The short version

What Japan's exit tax actually does

Japan's exit tax was introduced in the 2015 tax reform (Article 60-2 of the Income Tax Act) and has applied to departures from Japan since July 1, 2015. It is not a tax on the act of leaving. It is a rule that treats you as if you had sold your securities on the day you leave, at their market value on that day, and taxes the unrealized gain as if the sale were real.

Two conditions both have to be met for it to apply to you:

• Asset value. Listed and unlisted securities, undertaking interests in silent partnerships (tokumei kumiai), unsettled margin trades, and unsettled derivatives, valued together at ¥100 million or more at the time you leave.
• Residency history. You have had an address or residence in Japan for more than 5 years within the 10 years before you leave.

If both apply, the gain is included in your income for the year you depart — as capital gains, miscellaneous income, or business income depending on the asset — and taxed even though nothing has actually been sold. (Source: National Tax Agency, No.1478 Special provisions on capital gains where you leave Japan.)

Most standard work visas do not count toward the 5-year test

This is the point almost every English-language explainer skips, and it is the one that actually decides whether the regime reaches you.

The National Tax Agency's own guidance on this rule states it plainly: even if you have had an address or residence in Japan, periods spent under a Table 1 status of residence under the Immigration Control and Refugee Recognition Act — for example Professor, Artist, Business Manager, or comparable work categories — are not counted toward the 5-in-10-year residency test.

The practical effect: a foreign executive who has lived in Japan for eight years entirely on a Business Manager or Highly Skilled Professional visa has accumulated zero years toward this test — regardless of how large their holdings are. The clock generally starts only once the person moves to a Table 2 status, most commonly by obtaining permanent residency or a spouse-of-Japanese-national visa.

(Source: National Tax Agency, Outline of the exit tax system for departing individuals, pamphlet — Japanese.)

The same years typically overlap with a separate tax-law question — whether you are a non-permanent resident, and how your foreign-source income is taxed while that status lasts. See our guide to non-permanent resident taxation and the remittance rule.

15.315%, not 20.315%

Ordinary capital gains on listed Japanese shares are taxed at 20.315% — 15.315% national tax plus 5% local inhabitant tax. A number of English-language pages covering exit tax simply carry that rate over. It is not correct for this regime.

The exit tax itself is a national tax only: 15% income tax plus a 2.1% reconstruction surtax calculated on that income tax amount, for a combined 15.315%, applied to the deemed gain in your departure-year return.

Local inhabitant tax is a separate system, assessed based on where you are registered as of January 1 of the following year. If you have properly filed your move-out notification before that date, and the departure is a genuine, ongoing relocation rather than a trip, no local inhabitant tax is assessed on that year's income — including the deemed exit-tax gain. This is not a specific exemption written into the exit-tax law itself; it follows from the general rule for how local inhabitant tax is assessed, and municipalities do look at the substance of the move, not just the paperwork, if it is disputed.

Vested shares count. Unexercised rights generally do not — confirm the facts

The exit tax reaches securities you already own — shares sitting in a custody account, with any transfer restriction already lifted. RSUs still subject to a vesting condition, and stock options you have not exercised, are contingent rights rather than owned securities, and general professional practice treats them as outside the exit-tax base until they vest or are exercised.

One sequencing point catches people who assume a large unvested RSU balance protects them entirely: the exit tax and Japan's ordinary employment-income tax on vesting are separate questions. Any RSU that vests before your departure date is still taxed as Japanese employment income at vesting, on the same basis as if you were not leaving at all — the exit tax only adds a second layer on top of whatever securities you already hold outright. We cover the vesting and sale mechanics for RSUs, ESPP and stock options separately in our guide to RSU and equity compensation tax in Japan.

You can defer the tax for 5 years — but only if you file before you leave

Paying tax on a gain you have not realized, on assets you may not want to sell yet, is the core problem this regime creates. Japan allows you to defer payment, but the election has to be made before departure, not after.

• File a tax agent notification. Before you leave, submit a notification of tax agent (nozei-kanrinin no todokede) to your tax office, naming someone in Japan to handle your filing obligations after you go.
• Report and post collateral. By the filing deadline for your departure-year return, submit the required attachments and provide collateral equal to the deferred tax and accrued interest.
• The deferral runs 5 years, extendable to 10. It lasts until 5 years after departure; filing an extension notice before that 5-year mark pushes it to 10 years from departure. Deferral is not free: interest tax (rishizei) accrues over the deferral period — at the lower of 7.3% a year or the statutory special base rate, so far lower in practice — and is payable together with the deferred tax when the deferral ends (NTA pamphlet, reference 3).
• File every year during deferral. Each year, submit a continued-application report (keizoku tekiyo todokedesho) by March 15 following each December 31, listing what you still hold. Miss the deadline and the deferral ends 4 months later, with the deferred tax and interest becoming due.

What sets your filing deadline and your valuation date is the tax agent notification — not the deferral election. They are two separate decisions.

File the notification before you leave, and your departure-year return is due on the ordinary deadline — March 15 of the following year — with the securities valued at their departure-date value. That holds whether or not you elect deferral; skip deferral and you simply pay at that same March deadline instead of posting collateral. Leave without filing the notification and the rules change: you must file a special return (jun-kakutei shinkoku) covering January 1 through your departure date, valuing the securities as of the day three months before your planned departure date, and pay — by the day you leave.

