The short version

Non-permanent resident is not non-resident

These two terms get confused constantly, and the confusion is expensive in both directions.

A non-permanent resident is a category of resident under Article 2(1)(iv) of the Income Tax Act: someone without Japanese nationality who has had an aggregate of 5 years or less of address or residence in Japan within the preceding 10 years. As a resident, ordinary progressive tax rates and the ordinary return process apply.

A non-resident is someone who is not a resident under Article 2. A resident has a domicile in Japan, or has had a residence here continuously for at least one year. The two tests are alternatives: spending less than a year in Japan does not prevent residence from beginning earlier if a Japanese domicile has been established. Assess the person’s living circumstances, rather than the length of an apartment lease alone.

Japan reaches a non-resident only on Japan-source income, and the mechanism depends on whether there is a permanent establishment here (Art. 164(1)). Where collection is by withholding, salary and most other categories are withheld at 20% before the 2.1% surtax (the familiar 20.42%). The Act sets 10% on the consideration for transferring land, rights over land, or buildings and their attached facilities or structures in Japan, excluding certain transfers prescribed by Cabinet Order (Art. 213(1)(ii) read with Art. 161(1)(v)). It sets 15% on certain interest and similar income (Art. 213(1)(iii); Art. 161(1)(viii) and (xv)). Treat 20.42% as the common rate, not a universal one (Articles 212 and 213). There is no year-end adjustment, and the personal deductions a resident receives do not apply in the same way.

Your 5 years are counted across the last 10 (not from your latest arrival)

The test is not “years since I arrived this time.” It is an aggregate of every period you have had a domicile or a residence in Japan within the trailing 10 years. Two details in the circular decide most borderline cases, and neither is obvious.

What “the preceding 10 years” means. It runs from the same date ten years before the day being tested, up to the day before the day being tested (Circular 2-4-2). It is not a calendar-year window.

How each period is measured. Calculation follows the calendar, and a period shorter than a month is counted in days. Where there are several periods, the years, the months and the days are added up separately, and then 30 days are converted to one month and 12 months to one year (Circular 2-4-3). Each period runs from the day after the day you came to have a domicile or residence here (the circular calls that the day of entry) to the day you ceased to have one.

• Every past stay has to be reviewed, not just the current one. A prior study-abroad period, an earlier assignment, even time on a working holiday visa years ago: each of them can contribute to the same 10-year lookback. What is added is the period you had a domicile or a residence in Japan during that stay, not the number of days you were physically in the country. Relying on memory is not enough; passport stamps, or a disclosure request to the Immigration Services Agency for your entry/exit record, are where the reconstruction starts.
• An entry/exit record is the starting point, not the answer. What is counted is the period you had a domicile or a residence here, and that is not the same as the period you were physically in the country. Circular 2-2 is the one to know: where someone who had a residence in Japan goes abroad and later re-enters, and the purpose of the trip was clearly temporary (for example a spouse or other relative sharing the household left here, a house or a hotel room kept for the return, or household goods left in storage), the time abroad is treated as a period in which the residence in Japan continued. A trip whose purpose is clearly temporary can therefore count towards the five years rather than interrupting them, but do not assume a long overseas posting meets that test.
• The switch happens mid-year, not at the start of a tax year. You remain a non-permanent resident up to and including the last day on which the aggregate is 5 years or less, and you are an ordinary resident (worldwide income, no remittance limitation) from the following day (Circular 2-3(3)). This is a tax-law concept, separate from immigration permanent residency; you can cross this line while still on an ordinary work visa.
• A mid-year switch splits the year in two. Under Article 8, income earned before the switch date is assessed under non-permanent-resident rules, and income from the switch date onward is assessed as an ordinary resident, within the same calendar year, on the same return. The remittance calculation is scoped to match: Enforcement Order Article 17(4)(vi) applies the ordering rule only to the income paid abroad that arose during the non-permanent-resident period, and only to the amounts remitted from abroad within that period. A transfer that lands two weeks after the switch is not in that calculation at all. By then your worldwide income is taxable anyway.

Income source comes first; payment and remittance follow

(Income Tax Act Article 7(1)(i)–(iii).)

Examples of income other than foreign-source income, taxed regardless of remittance: salary for work performed in Japan, even if paid into a foreign account by an overseas parent company; rental income from Japanese real estate; dividends from a Japanese company.

Foreign-source examples that are taxed only on the paid-in-Japan-or-remitted portion: a bonus paid by a foreign entity for work performed outside Japan; rental income from property overseas; interest on a foreign bank account.

