Under the Inheritance tax law in Japan, a person who receives assets due to inheritance or gift is required to pay Inheritance tax or Gift tax. Whether the inherited or gifted assets located outside Japan is subject to Inheritance tax or Gift tax is depending on multiple combinations of types of heir and decedent, and, donor and donee.
I will try and summarize the tax implication under certain situations out of the multiple combinations in this and the next several columns.
This column serves to briefly summarize Inheritance tax implication for a non-Japanese national who is a resident in Japan and inherit assets upon death of decedent who is a non-Japanese national and a certain non-Japanese resident.
Under the Japanese inheritance tax law, heir/heiress who receives assets from his or her decedent (a non-Japanese national and a non-Japanese resident) is required to file Inheritance Tax Return and pay Inheritance Tax within 10 months after the decedent’s death if certain conditions are met. This basic rule is applicable even if heir/heiress is a non-Japanese national resident in Japan.
It would be barely understandable that heir/ heiress who is a non-Japanese national resident in Japan is required to pay Inheritance Tax if he or she receives assets located in Japan, e.g., real estate in Japan, upon decedent’s death.
However, it would be hard to understand that he or she needs to do so even if he or she receives assets located outside Japan, e.g., real estate located outside Japan.
There is an exception to this basic rule in the case where Short Period Stay Resident (SPSR) receives assets located outside Japan from his or her decedent who is a non-Japanese national and has not lived in Japan within 10 years before the death. SPSR is a non-Japanese national who has lived in Japan for 10 years or less within 15 years before the decedent’s death, and has certain working visa listed on Schedule 1 of Immigration Control Law, e.g., Business manager, Professor and Instructor, etc.
Where SPSR receives assets located outside of Japan upon death of the decedent who is a non-Japanese national and a non-Japanese resident, who has not lived in Japan within 10 years before the death, SPSR is not required to pay Inheritance tax on the assets outside Japan received.