Importantly, even if a non-Japanese national who lives in outside Japan at the time of his death owns his real property in Japan passes away outside Japan, the person receiving the real property in Japan should file the Japanese inheritance tax form, which is dealt with by a Japanese tax accountant.
Moreover, the problem is that long-term residents whose nationality is non-Japanese who have spent longer than 10 years within the past 15 years in Japan before any gift or inheritance or have the residence status set out in Appendix 2 of the Immigration Control and Refugee Recognition Act (such as a spouse visa or permanent resident) are subject to inheritance tax on their global assets even though his heir or the person receiving is non-Japanese national.
In comparison with the above case, persons who have the residence status set out in Appendix 1 of the Immigration Control and Refugee Recognition Act and who have been living in Japan for less than 10 years in total within the past 15 years before any gift or inheritance are not subject to gift or inheritance tax on their overseas assets.
However, under the inheritance tax rules, if the deceased person is a non-Japanese national and whose address is outside Japan at the time of his death, plus a non-Japanese national who has a domicile outside Japan acquires assets from the deceased through inheritance or bequest, inheritance tax on overseas assets is no longer applicable, regardless of how long those deceased persons and those persons receiving the inheritance or bequest had their address in Japan in the past.
In addition, under the gift tax rules, a person who has not had Japanese nationality within the 15 years before the date of no longer having an address in Japan and whose total period of having an address in Japan exceeds 10 years is not subject to the gift tax on their overseas assets after 2 years have passed since leaving Japan.
As an additional information, from 1st July 2020, the exit tax rule impose for unrealised capital gains on shares at the time of a departure from Japan. The total amount of the target asset value is 100 million Japanese Yen or more. It is introduced from the viewpoint of preventing tax avoidance for cross border moves.
Some long-term foreign residents (10 years or more) in Japan and non-Japanese national whose residence status set out in Appendix 2 of the Immigration Control and Refugee Recognition Act (such as a spouse visa or permanent resident) might be considering undertaking some possible planning. The above explanation is extracted for persons who should be extra careful. A precise advice should be necessary for individual cases.
Real property especially has various special rules and discounts for the inheritance tax.
Managing property efficiently and cost-effective is essential in international tax matters.
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