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 without a residence in Japan at all. Non-residents are generally subject to flat 20.42% withholding on Japan-source payments (Articles 212 and 213), with no year-end adjustment and no personal deductions applied the way a resident would get them.

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 an address or residence in Japan within the trailing 10 years, counted month by month, with days rounded (30 days to a month, 12 months to a year).

• Every past stay counts, not just the current one. A prior study-abroad period, an earlier assignment, even time on a working holiday visa years ago — all of it is added into the same 10-year lookback. Relying on memory is not enough; passport entry and exit stamps, or a disclosure request to the Immigration Services Agency for your entry/exit record, are the reliable source.
• The switch happens the day after you cross 5 years, not at the start of a tax year. Once your aggregate exceeds 5 years, you become an ordinary resident for tax purposes — worldwide income, no remittance limitation — from the following day. 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.

A non-permanent resident is taxed on all Japan-source income — and on foreign income only when it lands here

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

Domestic-source examples that are 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.
• A foreign credit card used for spending in Japan, where the charge is settled against a foreign-held account — the spending itself is treated as a remittance.
• 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 taxable.

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 most explanations skip, and it works in the taxpayer's favor more often than people expect.

Under Article 17(4) of the Income Tax Act Enforcement Order, a remittance received in a given year is first deemed to be applied against your domestic-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 (this income is already fully taxable regardless of remittance). Only the amount remaining after that is deemed applied to — and taxes — your actual foreign-source income.

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 runs per income category under the Enforcement Order, so a year that mixes several kinds of foreign income needs the split done category by category. 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

RSUs granted by an overseas parent company are apportioned between domestic-source and foreign-source income based on where you worked during the period from grant to vesting. The domestic-source portion is taxed regardless of remittance; the foreign-source portion — attributable to work performed outside Japan during that period — falls under the remittance rule above. We cover the vesting and sale mechanics in full in 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.

Two thresholds decide whether a return is actually required. If your employment income for the year exceeds ¥20 million, you must file regardless. Below that line, if you have a single Japanese employer whose payments were all subject to Japanese withholding, and your total income other than employment and retirement income — including the foreign-source amount the remittance made taxable — is ¥200,000 or less, no income tax return is required (Income Tax Act Article 121(1)(i); NTA No.1900). A separate residence-tax filing with your municipality may still be due: 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

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 residency determination 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 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. Calculate what is actually taxable after domestic-source-paid-abroad amounts are absorbed first.
• 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 has no residence in Japan and is generally subject to flat 20.42% withholding instead.

I have been in Japan 6 years — am I automatically a full resident now?

Not necessarily. The test is an aggregate of every period of Japan residence within the trailing 10 years, not a simple count from your current arrival. If you left and returned, or had earlier stays, the aggregate could be under or over 5 years depending on the actual history — it has to be calculated, not assumed.

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

Yes, if the charge is settled against a foreign-held account. The National Tax Agency's interpretation treats this the same as a bank transfer for remittance purposes.

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

For a non-permanent resident, foreign-source income that is neither paid in Japan nor remitted here is not taxed for that year. It is not exempt permanently — remit it in a later year while you are still a non-permanent resident, and it becomes taxable then, subject to the ordering rule.

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

Under the ordering rule, the remittance is first applied against any domestic-source income that was paid abroad; only the excess is treated as a remittance of foreign-source income. You are not taxed twice on the same funds, but the calculation has to be done correctly to show that.

The same temporary-resident concept also governs inheritance and gift tax from family abroad — see our guide to Japan inheritance and gift tax for foreign professionals.