Tax information: Leaving Japan
Welcome to the tax guide on leaving Japan, produced by Deloitte. Looking for tax information about going to Japan, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Terms and conditions
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Before/once you departQ. Should I complete any documentation prior to leaving Japan?
A. The tax return for the year of departure should be filed prior to departure and any outstanding taxes should be paid before departure unless a Japanese tax representative has been appointed to handle these matters. The power of attorney appointing the Japanese tax representative must be filed with the tax authorities on or before departure.
Q. Should I open an offshore bank account?
A. Yes.
Q. Will I be regarded as not resident in Japan during my period overseas?
A. Generally, an individual who leaves Japan to work abroad for at least one year is treated as a non-resident from the day following the date of departure.
Q. Will I still need to complete a Japanese tax return after my departure?
A. A tax return will need to be filed for the year of departure, and any subsequent year where you have Japanese source income which is not subject to withholding tax.
Q. Will I have to pay Japanese tax in respect of the employment income I will earn overseas?
A. A non-resident is subject to national income tax in respect of Japanese source income. In general, employment income is considered Japanese source if the employment duties are performed in Japan. The performance period of bonuses paid after your permanent departure in the departure year or the subsequent year may include your employment duties in Japan. In such cases, the Japan source portion based on proration is taxed at 20% non-resident rate.
If you remain resident in Japan during your period overseas you will remain liable to national income tax.
Q. Will I have to pay tax in respect of Japanese investment income earned while overeas?
A. Yes.
Q. I plan to sell my Japanese property while overseas. Are there any capital gains tax implications?
A. Sales of real property located in Japan are subject to a 10% withholding tax, assessed on the gross sale price and is creditable against your Japanese national income tax liability. Capital gains from the disposal of land or buildings are taxed differently depending upon how long the property has been owned. There are special rules concerning the disposal of residential property which has been used as your principal residence.
Q. What Social Security contributions will I pay when abroad?
A. Your requirement to pay Japanese or foreign social security contributions during your absence from Japan will depend upon how long you are leaving for, what country you are going to and whether you will be employed by a Japanese or foreign employer.
If you are going to work for a Japanese company overseas on a short assignment in a country with which Japan has a reciprocal agreement it is likely that you will be able to remain within the Japanese Social Security system.
