I moved to Japan in April of 2010 and have just another 2.5 years to go before hitting the 10-year mark, qualifying for permanent residence. The PR position is very much sought after and has been something I’ve been aiming for for some time now. However, new information I learned about gift and inheritance taxation might change all that.
In a bid to catch wealthy Japanese who give up their citizenship to evade taxes on their foreign assets, the Japanese government came up with the inheritance tax in 2013 which affected foreigners on short-term residency statuses (less than 10 years residence) as well. However, they amended the rule in April this year to make it applicable only to Japanese and foreigners with long-term residence statuses (i.e. spouse visa, permanent residence, or more than 10 years’ residence in the last 15 years). This inheritance tax can go as high as 55 percent, which is ridiculous given that more than half of what your parents leave you (or you are leaving your children) will be taken away by the government.
Tokyo Governor Koike Yuriko is pushing for the government to reconsider this as it goes against Japan’s wish to attract more foreigners. However, it will likely take time before the law will be amended again since the last revision was less than a year ago. For more details on the news, see this Japan Times article.
I’m beginning to think twice about staying here beyond 10 years. Of course, I do not intend to leave as yet, but I only have another 2.5 years to think about this.
Lai, welcome back home! 😀
On a side note, can’t you just stay past 10 years and then apply PR anytime when you feel like it i.e. 12th year, 15th year, 20th year etc? Or is it once you hit 10th year, you got to apply? If it isn’t, then I’m sure you have all the time you want to consider it.
Or, move to Korea, like what you considered before.
LOL, yea I could choose to apply for PR or not anytime I want after 10 years but the law applies to people who have been in Japan for at least 10 years out of the last 15 regardless of whether you are PR or not =\
Funny, how would the Japanese government be able to track the inheritance your parents left you? They are in Singapore, right? They would have no way of knowing if you got the sum or not.
That’s a very valid question to which I have no answers. Gotta do more research on the topic.
Do you happen to know if your residency period counts when you are out of the country? If it is not counted, it is possible to avoid the inheritance tax given that you will only lose your permanent resident status if you are overseas for more than year each time.
I believe as long as we’re residents in the country for at least 10 of the last 15 years, it doesn’t matter if it’s consecutive or not. So you will only be exempted if, for example, you stay here for 9 years, leave for the next 6 years and then come back again, which doesn’t make much sense if you want to be here because 6 years is a long time. But you won’t qualify for PR if the 10 years are not consecutive. Which is why they explicitly listed
1) spouse visa
2) permanent residence
3) over 10 years residence of the last 15 years
as separate conditions.
And as long as you have resident status in Japan, they don’t care whether you’ve spent most of each year within or outside Japan. Otherwise, they would have to count every time you go on holiday, which again, doesn’t make sense. But once you have PR status, it no longer matters how long you are in the country because the above #2 applies.
And now I understand why some of the people I know who married Japanese people choose to continue living here on their work visa instead of changing to a spouse visa.
Even if I choose to give up the status and leave the country, the law supposedly still applies to me if I give or receive inheritance within 5 years of leaving the country. And then we arrive at Mr. Wong’s question: How would they know?
It does appear that there are few merits of permanent residency given all these information. Given that your passport is scanned every time you enter or leave the country, it should be easy to track the number of days you have been in the country over the past 15 years. It is unlikely that it will be done for their own convenience, however.
On the topic regarding foreign assets, I believe that there is no way for the government to determine what you own unless you have declared it for income tax before. Singapore’s inheritance tax has long been abolished so it would not be a bad idea to eventually transfer all your money back home. Purchasing your own property in Japan also sounds like a bad idea.
Yea, the huge inheritance tax is also one reason why many of the older generation with empty land typically take up huge loans to build apartments on it for rental in order to reduce the taxable amount. I guess the idea is to not have too much to your name before you die.
I’m wondering if these laws are a knee-jerk reaction to the Tokyo 2020 Olympics and they don’t want foreigners to suddenly decide they like this place and stay here permanently or if they are marrying the locals after some ‘Love Hotel’ funtime ends up in pregnancies. Maybe after 2020, they will revert back to less ridiculous tax laws? In any case, don’t give up! You’ve come this far!
I guess that’s hard to say since the government does want foreigners to come to Japan, which is why visa laws have been relaxed. But again, they probably want the ones who can work and not those who create more single mothers =\