The short version

What Japan actually taxes

Japan’s inheritance and gift tax law sorts recipients by how far its reach extends, and that reach decides whether foreign-held assets are in scope at all. The table below summarises the ordinary scope: the unlimited and limited taxpayer categories of Article 1-3(1) and Article 1-4(1).

The second row is the one that matters for a foreign professional on a work visa, and it is the one worth understanding in detail, because losing it is easy to do without noticing.

The table is a summary, not a complete classification. There is a further category the summaries leave out: a specified taxpayer under Article 1-3(1)(v), someone who is liable to inheritance tax on property received by gift from a decedent who was their specified donor under the unified gift-and-inheritance election, even where none of the other categories reaches them. If you have made or are considering that election, see the section on it below; it changes which of these rows is doing the work.

The test: your visa category, and 10 years out of 15

Under Article 1-4, paragraph 3, item 1 of the Inheritance Tax Act, a temporary resident is someone who, at the time property is received, holds a status of residence under Table 1 (Beppyo Ichi) of the Immigration Control Act (the work categories such as Engineer/Specialist in Humanities/International Services, Business Manager or Highly Skilled Professional, and equally Dependent, the status an expatriate’s spouse and children usually hold, and Student) and whose aggregate period having a domicile in Japan within the preceding 15 years totals 10 years or less.

Meet both conditions, and receive from a giver who also qualifies (see the next section), and foreign-situs assets you receive are outside Japan's inheritance and gift tax entirely. Only Japan-situs property is taxed.

Your status alone is not enough: the giver's status counts too

This is the half of the test that short explanations leave out, and it is where the rule actually bites.

Being a temporary resident yourself only keeps foreign-situs property out of the tax base if the person giving it (the donor, or the decedent in an inheritance) is either (a) living in Japan while holding a Table 1 status of residence themselves (a "foreign donor", or for an inheritance a "foreign decedent"), or (b) a "non-resident donor" / non-resident decedent: broadly, someone living outside Japan who either had no address in Japan at any time in the preceding 10 years, or who did but held no Japanese nationality at any of those times (Inheritance Tax Act Articles 1-3(3) and 1-4(3)). The same Table 1 / Table 2 distinction that applies to you applies to the giver: a foreign parent or spouse living in Japan on permanent residency (Table 2) does not qualify as a foreign donor, even though they are a foreign national. If the gift or inheritance comes from someone who is an ordinary Japan-resident (most commonly a Japanese-national spouse, parent-in-law, or family member who has lived in Japan long-term and is not themselves temporary or non-resident), the exemption does not apply, even though you personally qualify as a temporary resident. You become an unlimited taxpayer on that transfer, and foreign-situs property is taxed in full (Inheritance Tax Act Article 1-4, paragraph 1, item 1, sub-item ro).

In practice, the combination that catches people is an international marriage: a foreign national who has lived in Japan 3 years and holds a work visa is, on paper, a textbook temporary resident, until their Japanese spouse, who has lived in Japan their whole life, is the one making the transfer. The same failure occurs if the giver is a foreign parent or spouse who lives in Japan on permanent residency. In either combination, the shield does not hold.

The window closes in two different ways

Temporary resident status is not permanent. It ends the moment either of two thresholds is crossed, and both are easy to cross without realizing the tax consequence.

The same ¥30 million gift, two outcomes

Same recipient, same foreign parent, same ¥30 million cash gift. The only variable is which side of the walls the recipient is standing on.

The right-hand calculation: ¥30,000,000 less the ¥1,100,000 annual exemption (Act on Special Measures Concerning Taxation, Article 70-2-4, which applies notwithstanding Inheritance Tax Act Article 21-5) leaves ¥28,900,000 taxed at the special rate for gifts from a lineal ascendant to a descendant aged 18 or over as of January 1 of the year of the gift, with 45% on the top slice and with the lower slices taxed at their own rates (Act on Special Measures Concerning Taxation, Article 70-2-5). Published tables reach the same figure by subtracting ¥2,650,000 as a quick-calculation shortcut; the statute itself contains no such deduction.

The rate tables themselves, the ¥1,100,000 annual exemption, the 1 February to 15 March filing window and the reliefs that can apply are set out in our guide to Japan gift tax: rates, the ¥1.1m exemption and the filing deadline.