(Source: National Tax Agency, Exit tax FAQ Q7, and Notice to persons leaving Japan — Japanese.)

Five ways to unwind the tax — each with a 4-month clock

The exit tax is not necessarily final. Japan built in several routes to cancel or reduce it after the fact, each triggered by filing a correction claim within a fixed window.

Return-based cancellation is not limited to people who elected deferral — if you paid the tax immediately at departure and still return to Japan within 5 years holding the same assets, you can file the same correction claim within 4 months of your return.

Relief exists — but only if you elected deferral, and only if you claim it in time

Here is the scenario the marketing pages for this topic consistently skip. You leave Japan, your new country of residence does not step up your cost basis to the Japan departure-date value, and when you eventually sell, that country taxes the full gain from your original cost — on top of what Japan already taxed at departure. The same economic gain is taxed twice.

Japan's answer is a foreign tax credit against the exit tax already assessed — but the National Tax Agency lists this specific relief among the measures that are conditioned on having elected the deferral at departure. If you paid the exit tax immediately without electing deferral, this particular route is not available under the mechanism described in the official guidance.

The practical takeaway: for anyone moving to a country likely to tax the same shares again on eventual sale — common wherever the destination does not recognize a Japan-triggered step-up in cost basis — electing deferral is not only a cash-flow decision. It is what preserves the documented route to relief if double taxation later materializes. Country-specific plans layer their own mechanics on top of this: 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, and has to be analyzed against the actual plan documents on the French side — Japan's exit-tax relief addresses the Japan-side friction, not the foreign country's own rules.

(Source: National Tax Agency, Outline of the exit tax system for departing individuals, measures conditioned on the deferral election — Japanese.)

We map the exposure before you book the flight

Tax return preparation in Japan is restricted to licensed tax accountants (zeirishi). At ESPERANZA, YAMAGUCHI Junya — a certified tax accountant (zeirishi), registration no. 151831 — handles the work directly, in English, from the initial scoping through the filing itself.

Our work centres on industries where expatriate executives are common — multinational manufacturers, international hotel groups, resources and infrastructure, and global BPO — supporting professionals at major foreign-owned companies through direct individual engagements, with no vendor registration required on the employer's side.

• Confirm whether you are even in scope. Your visa-status history against the 5-in-10-year test, and your actual holdings against the ¥100 million line — including NISA-account and overseas-held securities, which count toward the threshold even where the gain itself would otherwise be tax-free.
• Model the deferral decision. Cash cost now versus collateral and annual filings later, run against your actual departure and return plans.
• Handle the departure-year filing. The return or special departure return, the deferral election, the tax agent notification, and the collateral arrangements.
• Track the deferral period. The annual continued-application filings, and the correction claim if you return, sell for less, or run into double taxation abroad.

Pricing

Exit tax work does not fit a standard annual-return tier — it is scoped and priced individually, across three phases:

What we need from you

• Passport with your visa history, or an entry/exit disclosure from the Immigration Services Agency if stamps are incomplete.
• A full asset schedule. Listed and unlisted securities, margin or derivative positions, NISA-account holdings, and anything held overseas, with current values.
• Your planned departure date, even if only approximate at the diagnosis stage.
• A candidate tax agent — someone remaining in Japan who can be named if you elect deferral.

If part of your exposure comes from unsold RSUs, stock options or ESPP shares, our separate guide on how equity compensation is taxed in Japan covers the vesting and sale mechanics in detail.

Common questions

I have lived in Japan for 8 years on a work visa. Does the 5-year test catch me?

Generally no. Years spent under a Table 1 status such as Business Manager, Engineer/Specialist in Humanities/International Services, or Highly Skilled Professional do not count toward the 5-year test. The clock generally starts once you move to a Table 2 status such as permanent residency or a spouse-of-Japanese-national visa.

My assets are worth less than ¥100 million. Am I safe?

You are outside this specific regime, but the ¥100 million line counts securities whose gains would themselves be tax-free — NISA and junior-NISA holdings, and discount bonds whose redemption gain was taxed at source on issue — as well as securities held overseas and securities standing at a loss. Confirm the total before assuming you are under the line.

I have not sold anything. Why would I owe tax?

The exit tax treats you as if you sold everything at its departure-date value, whether or not you actually sell. That is exactly why the deferral election matters if you do not want to pay tax on an unrealized gain with cash you do not yet have.

What if the share price falls after I leave?

If you elected deferral and later actually sell, or the deferral period ends, at a lower value than the departure-date valuation, you can file a correction claim within 4 months to have the tax recalculated on the lower figure.

Does this apply to RSUs I have not vested yet?

Generally not the unvested portion itself, based on how the asset categories are defined — but confirm this against your actual plan documents. Separately, any RSU that vests before your departure date is still taxed as ordinary Japan employment income regardless of the exit tax.

Is 20.315% the right rate?

No — that is the ordinary rate for domestic listed-share sales, which includes a 5% local inhabitant tax component. The exit tax itself is calculated at 15.315% (15% national income tax plus a 2.1% reconstruction surtax), and local inhabitant tax generally does not attach if you have properly deregistered before January 1 of the following year.

If your holdings also include an eventual gift or inheritance from family abroad, see our guide to Japan inheritance and gift tax for foreign professionals — the same visa-status logic decides both.