NAViS Topics

Gift and inheritance tax reforms might be a disincentive to spouse visa

As part of the Japanese government’s efforts to make it easier for foreign nationals to work in Japan, the 2017 reform of the Japanese gift and inheritance tax system gave tax concessions to short-term residents. Unlike some other countries, recipients (heir) are tax payers, not the deceased. For people domiciled in Japan – regardless of nationality – IHT applies to worldwide assets. Before 2017 tax reform, even for expatriates working in Japan for short-time period, IHT would be imposed on overseas assets inherited from their parents, which made them hesitate to be assigned in Japan.

2017 tax reform   

Short-term residents are relieved of tax obligations for overseas assets they receive from parents abroad (domestic assets inherited are still taxable). For IHT purpose, short-term residents are defined as:

  • Those who have a Table 1 permits; and

  • Those who have been in Japan for no more than 10 years within the past 15 years

Table 1 permits include all typical visas for expatriates such as Business Manager/Engineer/Specialist in Humanities/International Services/Intra-company Transferee. Permanent resident and spouse visa are categorized at Table 2.

go to the List of statuses of residence (Immigration Bureau of Japan)

Another issue   

While it seems working well for people who are offered new assignments to Japan, this tax treatment change is a disincentive for foreigners who considered applying for spouse visa or permanent residence. As long as they can get IHT concession, they want to keep the current visa status.

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