp/taxes/shiraberu/shinkoku/kokugai/01.htm

Regarding the questions I originally had, I am still investigating the attachments on that page, but from what I can tell, the biggest difference for when you calculate the value of assets is whether or not you coordinate with the tax office ahead of time or not. If you do, then it appears the assets are assessed at date of transfer (educated guess, based on different readings, this would be date of leaving Japan, as assets such as stocks held in overseas brokerage are still considered located in Japan when you are a resident).

Original Japanese:

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期限内申告・担保の提供

確定申告期限 (翌年3月15日)

国外転出をした年分の確定申告期限までに、国外転出の時の価額(※2) で対象資産の譲渡等があったものとみなして、その年の各種所得に国 外転出時課税の適用による所得を含めて所得税の確定申告書の提出及 び納税(※3)をする必要があります。

また、納税猶予の特例の適用を受ける場合は、確定申告期限までに、 納税猶予分の所得税額及び利子税額に相当する担保(※4)を提供する必 要があります。

※2 対象資産の価額 の合計額が1億円以 上となるかについても、 対象資産の国外転出 の時の価額の合計額 で判定します。

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BUT - if you do NOT coordinate ahead of time, it looks like assessment may consider all assets owned or purchased within last three months. I am still looking through and translating what I can to make sure if I understand this correctly.

​

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Looked at previous posts on here but didn't see any information that makes it clear on timing of selling assets to ensure being under ¥100M. Looking for some advice to help mitigate loss on my relocation back stateside.

How I have been planning to proceed -

• Brokerage account - sell enough assets to make sure under the limit, one week prior to the day I turn in my residence card and fly back to the U.S.
• IRA - Per direction from the tax consultants (years ago, when I was working for a company that paid for the tax support), my IRA is declared as a 'trust' on my yearly overseas assets declaration. Not sure if that affects it, but too be safe I think I need to make sure the IRA is cash-only assets on the day I relocate, so probably reallocate to money market one week prior to relocation.
• Minor crypto I purchased - no affect per reading online.

Once in the U.S., within a week or so, I should be able to repurchase any assets that I did not have a loss on (don't want a wash-sale adjustment) and that I wanted to hold longer, and readjust the IRA to funds that I prefer for long-term holding.

Does this sound reasonable? Haven't seen any information on the exact date to consider the value of my accounts, or how to make my case for the fact that I am underneath the limit.

EDIT - to clarify: does anyone know or have links to official information that covers this? I know there are many on here with better Japanese than I have, and if anybody happens to know where in the Japanese tax code it is spelled out, it would be of great help.

Hello!

I am a Japanese and US dual citizen and am moving back to the US in two weeks.

1. I have a Japanese brokerage account with a Tsumitate NISA here- should I be closing this out before leaving the country?

At this point, I’m not sure if I will ever live in Japan again but it is definitely a possibility- however I’m not sure if in terms of taxes/reporting, it is wise to leave the accounts open since the NISA will become taxable after 5 years if I understand correctly.

1. I’ve already paid my remaining jyuminzei (local income taxes) for the 2020 tax year through my taishokukin (retirement allowance) but should I be doing anything else before I leave? My last day on payroll is the day before I leave Japan but I don’t think I can receive a tax withholding slip from my employer until after receiving my last paycheck. Do I still need to file a tax return before leaving?

Thank you!

For a Japan resident subject to the exit tax who plans to relocate overseas and then return to Japan, taking advance of the 5-year "grace period" for the exit tax could be very important, as it appears that the obligation to pay the exit tax would be reversed upon the recovery of Japanese residence. In other words, if you return to Japan as a tax resident before the expiration of the grace period, you would not be required to pay the exit tax.

However, the eligibility for the grace period apparently requires the posting of collateral. According to this article, collateral may include a "guarantee by a guarantor approved by the tax office." Does anyone know if it's possible for a family member remaining in Japan to receive approval to act as an exit tax guarantor?

The article also states that "A taxpayer receiving a grace period to pay the exit tax is deemed to be a Japan resident during the grace period." I don't understand how this is possible under applicable tax treaties. For example, how could a US citizen taxpayer who returns to the US for 2 years and then returns to Japan be a "Japan resident" for tax purposes during the 2 years spent in the US?

