Japan · Tax regime
Japanese inheritance and gift tax exposure for foreign residents
In force. The current architecture dates from the 2017 and 2018 reforms, which introduced the Table 1 visa carve-out and the 10-out-of-15-years test. Not a programme — a structural risk that disqualifies Japan for many families.
Japan taxes the RECIPIENT, not the estate, and it reaches worldwide assets whenever the heir or the deceased fails the temporary-foreigner test. The trap that catches UHNW families is the visa table: Table 1 (work) visas — Business Manager, Highly Skilled Professional, Engineer — get the 10-out-of-15-years carve-out. Table 2 statuses — PERMANENT RESIDENT, spouse of a Japanese national, long-term resident — do not. So the J-Skip holder who takes permanent residency after one year, congratulating himself on the fast track, has just moved his entire global estate into a 55% net with no grace period at all.
Qualifying routes
JPY 30m plus JPY 6m per statutory heir. For a spouse and two children that is JPY 48m — roughly USD 300k. Everything above is taxable
55% applies to each heir's taxable share above JPY 600m
The facts
- Total landed cost
- Potentially 55% of a worldwide estate. For a family with USD 100m of assets and no Japanese connection other than residence, the exposure is measured in tens of millions of dollars.
- Physical presence
- Exposure is driven by jusho (domicile) in Japan, not by nationality or visa alone
- Permanent residency
- not applicable
- Citizenship
- not applicable
- Language test
- not applicable
- Dual citizenship
- Not permitted — you would have to renounce
- Requirements
- Table 1 visa holders (work statuses including Business Manager and Highly Skilled Professional) with jusho in Japan for less than 10 of the last 15 years are exempt from Japanese gift and inheritance tax on OVERSEAS assets, provided the counterparty is also a temporary foreigner or a non-Japanese national outside JapanTable 2 statuses — permanent resident, spouse or child of a Japanese national, long-term resident — do not qualify for the carve-outAssets located in Japan are always within scopeTop rate 55%; basic exclusion JPY 30m plus JPY 6m per statutory heir
- Taking Japanese permanent residency converts you from a Table 1 temporary foreigner into someone whose worldwide estate is exposed to Japanese inheritance tax immediately. For most UHNW families, PR in Japan is a mistake and rolling a Table 1 visa is correct. This is counterintuitive and it is the whole point.
- The 10-out-of-15-years test looks BOTH ways: exposure can arise because of the heir's status even if the deceased never set foot in Japan, and it can arise because of the deceased's status even if the heir lives elsewhere. Model both sides.
- Marrying a Japanese national and taking a spouse visa is a Table 2 status — same immediate worldwide exposure.
- Japan-situs assets are ALWAYS taxable regardless of anyone's status. Buying a Tokyo apartment creates permanent Japanese estate exposure on that asset.
- A Japanese national who leaves Japan carries worldwide inheritance tax exposure for 10 years after departure. Emigration does not switch it off.
- Gift tax mirrors inheritance tax at up to 55% and closes the obvious escape route. Lifetime giving out of Japan is not a quick fix.
- Foreign trusts are frequently ineffective — Japan may look through them, and a trust that works for US or UK purposes can be transparent for Japanese purposes. Do not assume your existing structure travels.
- Japan also levies an exit tax at 15.315% on unrealised gains on securities of JPY 100m or more if you have been resident more than 5 of the preceding 10 years. Leaving to escape the inheritance regime can itself trigger a bill. Payment can be deferred up to 10 years with procedures.
- The 10-year clock counts residence in the past 15 years, so time spent in Japan on an earlier posting counts. Families who lived in Japan before must count backwards carefully.