Inheritance tax in Japan
It’s important to understand what kind of inheritance tax liability you will be facing upon receiving inheritance in Japan when a loved one passes. Perhaps a family member who lived abroad is passing on an inheritance to you, or you are an expat living in Japan and have come into an inheritance from family abroad. As an expat, it is critical that you understand what laws apply to you concerning the payment of inheritance tax on assets received. What laws apply to foreigners and non-residents of Japan as opposed to Japanese citizens? Read on to learn the answers to all these questions along with more helpful information to guide you through the inheritance process in Japan.
What is inheritance tax?
Inheritance tax (sōzokuzei) in Japan is a tax paid by someone who inherits money or property from someone who has died. In Japan, it is paid as a national tax (between 10 and 55% after an exemption of ¥30 million + ¥6 million per heir is deducted from the estate).
Who has to pay inheritance tax?
If the net estate amount exceeds the amount of basic exemption, inheritance tax will be imposed, so a declaration and payment of inheritance tax need to be made. Where applicable, each individual beneficiary must pay the inheritance tax after the assets have been divided and distributed to the respective beneficiaries. It is the heirs who are taxed, not the estate.
Even if you received an inheritance from abroad, you may still be on the hook to pay inheritance tax. This is determined by your address (jūshō) — if your or the decedent’s principal place of residence is in Japan then you may be liable for the tax; however, it depends on how long you or the decedent lived at that address and the visa status.
In 2013, changes to the Japanese tax law went into effect, changing who is responsible to pay the inheritance tax. Upon the 2013 changes, if either the beneficiary or the decedent has an address in Japan at the time of death, the beneficiary becomes classified as an “unlimited taxpayer,” meaning inherited assets (and gifts) worldwide are taxed.
In 2017 the law was revised to specify that only residents who have lived in Japan for the last 10 or more years were considered to be unlimited taxpayers. Prior to this change, even short-term residents were required to pay the tax on worldwide inherited assets. However, certain visa holders who have an address in Japan are automatically considered unlimited taxpayers regardless of time spent in Japan, including those holding the permanent resident, long-term resident or spouse/child of a national/permanent resident visa.
The bottom line: Those who have held an address and lived in Japan for 10 or more years, or those who hold certain visa types, are required to pay the inheritance tax on inherited assets worldwide.
What is the inheritance tax rate in Japan?
Japan has considerably high inheritance tax rates with the current highest rate standing at 55%. The rate is determined based on how much money is received by each statutory heir. To find the aggregated tax base, the amount of ¥30 million + ¥6 million is deducted from total taxable assets — this amount is then divided among all statutory heirs.
See Table 1 below for a list of the inheritance tax rates based on the amount of inheritance received.
|Amount received||Inheritance tax rate|
|Up to ¥10 million||10%|
|¥10 million – ¥30 million||15%|
|¥30 million – ¥50 million||20%|
|¥50 million – ¥100 million||30%|
|¥100 million – ¥200 million||40%|
|¥200 million – ¥300 million||45%|
|¥300 million – ¥600 million||50%|
|Over ¥600 million||55%|
Do I have to pay inheritance tax on inheritance located outside of Japan?
Yes, all heirs are fully liable to pay inheritance tax on property located in Japan and any property you acquire outside of Japan. If the decedent lived in Japan, inheritance tax is also imposed on foreign property.
Do I have to pay inheritance tax on inheritance within Japan, even if I have foreign nationality?
Yes, even when you’re not a Japanese national and don’t live in Japan but the deceased is living in Japan, you’re fully liable for tax purposes. In the case where the decedent lived in Japan, inheritance tax is imposed on domestic property even if the person has a foreign nationality (Article 2.1, Article 1-3.1 (i) and (ii) of the Inheritance Tax Act).
What is the deadline for inheritance tax?
Inheritance tax debts must be filed and paid in one lump sum within 10 months of the date of death. The penalties for late payment or non-payment are severe. The payment can be made at a tax office, post office, or through a lawyer or local tax representative.
This page is intended to be used for informational purposes only and should not be a substitute for obtaining professional legal advice.