Read the plan before assigning a tax date. An RSU, restricted share, stock option and ESPP purchase are different arrangements. Establish what benefit became receivable, when it became receivable and its value; then determine the Japanese taxing scope from your residence and work history. A later sale is a separate disposal calculation.

Japan's filing exemption for employees is narrower than it looks. Article 121(1) of the Income Tax Act opens with a ceiling: it is available only to a resident whose salary and similar payments receivable for the year are ¥20,000,000 or less. Note what that figure is: gross salary receipts, before the employment income deduction, and not taxable employment income after it. Where gross salary receipts exceed that ceiling, this salary-earner exemption is unavailable. Item (ii) then adds a second condition: all of that employment income must have been subject to Japanese withholding under Article 183 or 190, or have been required to be. Only once both hold does a ¥200,000 threshold come into play at all.

Check who paid the remuneration, where it was paid and whether Japanese withholding was legally required. If part of your salary is outside that withholding system, the salary-earner exemption may be unavailable even for a small amount. A missing deduction on a statement does not, on its own, establish the payer’s legal obligation.

Check withholding and year-end adjustment as separate questions:

• What was withheld, and where? Reconcile any tax deducted or shares retained with the payroll and release records. Identify the country and the payment concerned. Japanese withholding obligations depend on the payment facts; a statement labelled “tax” does not settle the Japanese treatment.
• What did year-end adjustment include? Compare the award with the Japanese withholding slip and payroll explanation. If the award was outside that calculation, do not assume that the adjustment settled it. The filing obligation is then checked against the year’s full facts.

Options and ESPP need their own checks

Do not transfer an RSU tax date to an option or an employee share purchase.

• Non-tax-qualified options. For an option granted because of employment or a similar relationship, the exercise benefit is generally employment income, measured using the share value at exercise less the exercise price. Japanese tax-qualified options have different rules. NTA No.1543 and No.1540.
• Employee share purchases. Where a discounted purchase provides remuneration, identify the benefit under the actual plan terms, including the price paid and the acquisition date. Do not treat the full share value as the discount, or assume that a foreign tax label determines the Japanese result.
• Check Japanese qualification separately. The deferral under Article 29-2 has issuer, contract and other statutory requirements. A plan’s preferential treatment abroad does not establish eligibility in Japan.

Determine the acquisition cost under Japanese rules

The acquisition-cost rule depends on how the shares were acquired. NTA No.1464 distinguishes restricted shares, shares acquired through rights, and other acquisitions. Establish the applicable rule from the plan documents and retain the relevant value and date. Do not substitute the amount taxed in Japanese payroll for this analysis. On a later sale, the gain is proceeds less that acquisition cost and selling expenses. NTA No.1464.

Foreign exchange moves the result even when the share price does not

Calculate the relevant acquisition amount and the sale proceeds in yen at their respective dates. Exchange-rate movement can change the yen gain even if the foreign-currency share price is unchanged. Keep the price, rate, date and source used for each calculation.

The default is the TTM, the mid rate between the bank's telegraphic transfer buying (TTB) and selling (TTS) rates (Income Tax Basic Circular 57-3-2). Where the foreign currency received as sale proceeds is sold for yen immediately on each receipt, the National Tax Agency accepts the TTB for the proceeds (NTA published Q&A; the Q&A concerns a sale of overseas real estate, and in our view the same reasoning applies to share proceeds). Outside that case there is no general TTB/TTS election for capital gains: the continuous-application election in the proviso to Circular 57-3-2 is confined to real-estate, business, forestry and miscellaneous income.

Multiple vests mean an averaged cost

Where the same shares have been acquired more than once, calculate the acquisition cost per share under the applicable averaging rule. Keep the quantities, applicable acquisition values and exchange rates across the relevant acquisitions, rather than choosing the most favourable vesting lot. NTA No.1466.

Executives with large grants and restricted trading windows are the group most likely to be caught by this. The return and the payment for a vesting year are normally due by March 15 of the following year (Income Tax Act Arts. 120(1), 128). If that falls on a Saturday, Sunday or public holiday, the deadline moves to the next working day (General Act on National Taxes Art. 10(2)). If you leave Japan without appointing a tax agent (nozei kanrinin), the return and the payment are due by the time you leave. This applies to the previous year if you leave between January 1 and the March deadline (Arts. 126, 130), and to the current year if you leave part-way through it (Arts. 127, 130). Planning the sale timing against that deadline is part of the work, not an afterthought.

Neither is automatic. Japan's foreign tax credit applies only if your return (or an amended return or request for correction) includes the computation statement and proof that the foreign tax was imposed (Income Tax Act Art. 95(10)); treaty relief depends on the wording of the particular treaty article.

Country-specific plans add their own layer. A French attribution gratuite d'actions (AGA), for instance, is a statutory regime under the French Commercial Code with its own vesting and holding periods. The Japanese analysis has to be run against the actual plan documents, not the label on the award letter.

If you hold shares and may leave Japan, review the separate exit-tax rules. For someone who is a Japanese income-tax resident, non-permanent-resident status additionally requires no Japanese nationality and no more than five years of domicile or residence in Japan in the preceding ten. For an award spanning work in more than one country, determine the income source and any treaty effect before applying the payment and remittance rules. See the non-permanent-resident guide.

In Japan, preparing tax returns for other people as a business is reserved to licensed tax accountants (zeirishi) and tax accountant corporations, with narrow statutory exceptions such as attorneys who have notified the Regional Taxation Bureau (Certified Public Tax Accountant Act Arts. 2, 51, 52). You can always prepare and file your own return. At our office, the interview, the calculation, the filing and the correspondence are led in English by our representative tax accountant (zeirishi), Junya Yamaguchi, a Japanese certified public accountant who previously handled international engagements at EY, Deloitte and PwC China, in Japan and in China.

We accept individual engagements directly from internationally mobile professionals. Where an employer is paying or coordinating the work, check its approval, procurement and information-sharing requirements before the engagement begins.

We prepare equity-compensation returns from the statements that plan administrators and brokers issue. Send the documents as they are; we do the re-typing and the currency conversion.

These are the document types we work from. Listing a platform does not indicate any relationship with it, and the names of the reports change from time to time; send what your platform gives you.