Japanese tax: Reporting worldwide income after 5 years

[split]

Does anyone know or realize this? As I understand after reading the regs, anyone domiciled in Japan after 5 years within the last 10 years is required to report their income worldwide as they are considered a permanent resident for tax purposes. Does anyone know any way to reset this clock and is there even any enforcement of this rule?

 

[warubuta]

Does anyone know or realize this? As I understand after reading the regs, anyone domiciled in Japan after 5 years within the last 10 years is required to report their income worldwide as they are considered a permanent resident for tax purposes. Does anyone know any way to reset this clock and is there even any enforcement of this rule?

There has been discussion about this here before. The long and short of it is, yes, you should understand your exposure to the Japanese tax authority and no there is no way to reset the clock. If you are a US citizen or a citizen of one of the other countries which taxes on worldwide income, then you need to thinik about that too. I suggest you read up on something called CRS. Google it. Japan just recently got started with it and is now actively exchanging data with member countries. The Buta recently came clean to the J authority and filed 5 years of back taxes on income from investments outside of Japan. Although they were structured such that they were unlikely to ever be uncoverfed by the bumbling, incompetent morons in the Zeimisho with their tabaco-stainied, 35 year old Fujitsu and NEC computers, The Buta has flourished financially (and corporally) while here in Japan and he wanted to Do The Right Thing,- as they say. He paid the back taxes owed. It was a bit painful. But, its only money - he keeps telling himself. Surprisingly, he was not asked to pay any of the signficant penalties. Apon inquiry he was told that this is because he voluntarily disclosed. Had he been caught in a state of absconding, he would have paid very dearly indeed - more than double the amount paid. Something to think about.

 

[split]

Thanks. Seems to be 50M threshold according to the recent info from the agency website.

 

[warubuta]

Thanks. Seems to be 50M threshold according to the recent info from the agency website.

Over 50 million in assets needs to be reported. But there is no limit for income. So theoretically if you made 50,000yen in interest income on assts that are less than 50 million yen, then you would still need to report that income and you would be liable for income tax on it. I think they want to know about your assets (as apposed to income) for inheritance tax purposes. Lots of wealthy Japanese are moving money offshore as a way to transfer wealth to their kids without paying the onerous (on very wealthy people only) inheritance tax. That is what is behing the asset disclousre requirement.

 

[MikeH]

I think they want to know about your assets (as apposed to income) for inheritance tax purposes.

And for the exit tax if you try to do the unholy thing and leave Japan permanently.

 

[MikeH]

Does anyone know any way to reset this clock and is there even any enforcement of this rule?

Spending the next six years out of Japan will do the trick. Then you can come back to enjoy four years of non-resident status for tax purposes. And yes, now when they have automatic information transfer agreements between the countries there is a real chance they take notice. It used to be that if they wanted to know your financial information like bank accounts they would need to send an inquiry to your home country. Now they just have to go clickety-click on their computer. (Details may vary, all pictures shown are for illustration purposes only).

And as @warubuta said the 50 million limit is a totally different thing; that's for assets abroad, all income needs to be reported and taxes paid with no lower limits.

There are various interesting holes you need to avoid falling to also; for example if you trade stocks in the US of A and let's say you lose 10 million in one trade and gain 10 million in another. Now that is +-0 for you, right? Not so fast; the Japanese tax man doesn't count losses made through foreign brokers. So now you have 10 million of gains you need to pay the tax.

Similarly with the assets; if you borrow 50 million to buy a house abroad the Japanese tax man now thinks you have 50 million in assets and you need to report it.

The exit tax then concerns only Japanese citizens and permanent residents; and it kicks in only after you have 100 million in assets and have lived in Japan for five years. If you do and want to avoid it you still have until next year to skip out of the country as the law came in to effect in 2015.

Disclaimer: anyone taking any of the above as financial advice needs to get his head examined. Seriously. However if the information is useful to you blowjobs will be accepted as tokens of appreciation.

 

[warubuta]

Spending the next six years out of Japan will do the trick. Then you can come back to enjoy four years of non-resident status for tax purposes. And yes, now when they have automatic information transfer agreements between the countries there is a real chance they take notice. It used to be that if they wanted to know your financial information like bank accounts they would need to send an inquiry to your home country. Now they just have to go clickety-click on their computer. (Details may vary, all pictures shown are for illustration purposes only).

And as @warubuta said the 50 million limit is a totally different thing; that's for assets abroad, all income needs to be reported and taxes paid with no lower limits.

There are various interesting holes you need to avoid falling to also; for example if you trade stocks in the US of A and let's say you lose 10 million in one trade and gain 10 million in another. Now that is +-0 for you, right? Not so fast; the Japanese tax man doesn't count losses made through foreign brokers. So now you have 10 million of gains you need to pay the tax.

Similarly with the assets; if you borrow 50 million to buy a house abroad the Japanese tax man now thinks you have 50 million in assets and you need to report it.

The exit tax then concerns only Japanese citizens and permanent residents; and it kicks in only after you have 100 million in assets and have lived in Japan for five years. If you do and want to avoid it you still have until next year to skip out of the country as the law came in to effect in 2015.

Disclaimer: anyone taking any of the above as financial advice needs to get his head examined. Seriously. However if the information is useful to you blowjobs will be accepted as tokens of appreciation.

Clickity click usually doesn’t turn up much.

 

[MikeH]

Clickity click usually doesn’t turn up much.

At least bank account numbers with balances are now immediately available as is everything you have admitted to your tax office in the other country. Of course none of that immediately scream tax fraud but if you had 10 million in the account last year and now have 20 they will ask for some explanations.

