We provide the following services to foreign nationals who are employed or have business operations in Japan.
Visa acquisition / renewal: We provide one-stop services from immigration procedures to the renewal of visas on behalf of foreign nationals and foreign-affiliated companies by partnering with visa acquisition companies that have specialized knowledge and experience.
Income Tax, etc.
We provide advice on taxes for expatriates and foreign nationals.
Taxation of foreign expatriates is a highly specialized field that requires knowledge not only of Japanese tax law but also of tax treaties, etc.
It is also a field that is becoming increasingly important as the so-called globalization progresses.
Specifically, issues such as the following can arise.
Taxation in Japan on Assets Acquired Abroad
Japanese Income Tax Act classifies individuals into residents and non-residents, and further classifies residents into permanent residents and non-permanent residents.
Based on the classification, it distinguishes the scope of taxation that Japan can impose on each individual.
|Resident||A resident is an individual who has a domicile in Japan, or who has had a residence for more than one year up to the present.|
– Permanent Resident –
An individual who is a resident other than a non-permanent resident.”
Japan imposes tax not only on income earned in Japan (domestic source income), but also on income earned outside Japan (foreign source income).
– Non-permanent resident –
An individual who does not have Japanese nationality and has had a domicile or residence in Japan for less than five years in the past ten years.”
Domestic source income and other income paid in Japan or remitted from abroad are subject to taxation in Japan.
|Nonresident||A nonresident is an individual who does not have a domicile in Japan and who has not resided in Japan for more than one year.|
Nonresidents are taxed in Japan only on domestic source income.
For example, if an individual with Japanese nationality returns to Japan from a long-term overseas assignment and starts living in Japan again, that person will be classified as a permanent resident.
Accordingly, if an individual acquires real estate in their place of assignment and earns income from the acquired real estate after returning to their home country, in principle, such income will be subject to taxation in Japan.
Rental real estate owned overseas
Individuals such as those who have a domicile in Japan (permanent residents) are, in principle, subject to tax in Japan on the rent of real estate they own overseas.
On the other hand, rents are also usually taxed in the country where the real estate is located (source country taxation).
In other words, rents from overseas real estate are taxed twice, in Japan and overseas.
This however, this discourages owning real estate for rent overseas as there is a disadvantage from a tax standpoint.
Therefore, the Income Tax Act provides for a foreign tax credit, which allows for the deduction of taxes levied overseas to a certain extent in the calculation of Japanese taxes.
The foreign tax credit system was a corrective measure for the double taxation of the same profit both domestically and abroad.
However, there are examples where profits made in a foreign country are not taxed in that country (taxed only domestically).
This is when a “tax treaty” or “tax agreement” is established and the treaty states that no tax will be imposed.
When profits are made outside the country (foreign source income), it is necessary to check the tax treaty with that country.
It is important to note that tax treaties may be concluded not only with countries but also with regions such as Hong Kong.
Nationality and Residence
Japan’s Income Tax Act classifies residents and non-residents according to whether or not they have a residence.
Non-residents are then taxed only on profits made in Japan (domestic source income).
Accordingly, even Japanese nationals who fall under the category of non-residents are not taxed in Japan on profits earned overseas (foreign source income).
Regarding this point, countries that distinguish between residents and non-residents based on nationality rather than residence will tax income earned while living abroad as long as the individual has a nationality.
But what is a residence?
Although there is a provision in the Civil Code regarding this point, it is not easy to determine and it is a subject of dispute.
This was in relation to the Inheritance Tax Act, and one of the cases in which this point was disputed was the famous Takefuji Case (No. 2111, February 18, 2011).