Can foreigners apply for a NISA account in Japan?

Absolutely! Foreigners can definitely apply for a NISA account in Japan, provided they meet the conditions.

Let me break down the key points for easier understanding.

What are the Core Conditions?

Simply put, the most crucial condition is: You must be a legal resident of Japan.

• Possession of a Residence Card: As long as you have a valid status of residence (e.g., work visa, spouse visa, permanent residency, etc.) and a fixed address in Japan, you meet the most basic requirement.
• Aged 18 or older: This is the legal age of majority in Japan.
• Possession of a My Number: This is extremely important; it's essentially required for opening any financial account. If you've just arrived in Japan, remember to register your address at the ward/city office (区役所/市役所) to obtain this number.

Therefore, foreigners on tourist visas or short-term stays are definitely not eligible, as it requires you to be a 'resident'.

Simple Process for Applying for a NISA Account

You can think of opening a NISA account as similar to opening a stock account in your home country, but with tax-exempt investment limits.

1. Choose a Financial Institution:

   • You can open a NISA account at a securities firm (e.g., Rakuten Securities, SBI Securities) or a bank (e.g., Mitsubishi UFJ, Sumitomo Mitsui).
   • My recommendation is: Prioritize online securities firms like Rakuten Securities or SBI Securities. Why? Because they generally have lower fees, convenient app and website operations, and a much wider variety of investment products available.

2. Prepare Your Documents:

   • Residence Card
   • My Number Card or My Number Notification Card
   • A Japanese bank account (for transferring funds)
   • Personal seal (hanko) (may be required in some places, but many now support online signatures)

3. Submit Your Application:

   • You can complete most of the application process online. Simply follow the instructions on the website or app, fill in your personal information, and upload photos of your identification documents.
   • The financial institution will review your application, including confirming with the tax office that you haven't opened a NISA account elsewhere (as each person can only have one NISA account).
   • The entire process usually takes about 1 to 3 weeks.

What Exactly is NISA?

You can think of it as a 'tax-exempt investment savings pot'.

Normally, if you make a profit from investing in stocks or funds in Japan, for example, earning 100,000 JPY, the government would take approximately 20% in tax (i.e., 20,000 JPY).

However, if you invest your money within the NISA 'savings pot', up to a certain limit, the profits you earn are completely tax-exempt! The entire 100,000 JPY you earn is yours.

Starting in 2024, the new NISA system is divided into two investment frameworks, which you can use simultaneously:

• Tsumitate Investment Framework (つみたて投資枠): You can invest up to 1.2 million JPY annually, primarily suitable for purchasing lower-risk index funds and engaging in long-term regular investments.
• Growth Investment Framework (成長投資枠): You can invest up to 2.4 million JPY annually, allowing for investments in individual stocks, actively managed funds, and offering more freedom of choice.

Combined, you can invest up to 3.6 million JPY tax-free annually, with a lifetime tax-exempt limit of 18 million JPY. For most individuals, this limit is quite generous.

One Special Point Foreigners Need to Pay Attention To

What if you plan to leave Japan in the future and are no longer a resident?

This is the most crucial question. In principle, when you decide to permanently return to your home country or move to another country, you are required to close your NISA account before leaving Japan.

• When closing the account, you can choose to sell all your investment products and withdraw the cash.
• Alternatively, you can transfer the investment products from your NISA account to an ordinary taxable account (特定口座 or 一般口座 - specific or general account) to continue holding them, but any future profits from selling them will then be subject to tax.

Therefore, NISA is most suitable for foreigners who plan to reside in Japan long-term (e.g., 5 years or more). If you only plan to stay for one or two years, while you can still open an account, you might face the hassle of closing it soon after starting to invest.

In summary, as long as you are a legal resident of Japan, opening a NISA account is not only feasible but also a financial management method highly encouraged by the Japanese government. Don't miss out on this benefit!