“Remittance” is broader than a bank transfer

Under the National Tax Agency’s own interpretation of Article 7, a remittance is not limited to a wire between bank accounts. It includes:

• A wire transfer from a foreign account to a Japanese account.
• Goods carried or sent into Japan in place of a transfer: precious metals, bonds or share certificates brought or sent here, where that was done in place of an ordinary remittance (Circular 7-6(1)).
• Borrowing or an advance payment in Japan, settled from your overseas account, where that arrangement was made in place of an ordinary remittance (Circular 7-6(2)). This is the limb that reaches most substitution structures.
• Cash physically carried into Japan.
• Proceeds of a foreign asset sale, paid to you in Japan. Strictly this is caught as foreign-source income paid in Japan rather than as a remittance. The result is the same: it is in scope. Note carefully what is in scope. Article 7(1)(ii) reaches income, not receipts, and a capital gain is the sale price less the acquisition cost and the costs of the sale (Art. 33(3)). ¥30,000,000 arriving in a Japanese account for a property that cost you ¥28,000,000 brings ¥2,000,000 into scope, not ¥30,000,000.

None of this depends on how the money is labeled or what it was for. It is assessed on amount, not purpose.

A remittance does not automatically tax your foreign income: there is a queue

This is the mechanic that gets left out of short explanations, and it works in the taxpayer’s favour.

Under Article 17(4)(i) of the Income Tax Act Enforcement Order, a remittance received in a given year is first deemed to be applied against your income other than foreign-source income that was paid outside Japan: for example, the Japan-work portion of a salary that an overseas parent company deposits into a foreign account (that income is already fully taxable regardless of remittance). Only the amount remaining after that is deemed applied to, and taxes, your foreign-source income.

The Order’s own term is income other than foreign-source income, and it is wider than “Japan-source income”. What sits outside it is foreign-source income as Article 7(1)(ii) defines it: the Article 95(4) list plus the securities gains prescribed by Article 17(1). Everything else goes in the first queue, so the bucket that absorbs a remittance ahead of your overseas income is larger than most summaries imply, which works in your favour.

In this example, only ¥300,000 of the ¥2,000,000 foreign-source income becomes taxable that year. The remaining ¥1,700,000 that was not remitted stays untaxed for the year, because it was neither paid in Japan nor sent here.

The comparison is made on totals, not category by category. Article 17(4)(ii) first puts the amounts on a common footing: each class of income is computed as if under Articles 23 to 35 and the loss-offset rule in Article 69, with two adjustments that are easy to miss. Employment and retirement income are taken at gross receipts, and timber, capital gains and occasional income are taken after the statutory expenses, acquisition cost and selling costs but before the special deduction, which is applied later at the aggregation stage (Circular 7-2(2)(d)). It is the totals that the remittance is measured against. Where a class of income was paid partly in Japan and partly abroad, Article 17(4)(iii) splits it in the ratio of the receipts. Only then, if two or more classes of foreign-source income paid abroad remain, does Article 17(4)(iv) spread the deemed remittance across them pro rata by their amounts. You cannot nominate which one absorbs it, so a year mixing overseas rent, foreign interest and a foreign capital gain has to be worked in that order.

And the deemed amount is capped twice. Circular 7-3 sets out the calculation step by step, and two of its steps are worth knowing because they both work in your favour. The amount deemed remitted is the lower of (a) the remittance you received less the total of your non-foreign-source income paid abroad (if that total is negative, (a) is simply the remittance received), and (b) the total of your foreign-source income paid abroad. A remittance larger than your foreign income for the year cannot create income you did not have. And where that foreign-source paid-abroad total is negative for the year, the circular directs that no amount is deemed remitted at all, and the allocation step is not performed.

Track what you remit, and against what balance, because the ordering rule only helps if you can show your numbers.

RSUs from a foreign parent need to be split by work location, not treated as one number

Where an award rewards work performed both in and outside Japan, review the service period, work locations, award terms and any applicable treaty before allocating the employment income. Do not assume that grant-to-vesting is the correct period for every award. The source classification and any remittance treatment must be checked separately; directors may require a different analysis. See our guide to RSU and equity compensation tax in Japan.

