Resident/Tax Resident?

steford
Newbie
Posts: 11
Joined: Sat Dec 05, 2020 1:15 pm

Re: Resident/Tax Resident?

Post by steford »

Amazing. Thanks. My son is a dependent (student) in that sense although as he dropped out of uni once we aren't giving him that much this year. No other children or dependents.

All pensions, health etc signed up to. I'd like to get 10 years of pension contributions paid before I turn 65 (currently 51). My wife has 9 years of previous payments before she left for the UK so would like to get to 20 years and half a pension. We have our UK pensions of course and I have a fairly good set of private and occupational pensions.

I may well take you up on the offer of a PM. For now I can't thank you enough.
emikami
Regular
Posts: 23
Joined: Tue Aug 02, 2022 12:47 am

Re: Resident/Tax Resident?

Post by emikami »

steford wrote: Fri Oct 29, 2021 3:23 am HI all,
I'm sure this has been asked before although I've searched and can't find anything specific. I've also checked all the guides I can find which I either don't fully understand or are US specific. It came up briefly in an old thread of mine on a different topic here viewtopic.php?t=1452
This one is very tricky. Japan has bilateral tax treaties with many countries. In article 2, it usually lists which Japanese tax are covered in the tax treaty. In the U.S. Japan tax treaty, only income tax and corporate tax are listed. In the U.K. Japan tax treaty, it lists many more types of Japanese tax such as the local inhabitant tax (Jyumin zei).

When a tax treaty with Japan includes Local inhabitant tax, then the treaty can override the local Japanese law for determining tax residency in Japan. So if the relevant treaty is with the U.K., you need to look at article 4 and figure out which country you're a resident.

If the treaty didn't include Japanese Local Inhabitant tax such as the case in U.S. Japan Tax treaty, then local Japanese law determines the residency in Japan.
emikami
Regular
Posts: 23
Joined: Tue Aug 02, 2022 12:47 am

Re: Resident/Tax Resident?

Post by emikami »

I want to make a few correction/clarification to responses in this thread. The time you are away from Japan (called Zaigai kikan - 在外期間) after you already became a non-permanent resident _does count_ against the 5 year clock to becoming a permanent resident for tax purpose. Basically, you have a place to return to in Japan, it is as if you never left Japan. So if you had a home (rental or otherwise) in both Japan and the UK and went back and forth for extended period of time, the fact you still have a place to return to Japan based on many different reasons such as the Validity of the Visa (re-entry permit), validity of Japanese family registry (Jyumin hyo), left any personal belongings in Japan, leaving banks accounts open in Japan, having a car in Japan, enrolled in Japanese Pension and Japanese National Health Insurance, etc., all contribute to their views as still having continuous Japanese residency even if you left the country for some time. So to stop the clock from continuing, you must end Japanese residency completely which isn't easy to do.

About the remittance tax (soukin kazei 送金課税) - It applies not only to literally remitting money from a foreign country into Japan, but also any means to transfer any monetary value into Japan which could be use in place of an actual remittance. Example would be if you has a Visa Credit Card issued by a UK bank and paid the bills from UK. If you use your UK issued Visa Card to purchase goods and services while in Japan, it is considered a remittance into Japan. In fact, if you bought something from UK online using your UK bank or UK credit card and had the merchandise sent into Japan, that's also counted as a remittance. If you send money from the UK to your friend in Japan whom isn't living with you, that's still counted as remittance into Japan. If you had an UK ATM card and you withdrew money at an ATM in Japan, that's counted as remittance into Japan. If you brought cash or bullion gold from the UK into Japan from a short trip into UK, that's also counted as remittance (probably why it is in the customs declaration form).

If say you had money in Hong Kong Bank but don't have any meaningful income there and you moved money into Japan from the Hong Kong Bank account, it still counts as remittance against income you may have in the U.K. even though there's no clear connection to the UK earnings relating to money in Hong Kong. So it is far easier to trigger the remittance tax than just the actual bank transfer.

Most non-permanent residents are probably out of compliance for the remittance tax and it's probably not audited unless larger amounts of money is involved. So for example, if you bought a relatively expensive brand new car in Japan that the income in Japan could not possibly cover and without reasonable explanation of how it was paid, they may audit you questioning if "remittance" took place and if income was not declared properly in Japan. In an audit situation, most likely, they'll check not only your bank accounts, but anyone close to you such as your spouse and other family members. They try to be efficient at their tax audit by auditing multiple years at a time. So just because they didn't audit you on your first year you didn't declare your remittance tax does not necessarily mean they won't audit you few years later for years 1-3.
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