The same framework applies when someone dies

Inheritance tax runs on the identical structure, with matching terminology on the decedent's side: a foreign decedent (someone who, at death, held a Table 1 status and had an address in Japan, with no 10-in-15-year test on the decedent's side) and a non-resident decedent (someone with no address in Japan at death who, in addition, either had no Japan address at any point in the 10 years before death, or did but held no Japanese nationality at any of those times) both keep an heir's own temporary-resident status effective. A Japanese-national parent who moved abroad two years ago is not a non-resident decedent. The shield fails there too. An heir inheriting from an ordinary long-term Japan-resident decedent faces the identical trap described above: foreign-situs assets pulled into the Japanese tax base despite the heir's own short time in Japan (Inheritance Tax Act Articles 1-3 and 1-4; National Tax Agency, No.4138).

How long you have been in Japan also drives two neighbouring questions: how your foreign income is taxed while you are a non-permanent resident, and what happens to your securities if you eventually leave. For a family with members on both sides of the walls (one spouse newly arrived, one a long-term resident or permanent resident), the analysis has to be run for each individual transfer, not once for the family as a whole.

The 7-year clawback (and what it does not reach)

Gifts the decedent made to a person who later inherits from them are added back into that person's inheritance tax base (Inheritance Tax Act Article 19), whoever the decedent is, not only a parent or grandparent. The 2023 reform extended the look-back from 3 years to 7, but it phases in: for a death in 2026 the reach is still the 3 years before death; for deaths from 2027 through 2030 it runs from January 1, 2024 to the date of death; and the full 7 years applies only to deaths from January 1, 2031 (NTA No.4161). Once the extended portion applies, ¥1,000,000 in total is deducted from the gifts falling outside the 3-year window.

What the add-back does not do is reopen a gift that never entered the gift tax base. Article 19 is drafted narrowly on this point: it catches only property that was included in the basis for computing the gift tax taxable value for the year of the gift, under Articles 21-2(1) to (3), 21-3 and 21-4. A foreign-situs gift received as a temporary resident from a qualifying giver is outside the taxable value for a limited taxpayer, so it was never in that basis and Article 19 does not reach it. That is why timing the gift inside the temporary-resident window matters: for that property, the outcome is settled rather than provisional.

Separately, the sōzoku-ji seisan kazei election, the unified gift-and-inheritance taxation system (Inheritance Tax Act Articles 21-9 to 21-18; since 2024 it also carries its own annual deduction, and the citation is worth getting right: Article 21-11-2 of the Inheritance Tax Act sets ¥600,000, and the ¥1,100,000 figure everyone quotes comes from Article 70-3-2 of the Act on Special Measures Concerning Taxation, which overrides it for gifts from 1 January 2024; the amount deducted under that special provision is treated as deducted under Article 21-11-2 and is not added back to the estate), allows gifts to be taxed on a unified basis with a later inheritance, which can suit a staged transfer plan. Before treating it as an option, check the gate and the deadline.

• Who can elect. The recipient must be a presumptive heir of the giver and a lineal descendant, aged 18 or over on 1 January of the year of the gift, and the giver must be 60 or over on that same date (Art. 21-9(1)). A grandchild who is not a presumptive heir is brought in separately by Article 70-2-6 of the Act on Special Measures Concerning Taxation, on the same two ages. Note that both tests run on 1 January, not on the date of the gift. A birthday in February does not help you.
• The election is a filing, with a deadline. It is made by submitting a notification, separately for each giver, within the Article 28(1) period (ordinarily 1 February to 15 March of the following year, but if you leave Japan between 1 January and 15 March without first appointing a tax agent (nōzei kanrinin), the period ends on the day you cease to have an address or residence in Japan), for the gifts received from that giver in that year (Art. 21-9(2); where a gift tax return is filed, the notification is attached to it, Enforcement Order Art. 5(1)). There is no relief for a late notification. If the giver dies during the year of the gift, a different office and deadline can apply. Miss the window and the year is taxed under the ordinary annual system, whatever you intended.
• It is per giver, and it does not come back off. Once the notification is filed, every later gift from that giver is computed under this system from that year onwards (Art. 21-9(3)). It is not a year-by-year choice, and electing for one parent says nothing about the other.
• Weigh it against the temporary-resident window specifically. This is not a generic estate-planning default. If your window is open and the property is foreign-situs from a qualifying giver, the gift may be outside the tax base altogether, in which case there is nothing for the election to improve.