The exit tax runs on a different five-year clock

Two five-year tests are easy to confuse, and they work in opposite directions. Non-permanent resident status counts every period you had an address or residence in Japan, whatever status of residence you held while you were here (Income Tax Act Article 2(1)(iv)). The five-year residency test for Japan's exit tax does the reverse: periods spent under a Table 1 status (the standard work, student and dependent categories) are excluded from that count altogether (Income Tax Act Enforcement Order Article 170(3)(i)). The practical consequence: you can stop being a non-permanent resident and still sit outside the exit tax entirely, as long as you have only ever held a Table 1 status. What changes that is a move to permanent residence or another Table 2 status. If your securities are approaching the ¥100 million line and permanent residence is on your horizon, review the two questions together. We cover this in our guide to Japan's exit tax.

This is not handled by year-end adjustment

Year-end adjustment (nenmatsu-chōsei) settles ordinary Japan-paid salary. Foreign-source income that a remittance has made taxable is not picked up by that process. It is settled by a final tax return, due March 15 of the following year.

The relief people rely on here is Article 121(1), and it is narrower than the summaries suggest. Read the conditions as a gate you have to pass entirely.

• ¥20 million is a receipts figure, not an income figure. Article 121(1) is available only where the amount of salary etc. receivable during the year is ¥20,000,000 or less. That is gross salary before the employment income deduction, not taxable employment income after it. Above that line you file, whatever else is true.
• All of the salary must have been through Japanese withholding. Item (i) applies where you receive salary from one payer and the whole of it was, or should have been, subject to withholding under Article 183 or the year-end adjustment under Article 190. This is the condition that catches split payrolls: if part of your salary is paid by the overseas parent with no Japanese withholding on it, the gate is closed and the ¥200,000 relief is not available to you at all, regardless of how small the foreign-source amount is. Article 121(1)(ii) covers two or more payers, again only where every payment went through withholding.
• Then, and only then, the ¥200,000 test. Where the gate is passed and all your salary comes from one payer, no return is required if the total of your interest, dividend, real estate, business, timber, capital gain, occasional and miscellaneous income for the year (including the foreign-source amount the remittance made taxable) is ¥200,000 or less (Art. 121(1)(i)). With two or more payers, item (ii) applies instead, and the salary from the secondary payer is added to that total before the ¥200,000 test (Art. 121(1)(ii)); NTA No.1900.
• A proviso closes it again in one common case. A proviso closes it again for officers of a family company (dozoku kaisha under Art. 157(1)(i)). It also applies to their relatives, de facto spouses and people who live on the officer's support. If such a person receives from that company, on top of salary, interest on a loan to its business or consideration for letting real estate or other assets be used in its business, Article 121(1) does not apply (Art. 121(1) proviso; Enforcement Order Art. 262-2; NTA No.1900 item 4). An employee outside that group is not caught by this proviso merely by renting property to the employer.

A separate residence-tax filing with your municipality may still be due even where no income tax return is: the ¥200,000 relief is an income-tax rule only.

The return has to include a Statement Concerning Residence Status (kyojū keitai-tō ni kansuru kakuninsho, filed as a supplementary schedule to the return): nationality, status of residence, your entry and exit history for the past 10 years, and the remittance amounts for the year. Keep the underlying records: foreign account statements, foreign card statements. If the remitted amount is ever questioned, the burden of showing what it actually was falls on you.

We do the counting, not just the filing

Preparing a tax return for another person as a business in Japan is, as a rule, restricted to licensed tax accountants (zeirishi) and others the law permits (Certified Public Tax Accountant Act, Arts. 2 and 52). You may prepare and file your own return. At our office, the work (from the residency determination through the filing itself) is 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.

• Confirm your status. Map every past Japan stay against the 10-year lookback to establish whether, and until when, you are a non-permanent resident.
• Trace your foreign-source income and remittances. Identify what is domestic-source, what is foreign-source, and reconstruct the year's remittances from your account records.
• Apply the ordering rule correctly. Apply the statutory ordering rule to income other than foreign-source income paid abroad before calculating the remittance attributed to foreign-source income.
• File the return and the residence-status statement. Complete and accurate, on the March 15 deadline.

Pricing

What we need from you

• Identification. Residence card or passport, and your My Number.
• Your full entry/exit history for the past 10 years. Passport stamps, or a disclosure request to the Immigration Services Agency if incomplete.
• Records of the year’s remittances. Foreign bank and credit card statements covering transfers, card charges, and cash brought into Japan.
• Records of your foreign-source income. Overseas rental statements, interest statements, or foreign-employer pay records, as applicable.
• A bank account for any refund.

Common questions

Is a non-permanent resident the same as a non-resident?

