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Wednesday, July 29, 2009

Links to Important US-Japanese Tax Treaties

It is not always easy to find the treaties between America and Japan, so I have decided to post them here in case you would like to read them for yourself.

Here is the
US-Japan Income TaxTreaty (2003) courtesy of the IRS.

This is an official version of the US-Japan Estate & Gift Tax Treaty (1954) thanks to the Ministry of Foreign Affairs of Japanese.


Anonymous said...

Great blog, lots of good info. I have a question that I hope you can answer or point me to where I can read more about it.

I have read conflicting info regarding inheritance tax on non-permanent resident of Japan (less than 5 years). I know that permanent residents (>5yrs) is subject to Japanese inheritance tax on real estate outside of Japan which he/she inherits.

For example, if a person resides in Japan with non-permanent residency via spouse visa, will he/she be viable to pay japanese inheritance taxes on real estate inherited outside of Japan?

Thanks in advance.

Kevin A. Pollock, J.D., LL.M. said...

Dear Anonymous - sorry for the late post, but your email got lost somehow.

In general, whether a person in your situation is subject to the Japanese inheritance tax depends upon whether you are "Domiciled" in Japan. "An individual who acquires property by inheritance, bequest, or gift and who
has domicile in Japan at the time of acquisition" is subject to the Japanese inheritance tax.

For a more complete definition of who is subject to the tax, go to this web page established by the Japanese Ministry of Finance: http://www.mof.go.jp/english/tax/taxes2006e_d.pdf

I am not positive if the income tax definition of "Domicile" also applies to the inheritance tax, but if it does, then "any individual of non Japanese nationality having domicile or residence in Japan for an aggregate period
of five years or less within the last ten years is classified as a non-permanent resident."

As long as the definition of domicile is the same for income tax purposes as it is for inheritance tax purposes, Japan does not appear to tax the inheritance received by non-permanent residents.

You should confirm this with Japanese counsel though. Also don't forget that treaties may override this.