Founder shares and RSUs are property too

Stock, options, and vested RSUs transferred by gift or inherited follow the same domestic-situs / foreign-situs analysis as cash. The location of the underlying company, not where the certificate sits, generally governs. If equity compensation is part of what is being transferred, review it alongside our guide to RSU and equity compensation tax in Japan, since a vesting event and a gift can land in the same year and interact.

We map both sides of the transfer before it happens

Preparing returns and giving tax advice 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 initial classification through filing) 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.

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.

• Classify both parties, on their own tests. Your side is the 10-of-15-year domicile count plus your status of residence. The giver’s side is a different question: a foreign donor or decedent only has to hold a Table 1 status and have a domicile in Japan at the time (there is no period limit on them at all), while a non-resident donor or decedent is tested on a 10-year domicile history and, on one limb, nationality. Applying your 10-of-15 test to the giver is a common way to reach the wrong answer in both directions.
• Time the transfer. Model the two walls against your actual visa plans, PR timeline, and years already spent in Japan.
• Calculate the exposure. What is actually in the tax base under each scenario, before a decision is made, not after.
• File, or structure a staged plan. Including the unified gift-and-inheritance taxation election (sōzoku-ji seisan kazei) where it genuinely fits, and the return itself where tax is due. A return may also be needed where no tax is payable, for example to claim the spouse relief (Inheritance Tax Act art. 19-2(3)).

Pricing

This work is scoped individually. A diagnosis of your own and the donor's/decedent's status is the starting point, priced once we understand the transfer in question. If a standard tax return is also due independent of this analysis, that portion starts at ¥160,000 (excl. consumption tax) under our usual return tiers.

What we need from you

• Your visa history. Passport stamps or an Immigration Services Agency disclosure covering the past 15 years.
• The donor's or decedent's residence history. Nationality, visa status if applicable, and where they have lived.
• What is being transferred, and from where. Cash, real estate, securities, or equity compensation, with the country where each asset is actually located.
• Timing. A planned gift date, or the date of death for an inheritance already underway. Deadlines are short: a gift tax return is normally due between February 1 and March 15 of the year after the gift (NTA No.4429), and an inheritance tax return within 10 months of learning of the death (NTA No.4205). Either falls due earlier if you come to have neither an address nor a residence in Japan without having notified a tax agent: for gift tax, where that happens between 1 January and 15 March of the year after the gift; for inheritance tax, where it happens within the 10-month period. The return is then due by that day (Inheritance Tax Act, Arts. 27(1) and 28(1)).

Common questions

I've been in Japan 3 years on a work visa. Am I automatically protected?

Your own status is only half of the test, and the other half is not about nationality. The giver has to fall into one of two statutory categories: a foreign donor or decedent (someone who, at the time of the transfer, held a Table 1 status of residence and had a domicile in Japan) or a non-resident donor or decedent, meaning someone with no domicile in Japan at that time who either had none at any point in the preceding ten years, or had one but held no Japanese nationality at any of those times (Art. 1-3(3), Art. 1-4(3)). Read that carefully in both directions: a Japanese national who has lived abroad for more than ten years does qualify, and a foreign national living in Japan on permanent residency does not. One caveat before relying on the first half: where the giver or decedent is under an exit-tax deferral, Articles 1-3(2) and 1-4(2) deem them to have had a domicile in Japan within the preceding ten years, so an actual ten years abroad is not by itself the answer.

Does getting permanent residency really change everything, even for gifts already planned?

Yes, the switch from a Table 1 to a Table 2 status ends temporary-resident eligibility from that point forward. A gift received after the switch is assessed under the new status, regardless of when it was originally planned.

What if I've been on the same work visa for over 10 years?

The 10-year wall applies even without any status change. Once your aggregate period with a Japan address within the trailing 15 years exceeds 10 years, temporary-resident status ends on the same work visa you have always held.