No. A non-permanent resident is a category of resident, taxed under ordinary progressive rates with a normal return process. A non-resident is simply an individual who is not a resident (Art. 2(1)(v)), not necessarily someone with no foothold here, since having only a residence, and not a domicile, in Japan for under a year does not by itself make you a resident. Japan reaches a non-resident only on Japan-source income, by withholding or by return depending on whether there is a permanent establishment (Art. 164(1)); 20.42% is the common withholding rate but not a universal one, and a tax treaty can change it.

I have been in Japan 6 years. Am I automatically a full resident now?

If you have continuously had a domicile or residence in Japan for six years, you exceed the five-year limit and are no longer a non-permanent resident. If you mean that six years have elapsed since your first arrival, reconstruct the actual periods within the preceding ten years. Physical trips abroad do not necessarily interrupt a continuing domicile or residence. The tax category is separate from immigration permanent residence.

Does using my foreign credit card in Japan really count as a remittance?

The card label alone does not settle it. Circular 7-6 includes certain borrowings or advance payments in Japan settled from overseas funds in place of an ordinary remittance. Review the payment and settlement arrangement, and retain the supporting records. The absence of the word “card” from the circular does not establish an exemption.

If I don't remit anything, is my foreign income safe from Japanese tax?

Only where it was also not paid in Japan. The protection is not “anything sitting in a foreign account”, it is foreign-source income that was neither paid here nor remitted. Given that, not taxed for that year, yes. But the sentence that usually follows, that the income is merely deferred until you remit it, is not what the Enforcement Order says. Article 17(4)(i) measures a remittance received in a year against that year’s foreign-source income paid abroad. It does not reach back and tax an earlier year’s unremitted income. The consequence runs the other way, and it surprises people: remitting long-standing savings in a later year can still be deemed a remittance of that later year’s income, up to the amount you sent.

What if I remit more than my foreign-source income for the year?

Under Article 17(4)(i), the remittance is first applied against your income other than foreign-source income that was paid abroad (a wider bucket than “Japan-source”), and only the excess is treated as a remittance of foreign-source income. If more than one class of foreign-source income remains, the excess is spread across them pro rata, not assigned to the one you would choose. You are not taxed twice on the same funds, but the calculation has to be done correctly to show that.

Our guide to Japan inheritance and gift tax for foreign professionals works through that second test.

The year you arrive, when part of your salary is still paid at home

A change from non-resident to resident status during a calendar year creates periods with different tax treatment within that same year. Establish the residence start date from the domicile and residence facts, then determine whether the resident period qualifies for non-permanent-resident treatment. Do not use the immigration arrival date alone as the answer.

What Japan taxes once you are here

Salary for work performed in Japan is generally within Japanese taxing scope regardless of the account into which it is paid; a tax treaty may change the result. A split payroll does not by itself make Japan-work salary foreign-source income. Check Japanese withholding and any filing obligation separately.

Three things that catch people in the arrival year

• A bonus from the Japanese entity is withheld in full. Where the payment date falls after you became a resident, the whole amount is treated as residents’ salary for withholding, even if part of it was earned while you were still abroad (Basic Circular 212-5, note 2). The split, if any, is handled on the return, not at source.
• Only the resident period counts for several deductions. Social insurance and small-enterprise mutual aid premiums, and life and earthquake insurance premiums, are deductible only to the extent paid during the resident period (Enforcement Order Art. 258(3)(iii), (iv)). Premiums paid before you arrived do not come in.
• The confirmation form is not optional. A resident who was a non-permanent resident at any time during the year, whether for part of it or all of it, must attach to the return a statement of nationality, the periods with a domicile or residence in Japan, and the amounts paid in or remitted to Japan (currently Art. 120(7); renumbered Art. 120(9) from 1 January 2027; Enforcement Regulation Art. 47-4).

Dates and documents

The return is filed between 16 February and 15 March of the following year (Art. 120(1)). If you leave Japan before that, the return moves forward to the departure (Art. 126(1), Art. 127) unless a tax agent is notified under Article 117(2) of the Act on General Rules for National Taxes. What we ask for is narrow: the home-country payslips and the dates they were paid, the assignment dates, the Japanese payroll withholding slip, and the remittance records for the year.

Where the year also involves equity that vested around the move, the sourcing question is handled on our RSU and stock compensation page.

The day you stop being a non-permanent resident, a new annual return can start

Most of this page is about what Japan taxes. This section is about what Japan asks you to declare, because the two turn on the same status and the second one is easy to reach without being told.