 

[Sudsy]

If you are an American with holding outside Japan, there is no substitute for a good accountant. PWC will do individual tax accounting for US citizens if needed.

Worth noting, btw, that they have adjusted the estate tax and post-departure tax burdens they implemented several years ago in favour of foreign (ex) residents. The intent of that law was to prevent Japanese nationals from relocating to Thailand to drown in pussy while evading estate taxes, not to punish foreign nationals for working in Japan for 5-10 or more years.

 

[MikeH]

not to punish foreign nationals for working in Japan for 5-10 or more years.

Yeah, those were just happy coincidence. I guess some big corporations complained as I bet my share of spinners from now to death the officials don't really care if they accidentally fuck some gaijins in the process.

Just like with the driving license. As a foreigner you were allowed to drive with international permit until you weren't. The law was changed to prevent Japanese who lost their license to go to Thailand for a holiday and get license there, then come back to drive with international permit.

Nobody cared to think how it affects foreigners living in Japan and of course failed to notify them about the change either.

 

[Frenchy]

If you are an American with holding outside Japan, there is no substitute for a good accountant. PWC will do individual tax accounting for US citizens if needed.

Worth noting, btw, that they have adjusted the estate tax and post-departure tax burdens they implemented several years ago in favour of foreign (ex) residents. The intent of that law was to prevent Japanese nationals from relocating to Thailand to drown in pussy while evading estate taxes, not to punish foreign nationals for working in Japan for 5-10 or more years.

I must say it pisses me off to know some rich Japanese guys pay zero tax by relocating to Sing or wherever, while I pay prohibitive amounts that help taking care of their old people here (who for the most part hate foreigners I’m sure) or roads to nowhere or the 200 or so cops currently circling the Palace Hotel just in case the 50 or so Secret Service agents aren’t enough for The Donald. And I can’t even vote. And most fuzoku is inaccessible. Fuck what am I doing here?!

 

[MikeH]

And I can’t even vote. And most fuzoku is inaccessible.

I don't care about the right to vote, or not being able to become a police officer, but if getting naturalised would help with the access to more shops I would be lining up at the immigration right now.

 

[Frenchy]

I don't care about the right to vote, or not being able to become a police officer, but if getting naturalised would help with the access to more shops I would be lining up at the immigration right now.

Your look would not drastically change , I suppose. Unless some heavy cosmetic surgery could transform you into MikiTaro Suzuki or whatever new name you fancy

 

[warubuta]

I must say it pisses me off to know some rich Japanese guys pay zero tax by relocating to Sing or wherever, while I pay prohibitive amounts that help taking care of their old people here (who for the most part hate foreigners I’m sure) or roads to nowhere or the 200 or so cops currently circling the Palace Hotel just in case the 50 or so Secret Service agents aren’t enough for The Donald. And I can’t even vote. And most fuzoku is inaccessible. Fuck what am I doing here?!

Yea but Frenchy pretty soon you are going to be an old guy here like the old guys you are complaining about! And you will always be welcome by the old banana-tit ladies at NYNY and Sexy Kat! Your taxes will go to near zero because you will be retired! HAve a great weekend thinking about your happy future!

 

[Frenchy]

Yea but Frenchy pretty soon you are going to be an old guy here like the old guys you are complaining about! And you will always be welcome by the old banana-tit ladies at NYNY and Sexy Kat! Your taxes will go to near zero because you will be retired! HAve a great weekend thinking about your happy future!

Yeah and I could use the priority seats in the trains without shame. There’s that.

 

[warubuta]

I don't care about the right to vote, or not being able to become a police officer, but if getting naturalised would help with the access to more shops I would be lining up at the immigration right now.

Glad to see you got your priorities straightened out.

 

[MikeH]

Unless some heavy cosmetic surgery could transform you into MikiTaro Suzuki or whatever new name you fancy

I am going for 朝立 性子. I have the boobs already.

 

[MikeH]

Glad to see you got your priorities straightened out.

You trying to imply those were not my priorities always? I will sue you for defamation of character.

 

[split]

Have only skimmed through some of this and some interesting points. My main concern is the stocks, trusts, and LLC being earned income. I got a feeling even though I had gross income of
only 55k last year, among all that, the Japanese system will complicate this beyond imaginable levels given my broad range of assets. I think my tax bill came to $3100 total at home on that income, but got a feeling that it will be much higher once disclosed to JTA even with the tax treaty in place. Even my SO is questioning the need to disclose after 1 year of purchasing property here (I told my SO to stop making large xfers to Japan when I saw the bankbook). I even told my SO to take me off the foreign life insurance policy dues to the asssnine classifications of insurance policies at home. fKD up situation.

 

[warubuta]

The main thing about J taxes is to not sweat it. It took them like ten years to catch up to Carlos Ghosn and his undeclared amount is USD 88mil.

 

[split]

Yeah. That I explained to my SO was their charter kickoff to showing the public 'we are on the ball'. A formality basically.

 

[warubuta]

Yeah. That I explained to my SO was their charter kickoff to showing the public 'we are on the ball'. A formality basically.

They are trying to be on the ball. They can’t find it though.

 

[MikeH]

They are trying to be on the ball. They can’t find it though.

But now they are at least looking for it instead of ignoring it like before.

And Carlos is not charged for tax evasion because he never evaded any taxes.

 

[warubuta]

But now they are at least looking for it instead of ignoring it like before.

And Carlos is not charged for tax evasion because he never evaded any taxes.

Same difference. He hid money. He owes.

 

[Frenchy]

I wonder whether I should declare this virtual JPY 5,000 fortune too... nah, worked too hard for it, I virtually keep it all