Estate and Succession planning – 1-3. How to value the assets

Japanese business start-up consultant

The Japanese Law, tax system and inheritance system shall prevail in this blog.
Based on the above premise, the following rules will help you to understand the scheme in Japan. When proceeding this type of scheme, the case should be dealt with a tax accountant.


How to value the assets – For Inheritance Tax purposes

Importantly, the aim of this scheme is to pass on the property in the most effective way from an individual to a private company. Some of clients that come to seek an advice are not 100% confident about the detail of their property when starting a consultation. I can then assist them to create the list of their property. This problem is caused partly because of the format of the documents that are issued from different organisations.

 

1. Money in bank accounts
In Japan, many banks still use a bank book (See below), and the bank book records all banking transactions, so it is similar bank statement. In order to reduce paper use, the bank book may replace online banking statement, but it is still familiar to elderly people.
The remaining cash balance shall be valued when considering inheritance tax.

 

2. Stocks and shares
When stocks are listed on the market, they are valued based on their quotation on the Stock Exchange on which the stock is listed. The taxable time is the date on which the person died or his/her heir receives the gift. It is better to make a list of all the shares, including the name, nominal value and types of shares.

Unlisted private shares are valued as below.
If the person who acquires shares through inheritance or gifts is the person who already has the power to control the company, the net asset value method is used, which is the principle evaluation method.
If the acquiring person is not such a person, the dividend return method is used, which is a special evaluation method.
The valuation of unlisted private shares may be valued by a tax accountant because the evaluation method is crucial.

In this blog, a simple calculation method is stated.
A principle evaluation method (Net asset value method)
(Company assets – Company debt) / Number of issued shares x Number of shares to be inherited
A special evaluation method (Dividend return method)
{“(A) Annual dividend amount per share”/ 10%} × {“(B) Capital amount per share”÷ 50 Japanese yen}

 

3. Buildings
The value of a building for the inheritance tax calculation is the Fixed Assets Tax Evaluation price.

 

4. Land
In principle, the land value is the price which is published on the National Tax Agency website below, called Land Tax Assessment Value.
The roadside land price is the price per square meter of the residential land alongside the road in question, and the price is displayed in units of 1,000 Japanese yen.

https://www.rosenka.nta.go.jp/

 

5. Household and personal goods
The term ‘Household and personal goods’ means things such as furniture, paintings, TV, audio and video equipment, jewellery, cars, boats, antiques and so on.
You do not have to get a professional valuation for ordinary household and personal goods but if you do estimate the value, the open market value at the date of death is used. For this purpose, you may use an estimated figure.

I hope the information is useful.

I will update every Monday.

For more information
Japanese business start-up consultant
Shihoshoshi Lawyer
(Judicial Scrivener)
Akiko HORI

How to Buy a property in Japan

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