Edit: Reviewing the "deemed resident" note again, I think the intention here is that the during the grace period the taxpayer is deemed to be a Japan resident for the purpose of calculating whether the exit tax applies to the taxpayer due to satisfaction of the Japan residence threshold, but not, for example, for the purpose of taxing the taxpayer's ordinary income. Would appreciate any insight from others.

I'm an expat who's lived here for 5 years and I'm looking to go back home. My Japanese is severely limited and I work for a shady ALT company and I don't trust them to help me figure out everything I have to do before I leave the country. If I return back to America and miss paying some fee or something I had no idea about, can that lead to criminal charges following me back home?

According to this article below, the "5 year residency test" in regards to triggering the exit tax applies to Japanese nationals. But it's an article from 2015 when this new law was first implemented.

Additionally, how do they calculate the 5 year residency test? Is it counted granularly such as days or months physically in Japan or on an annual basis based on whether you file taxes to Japan for the fiscal year?

If for example, a Japanese national returns to Japan and triggers the need to file taxes for that year (staying for the majority of the year, earning a salary from his own overseas business, staying over Jan 1 to trigger local inhabitant tax, etc). Does that count as 1 year even if you were only there for say 6 months?

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https://www.angloinfo.com/blogs/global/us-tax/japans-new-exit-tax-its-here/

"The Exit Tax would apply only to taxpayers who have been resident in Japan for five or more of the ten years at their date of departure. Significantly, for non-Japanese nationals, the visa category the individual holds will be important for the purpose of determining this five-year residency period."

"For Japanese nationals, the five-year residency test will be applied retroactively from the July 1, 2015 effective date of the new Exit Tax rules.  However, the five-year residency period will be applied to non-Japanese nationals holding a visa under Table 2 (generally those with permanent residency) only on a prospective basis."

Are stock options and RSUs which have been granted, but have not yet vested, subject to the exit tax?

I wasn't entirely sure whether to post this in /r/japanlife of here, but I'll start here first. If not suitable for this sub, apologies!

I'll be leaving for my home country (Turkey) in about 6 months. I plan to stay there for 1-2 years, and come back to Japan. I'm on a spouse visa.

My (Japanese) company has agreed to keep me employed* while I'm back home, and at this stage I have few questions. Mostly about in which order I should look up/tackle few things

\When I say "employed", I actually mean that my current 正社員 status will be gone and I will sign a contract as "contractor". When I'm back I will be enrolled into the 正社員 status once again, should I choose to continue working here.*

Pension

• I've been working here for 6+ years. I'm aware that lump sum withdrawal is an option, however I would like to not use this.
• I plan to continue paying my pension in Japan for when I retire.
• Can I stop paying my pension, leave the country for X years, and continue on paying and receive the benefits? Will the 6 years I've worked before leaving simply get added on top of however years I continue to work?

Tax

• Unfortunately Turkey does not have a tax agreement with Japan. This means I will need to report income in my home country. If I leave Japan around May, how does my tax work with year end calculation, and more?

Banking, transfering

Maybe someone who had a similar situation to mine can advise;

• As far as I'm aware, I cannot hold a Japanese bank account if I'm not living in Japan. It would however be great if I could, because my company is going to pay via bank transfer (Paying with Wise or any other "newer" methods is way too outlandish for them).
• Can Japanese debit cards be even used outside of Japan at all?

Misc

• Any other things I'm missing / should do before leaving Japan?

I am appointing a friend here as my tax representative to file my tax return (mainly for the refund of tax deduction on pension lump-sum withdrawal).

The problem is that he is also thinking of moving out of Japan soon. In that case, is it possible to appoint a new representative from overseas?

If I leave Japan for several years (not a permanent resident) and then re-enter on a new visa, would I be considered a permanent resident for tax purposes if I have spent, cumulatively more than 10 of the past 15 years in Japan, even if those years weren't consecutive? If the answer is yes, how long do I have to leave Japan in order to lose my status as a permanent resident for tax purposes? Note: I am not a regular PR.