Under the Japanese Inheritance/Gift tax law, heir/donee is subject to Inheritance/Gift tax on assets inherited/gifted. Non-Japanese nationals who are residents in Japan for Japanese tax purposes are subject to Inheritance/Gift tax when they receive assets inherited/gifted even if these are located outside of Japan.
Exception to this rule is for the non-Japanese nationals who fall under “short period resident heir/donee”. “Short period resident heir/donee” is the Japanese resident who resides in Japan for 10 years or less period in 15 years before the inheritance/gift, and stay in Japan with qualification of stay listed in the Appendix 1 of Immigration Control Law. The qualifications consist of a university professor, management of a company, medical doctor, researcher, non-Japanese language teacher, and secondee from non-Japanese companies (so-called “Expatriate”), etc.
They are subject to Inheritance/Gift tax on the assets inherited/gifted, which are located only in Japan, if his or her decedent is also the “short period resident” at the time of his or her death or doesn’t have any residence in Japan or Japanese nationality within 10 years period before his or her death.
In case where heir/donee is non-Japanese national/ non-resident of Japan or “short period resident heir/donee, the worldwide assets inherited/gifted is subject to Inheritance/Gift tax in Japan unless the decedent is “short period resident” at the time of his or her death or the decedent is no-resident of Japan and doesn’t have any residence in Japan or Japanese nationality within 10 years period before his or her death.
In order to increase skilled /advanced/talented new immigrants and also reduce repatriation from Japan of the existing immigrants who reside in Japan for long time, the Japanese government has reformed the above rule so that the rule will apply to the heir/donee regardless of the qualified residents’ period of stay in Japan of the decedent.
Under the new rule, even if a highly skilled immigrant dies in Japan after he or she resides in Japan for more than 10 years from the immigration, only his or her Japanese assets are subject to Inheritance tax for the non-resident/ “short period resident” heir/donee.