#057

International Inheritance Tax Update !

New rules for international were introduced from April 1, 2017. According to the new rules, the scope of taxable assets become different for both Japanese and non-Japanese tax payers.

This is the updated of my lecture # 49.

Under the Japanese inheritance tax law, there were three types of tax payers:

A. Unlimited tax payer living in Japan (Assets in Japan and overseas are both taxable)
B. Unlimited tax payer living overseas (Assets in Japan and overseas are both taxable)
C. Limited tax payer (Only assets in Japan are taxable)

By the way, tax payer is successors, not ancestor, in Japan.

New rules will apply for the inheritance took place after April 1, 2017.

A. Unlimited tax payer living in Japan
Before March 31, 2017
1. Successor who lives in Japan at the timing of inheritance
2. Does not matter whether the successor is a Japanese citizen or not
3. Temporally (Tourist) visit is not included

After April 1, 2017
1. Both ancestor and successor are in Japan by visa
2. Both successor and ancestor have not had domicile in Japan for more than 10 years in the last 15 years

According to the new rules, if above condition 1 & 2 are satisfied, you will not be treated as A. Unlimited tax payer living in Japan, which means that only assets located in Japan are subject to inheritance tax.

C. Limited tax payer

Case 1 . Successor is a Japanese citizen
Before March 31, 2017
Successor lives overseas at the timing of inheritance
Both successor and ancestor have not had domicile in Japan within 5 years before the inheritance
After April 1, 2017
The judgement period is extended from 5 years to 10 years.

Case 2. Successor is not a Japanese citizen
Before March 31, 2017
Successor lives overseas at the timing of inheritance
Ancestor does not live in Japan at the timing of inheritance

After April 1, 2017
If ancestor had a democide in Japan in the last decade, assets in Japan and overseas are both taxable. Please note that if ancestor, who is not an Japanese citizen, stayed in Japan by visa, only assets in Japan are subject to inheritance tax.

*****
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