In the previous column, I touched on the case where a non-Japanese national who is a tax resident in Japan inherits non-Japanese assets from a decedent who is also non-Japanese national and has not lived in Japan.
In this column, I will touch on the case where a non-Japanese national who is a tax resident in Japan is gifted assets located outside Japan from his or her father who is a non-Japanese national and a tax resident in Japan.
In this case, if his or her father has a certain working visa listed on Schedule 1 of Immigration Control Law, e.g., Business manager, Professor or Instructor, etc., and he(son) or she (daughter) is a dependent who has lived in Japan for 10 years or less within 15 years before the gift, the son or the daughter is not subject to Gift tax on the gift.
This tax implication is also applicable if the son or the daughter is not a tax resident in Japan at the time of the gift.
It should be noted that there is no requirement for the donor (the father in this case) on the period of time for which the donor is living in Japan, while the donee (the son or the daughter in this case) does have the requirement if he or she is a tax resident in Japan at the time of the gift. Under the Inheritance Tax Law which was effective in 2020 or before, the donor had the requirement which is identical to the donee to apply the exception. In order to enhance immigration of certain talented /skilled /competent/ designated non-Japanese nationals into Japan, the law was reformed and effective from 2021.
It should also be noted that this exception doesn’t apply if his or her father has a general visa, e.g., Spouse visa, as husband of his wife who is a Japanese national. The logic behind this is that while the exception should apply for a non-Japanese national who has a certain designated working visa, i.e., who has a specific knowledge or technique, etc., this rule should not apply for a mere spouse of a Japanese national.