Do I Need to Declare My Overseas Assets and Income in Japan?

Sure, here is the translation of the provided content into English, maintaining the original Markdown format:

Answer: Okay, no problem! Regarding the tax issues of overseas assets and income in Japan, this is indeed one of the most concerning topics for many friends who have just arrived in Japan or are preparing to move here. I'll try to explain it clearly in plain language, hoping it helps you.

---

Do I Need to Declare My Overseas Assets and Income in Japan?

Hey there! The question you're asking is absolutely one of the most frequently discussed and headache-inducing topics in our Chinese community in Japan. The short and direct answer is: It depends.

In Japan, whether you pay taxes and how much you pay boils down to one key thing: your "tax residency status". This status is related to your visa type (e.g., work visa, business management visa, permanent residency, etc.), but it's not exactly the same.

The Japanese tax authority categorizes people into three main types. Let's look at them one by one:

1. Non-resident

This refers to someone who has just arrived in Japan or has lived in Japan for less than 1 year within a calendar year.

• Income Declaration: You only need to declare and pay taxes on "income sourced in Japan". For example, salary earned from working for a Japanese company, rental income from property in Japan, etc.
• Overseas Assets and Income: Your overseas assets and income (e.g., in China) – such as deposits, investment returns, stock gains, rental income, etc. – have absolutely nothing to do with Japan and do not need to be declared in Japan at all.

Simple Understanding: You've just arrived; the Japanese tax office only cares about the money you earn within its territory.

2. Non-permanent resident

This is the status of the vast majority of foreigners in Japan. The criteria are:

1. You have a "domicile" in Japan (meaning your center of life is in Japan).
2. You have lived in Japan for a total of less than 5 years within the past 10 years.

As long as you meet these two conditions, you are a "non-permanent resident". This is the status that requires the most attention!

• Income Declaration:

  • Income sourced in Japan: Same as above, must be declared and taxed.
  • Income sourced overseas: Here's a crucial point – the "Remittance Rule".
    • If your overseas income is NOT remitted to Japan: For example, if you rent out a property back home and the rent goes directly into your bank account there, as long as that money is not sent to Japan, it does NOT need to be taxed in Japan.
    • If your overseas income IS remitted to Japan: Then, unfortunately, the portion remitted to Japan needs to be declared and taxed as your income in Japan. For instance, if you transfer ¥1,000,000 in rental income from China to your MUFG bank account in Japan, that ¥1,000,000 becomes taxable.

• Overseas Asset Declaration:

  • There is a very important system here called the "Report of Overseas Assets" (国外財産調書, Kokugai Zaisan Chōsho).
  • The rule is: If you are a "non-permanent resident" or a "permanent resident", and on December 31st of the year, the total value of all your overseas assets (deposits, stocks, funds, real estate, trusts, etc.) combined exceeds ¥50 million (calculated at the exchange rate on that day), then you must submit this report to the tax office by March 15th of the following year.
  • Important: Submitting this report does NOT mean you have to pay tax on these assets immediately! It's purely a "declaration" obligation, telling the tax office "I have these assets overseas". Its main purpose is to prevent future tax evasion.

Simple Understanding: As a "non-permanent resident", the Japanese tax office not only taxes the money you earn within its territory but also starts "watching" your overseas income – money sent into Japan becomes potentially taxable. Also, if your overseas assets are substantial (over ¥50 million), you need to report them to the tax office.

3. Permanent resident

The criteria for this status are:

1. You have a "domicile" in Japan.
2. You have lived in Japan for a total of more than 5 years within the past 10 years.
3. Or, you have already obtained the "Permanent Resident" status of residence in Japan.

Once you become a "permanent resident", congratulations, you are treated the same as Japanese citizens for tax purposes.

• Income Declaration:

  • You need to pay tax in Japan on your "worldwide income".
  • This means that regardless of whether your income comes from Japan or overseas, and regardless of whether you remit overseas money to Japan or not, all income must be combined and declared for taxation in Japan.

• Overseas Asset Declaration:

  • Same as for "non-permanent residents": If your overseas assets exceed ¥50 million at year-end, you need to submit the "Report of Overseas Assets".

Simple Understanding: As a "permanent resident", you are a Japanese tax resident in the global village. Wherever you earn money in the world, you owe a share to the Japanese government.

---

To Summarize, What Should I Do?

You can follow these steps to determine:

Step 1: Confirm Your Status

• Just arrived in Japan less than 1 year ago? -> Non-resident
• Been in Japan over 1 year, but total time less than 5 years? -> Non-permanent resident
• Been in Japan over 5 years, or already have permanent residency? -> Permanent resident

Step 2: Match Your Status and Check Your Income & Assets

Step 3: If Needed, Prepare Your "Kakutei Shinkoku" (Final Tax Return)

If you determine that you need to declare, then you must file your "Kakutei Shinkoku" (Annual Income Tax Return) between February 16th and March 15th each year.

Final Important Reminders

1. I am not a professional tax accountant (税理士, Zeirishi). The above information is based on my experience and understanding of publicly available information, intended as a general guide. Tax laws are extremely complex and subject to change.
2. Strong Recommendation: If your situation is complex (e.g., involves company shares, large assets, or uncertainty about calculating income/asset values), it's best to spend some money consulting a professional tax accountant (税理士, Zeirishi). They can provide the most accurate and legally sound advice, helping you avoid penalties and unnecessary trouble if audited by the tax office later.
3. Keep Good Records: Regardless, be sure to keep all bank transfer records, income proofs, asset proofs, and other relevant documents safely, just in case.

I hope this information helps clarify things for you! When living in Japan, tax compliance is really important; understanding it allows you to live with peace of mind.