Jun 22,2023 ｜ Individual Income Tax
When you start living and working in Japan, regardless of whether your income comes from a Japanese source or an overseas source, you need to be aware of how it will affect your tax obligations in Japan. Or also you need to know your tax obligations when you leave Japan.
Here is a simple chart of a taxpayer and the scope of taxable income in Japan.
People who are not non- permanent residents in Japan
People who have foreign nationality and have lived in Japan less than 5 years out of the past 10 years
|Domestic source income
|Foreign source income
|Taxable only for the portion remitted to Japan
*Note that resident for tax purposes and immigration purposes may be different.
In the above boxes, you need to understand:
1.The definition of Resident/ Non-resident
2. The definition of domestic source/ foreign source income
Details of domestic income
|Income attributable to a permanent establishment in Japan
|Income from the utilization or possession of assets located in Japan.
|Income from the transfer of assets located in Japan
|Certain distributions derived from the profits of a business conducted through a permanent establishment based on a partnership contract and received in accordance with the provisions therein.
|Real estate income
|Income from sale or disposal of land, rights established on land, buildings, and facilities attached to buildings, or structures in Japan.
|Remuneration for personal/professional services
|Income received as remuneration by business operators providing personal services in Japan, including remuneration for services provided by motion picture artistes, musicians and any other entertainers, professional athletes, lawyers, accountants, and other professionals, or persons possessing scientific, technical, or managerial expertise or skills.
|Income from use or lease of real estate
|Rent or other compensation for the use or lease of real estate in Japan and rights therein or established thereon.
|Interest on bond, etc.
|Interest on national and local government bonds and debentures issued by domestic corporations; interest on debentures issued by foreign corporations that is attributable to business conducted through a permanent establishment; interest on savings deposited to entities located in Japan, etc.
|Dividends on surplus, dividends of profits, distribution of surpluses received, etc. from domestic corporations.
|Interest on business loans
|Interest on loans that are provided for business operators for their business conducted in Japan.
|Royalties from intellectual property rights, etc.
|Royalties or proceeds from the sale of industrial property rights and copyrights, and rental charges on equipment that are received from business operators for their business conducted in Japan.
|Salaries, bonuses, or remuneration for the provision of personal services resulting from employment and other personal services provided in Japan; and public pensions and severance allowances derived from employment, etc. offered during the resident taxpayer period.
|Monetary awards for the advertisement of a business conducted in Japan.
|Life-insurance related pension, etc.
|Pensions, etc. based on life insurance contracts concluded through entities located in Japan
|Installment savings accounts, etc.
|Money for payment for installment savings accounts, etc. received by entities located in Japan
|Silent partnership distributions
|Distributions of profits based on silent partnership arrangements, etc. for contributing capital to a business operating in Japan.
|Miscellaneous domestic income sources
|Other domestic source income including that concerning insurance benefits and compensations for damages received in conjunction with business conducted in Japan or assets located in Japan.