Does this apply to real estate and stock, or just cash?

Yes, but “where the asset is located” is not a common-sense question. Article 10 of the Inheritance Tax Act answers it property type by property type, and the answers do not always follow where the money feels like it is. A bank deposit is located at the branch or office that took the deposit (Art. 10(1)(iv)). Shares, corporate bonds and capital contributions are located at the head office of the issuing company (Art. 10(1)(viii)), so shares in a Japanese company held through an overseas broker are Japan-situs property, and shares in a foreign company held in a Japanese account are not. Movable and immovable property is located where it physically is, except that a ship or an aircraft is located where the authority that registered it is (Art. 10(1)(i) and its proviso). A loan receivable follows the debtor’s address or head office (Art. 10(1)(vii)). A retirement or long-service payment follows the address or head office of whoever paid it (Art. 10(1)(vi)), read with the head-office rule in item (v), so a foreign payer with a Japanese office is not a one-line answer. Insurance proceeds follow the head or principal office of the insurer (including a mutual-aid provider). Where the insurer has no head or principal office in Japan but has an office in Japan that handles that particular insurance contract, the proceeds follow that Japanese office (Art. 10(1)(v)). Getting any of this wrong decides the whole answer for a limited taxpayer, and the situs rules for the foreign asset report are not identical to these. Do not carry one across to the other.

Can I plan around this before it happens?

Yes, and that is where the value is. Once a gift has been received or an inheritance has opened, the classification is fixed by the facts as they stood at that moment. The planning window is before the transfer, not after.

Holding the property afterwards brings its own filing

Gift and inheritance tax are charged once, on the transfer. What the recipient holds afterwards can bring an annual return of a different kind.

• The foreign asset report. A resident who is not a non-permanent resident, holding more than ¥50,000,000 of property outside Japan on 31 December, files a report by 30 June of the following year (Act on Submission of Statements of Overseas Assets, Art. 5(1)). The valuation is taken at the year-end; a loan used to buy the asset does not reduce it.
• Who it actually catches. A non-permanent resident is outside this filing, but a Japanese national can never be a non-permanent resident (Income Tax Act, Art. 2(1)(iv)). A Japanese-national spouse who moves to Japan, holding an overseas portfolio received before the move, can be inside it from the first year.
• The year the inheritance falls is treated differently. An heir or legatee may apply the ¥50,000,000 test, and complete the report, leaving out the overseas property acquired by that inheritance or bequest during that same year (Art. 5(2)). It is a real relief in the one year when valuing and listing everything is least possible, and it is a choice, not an automatic exclusion. A further proviso in Article 5(1) removes the obligation altogether where the person dies, or makes an exit as the Income Tax Act defines it, before filing by 30 June.
• Why it matters even when no tax is due. Where an understatement relating to that property is later corrected, a timely report listing it reduces the additional tax 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. No report, or the property left off it, adds the same five points instead (Art. 6(3)), subject to the exceptions in that article, including for overseas property acquired by inheritance where the person was not at fault. If the tax office asks for documents on the acquisition, management or disposal of the overseas property and they are not produced by the date it sets (at most 60 days), the reduction is lost and the addition rises to ten points (Art. 6(7)). A false entry, or a failure to file without justification, is an offence carrying up to one year of imprisonment or a fine of up to ¥500,000 (Art. 10); the discretion to remit sits in the proviso to Article 10(2), the failure-to-file limb, and not in Article 10(1). None of this reduces the underlying tax.

A separate statement of assets and liabilities can also apply, on different thresholds, to someone filing an income tax return, and to a resident holding ¥1,000,000,000 or more of assets on 31 December regardless of income. It is set out in the same Act (Art. 6-2(1) and (3)) and, unlike the foreign asset report, has no non-permanent resident exclusion. Both filings, and how the non-permanent resident exclusion works, are covered in full in our guide to non-permanent resident taxation and the remittance rule.

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.
• Written advice, signed by a licensed tax accountant. You receive the analysis in writing, as a tax opinion letter signed by the licensed tax accountant (zeirishi) who handled your matter. A tax return or other follow-up work is included only where our written proposal says so; otherwise it is quoted separately.

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

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