The foreign asset report is owed by a resident, excluding a non-permanent resident, who holds more than ¥50,000,000 of property outside Japan on 31 December. It is due by 30 June of the following year (Act on Submission of Statements of Overseas Assets, Art. 5(1)). Read the exclusion in the statute rather than in summary: it is the same non-permanent resident definition used throughout this page, cross-referenced to Article 2(1)(iv) of the Income Tax Act. The status that matters is therefore the same one this page turns on. The timing, though, is not the same: the filing is judged at 31 December, on your status and your overseas holdings on that date. Stop being a non-permanent resident part-way through a year and that year can be your first reporting year. The obligation does not begin mid-year and it is not pro-rated.

What is easy to get wrong

• A loan against the asset does not reduce it. The test is the total value of the overseas property on 31 December. It is not a net figure.
• Where an asset counts as being is a legal question. Shares in a Japanese company held in an overseas account are overseas property; shares in a foreign company held in a Japanese account are not.
• Leaving, or dying, before the deadline. Article 5(1) closes with a proviso: if you die, or make an exit as the Income Tax Act defines it, before filing by 30 June, the report is not required. Read the definition before relying on it. Article 2(1)(xlii) defines an exit, for a resident, as ceasing to have both a domicile and a residence in Japan without having filed a tax agent notification under Article 117(2) of the Act on General Rules for National Taxes. So the relief is for someone who leaves and cuts the tie; appoint a tax agent, as most people leaving with assets should, and the report remains due. The statement of assets and liabilities has a proviso for death but none at all for departure (Art. 6-2(1)).
• The year an inheritance falls. An heir may apply the test and complete the report leaving out the overseas property acquired by that inheritance or bequest in that year (Art. 5(2)), a genuine relief in the year when the paperwork is least possible.
• Filing on time moves the penalty rate by five points, in both directions. Read Article 6 for what it actually does, because “a 5% discount” is the wrong picture. Where an understatement or a late filing relating to the property is later corrected, and the property was listed on a report filed by the deadline, the additional tax is reduced by an amount equal to 5% of the underlying tax, in effect a five-percentage-point cut in the penalty rate, not 5% off the penalty figure. Where no report was filed by the deadline, or the property was left off it, the same five points are added instead. The same article carries exceptions, including for overseas property acquired by inheritance where the person was not at fault, so a bad year is not automatically a surcharge. Both adjustments are conditional: if the tax office asks for documents on how you acquired, managed or disposed of the overseas property and you do not produce them by the date it sets (at most 60 days), the reduction is lost and the addition rises to 10 points (Art. 6(7)). A report filed late, but before any audit notice and not in anticipation of a correction, is treated as filed on time (Art. 6(6)).
• And the criminal provision is real. A false entry in the report, or a failure to file it without justification, is an offence carrying up to one year’s imprisonment or a fine of up to ¥500,000 (Art. 10). Note which limb carries the discretion: the proviso allowing the penalty to be remitted according to the circumstances sits in Article 10(2), the failure-to-file offence. Article 10(1), the false entry, has no equivalent.

The other statement, and the threshold nobody mentions

The statement of assets and liabilities is set out in the same Act and works differently. The main route applies to someone who has to file, or may file, an income tax return whose total income plus timber income exceeds ¥20,000,000 for the year and who holds, on 31 December, either ¥300,000,000 or more of assets or ¥100,000,000 or more of assets within the exit tax rules (Art. 6-2(1)). This provision contains no exclusion for non-permanent residents. The carve-out that appears in Article 5(1) simply is not there.

There is also a second route that is rarely mentioned in English: a resident holding ¥1,000,000,000 or more of assets on 31 December must file the statement regardless of the income test (Art. 6-2(3)). Where a foreign asset report is also due, the overseas assets’ details other than their value need not be repeated in the statement (Art. 6-2(5)).

If the overseas property came to you by gift or inheritance, the same filing is covered from the recipient’s side in our guide to Japan inheritance and gift tax for foreign professionals.

What you actually receive

• A written questionnaire. After your first message we send a short set of questions: residence and visa history for each person, the jurisdictions involved, what is held where, and the dates that matter. Nothing is quoted before we have the facts.
• One call, in English, if the facts need it. Used to confirm the timeline and the assumptions, not to sell.
• The agreed filing work. Your written proposal names the tax year, the returns and the calculations included. We prepare and e-file the agreed Japanese returns and explain the numbers to you in English. A separate written tax opinion, a prior-year review or other additional work is included only where the proposal expressly says so.

Fees are fixed and quoted in writing before any work begins, and they follow the scope once the facts are known.

Where this page sits