# Japan: taxes, residence and cost of living

Source: https://domicile.wiki/places/japan/ (domicile.wiki, researched 2026-10-16). Data licence CC BY-SA 4.0. Research, not tax or legal advice.

## At a glance

For an EU-citizen family of five living off a EUR 30M portfolio (the guide's default reader).

- Score for a wealthy family: 73 / 100
- Can EU citizens live here?: only work or business permits
- Can US citizens live here?: only work or business permits
- Other passports: only work or business permits
- Tax on a €30M portfolio: €728,482 a year
- Wealth tax: none
- Children inherit: taxed
- After 60 years: €26,500,000 of €30,000,000 (with no tax at all: €286,928,000)
- Living costs, family of five: €211,967 a year
- EU member: no
- Currency: JPY
- Capital: Tokyo

## Tax on investments, inheritance and wealth

Japan taxes gains on listed shares and listed-company dividends separately at 20.315% (15.315% national including reconstruction surtax plus 5% local), but for 2025 and 2026 a minimum tax of 22.5% applies to aggregate income above JPY 330 million, and from 2027 the threshold is JPY 165 million at 30% (per PwC), so very large realised gains face more. There is no wealth tax. Inheritance and gift tax is among the world's highest: 10% to 55% on each heir's statutory share above a basic deduction of JPY 30 million plus 6 million per statutory heir. Foreigners on working-type visas who have lived in Japan 10 years or less in the last 15 are taxed only on Japanese assets at death, and for the first 5 years non-permanent residents are taxed on foreign income only if it is paid in or remitted to Japan. An exit tax applies to departing residents with JPY 100 million or more of securities.

- **Permanent resident taxpayer (Japanese national, or foreigner resident more than 5 of the last 10 years)**: Worldwide income; separate 20.315% taxation of listed share gains and listed dividends; worldwide inheritance tax once the foreigner thresholds are passed.
- **Non-permanent resident + temporary foreigner (first 5 years)**: A foreign national resident in Japan for 5 years or less in the last 10 is a non-permanent resident: taxed on Japan-source income and on foreign-source income only if paid in or remitted to Japan. During this time (and up to 10 years in the last 15) a foreigner holding a work-type residence status is a 'temporary' person for inheritance tax: foreign property is outside Japanese inheritance and gift tax.
- **Temporary foreigner for inheritance tax (years 6 to 10)**: After 5 years the foreigner becomes a permanent-resident taxpayer for income tax (worldwide income at standard rates), but remains outside inheritance and gift tax on foreign property until more than 10 years of residence in the last 15, provided the residence status remains a Table 1 (work-type) status.
- **Asset-management company (shisan kanri gaisha: Japanese KK or GK)**: The family holds the portfolio through a Japanese company (kabushiki kaisha or godo kaisha) that the parents own. The company is taxed on its worldwide income at the ordinary corporate rates, with no relief for portfolio shares: about 35.43% in total for a small Tokyo company with taxable income above JPY 25 million (national corporate tax 23.2%, local corporate tax 10.3% of it, Tokyo corporate inhabitant tax 10.4% of it, enterprise tax 7.48% plus special corporate enterprise tax of 37% of the 7.0% standard-rate amount, defense special corporate tax 4% of the national tax, enterprise tax deductible when paid). Foreign withholding tax is credited against the national corporate tax. Distributions to the parents are aggregate income, about 49.4% at the top after the dividend credit. Inheritance tax is as for direct holding (the shares are valued at net asset value), so that metric is inherited from the standard regime.

## Income tax

National income tax runs 5% to 45% (seven brackets) plus a 2.1% surtax on the tax and a flat 10% inhabitant tax, giving a combined top marginal rate of about 55.9%. Employees pay about 14.7% in social insurance (health 4.925%, child support 0.115%, welfare pension 9.15%, unemployment 0.5%), each with its own ceiling; the self-employed use National Pension (flat JPY 17,920 a month) and National Health Insurance. The basic deduction is JPY 620,000 for total income of JPY 6.55m to 23.5m (JPY 1.04m below JPY 4.89m, JPY 670,000 up to JPY 6.55m).

## How to get residence

No free movement. Japan has no passive investor, golden or retirement visa. EU, US and other passports can run a business under the Business Manager visa (capital of at least JPY 30 million since 16 October 2025), apply for a six-month digital nomad stay (JPY 10 million income, visa-exempt treaty countries only), or qualify under the points-based Highly Skilled Professional status or a normal work visa. Permanent residence takes 1 to 10 years depending on the route.

- **Business Manager visa (Investor/Business Manager)** (Entrepreneur; EU citizens, US citizens, other passports; open): Residence status for running or managing a business in Japan; capital requirement rose to JPY 30 million on 16 October 2025.
- **Designated Activities - Digital Nomad (six-month visa)** (Digital nomad; EU citizens, US citizens, other passports; open): Six-month non-renewable stay for remote workers earning JPY 10 million a year, from visa-exempt countries with a tax treaty with Japan.
- **Highly Skilled Professional (HSP) visa, points-based** (Work; EU citizens, US citizens, other passports; open): Points-based status (70 or 80 points) that grants longer stay, family benefits and permanent residence after 3 or 1 years.
- **Engineer / Specialist in Humanities / International Services (employment visas)** (Work; EU citizens, US citizens, other passports; open): Standard employer-sponsored work statuses for degree-holders or experienced professionals.

Citizenship: Naturalisation generally requires 5 consecutive years of residence in Japan, adult age, good conduct, financial stability, and giving up other nationalities; the Ministry of Justice has discretion. Not verified on an official page in this run.

## Inheritance law and trusts

Children, a spouse and parents have a reserved share (iryubun) of one half of the estate, or one third if only parents survive; since 2019 it is a money claim. A foreign national's estate is governed by their national law. Japan has a Trust Act and the general incorporated foundation, but has not joined the Hague Trusts Convention.

## Daily life (0-100, higher is better)

- Safety and personal security: 88
- Political and institutional stability: 80
- Corruption and government integrity: 74
- Legal system and property rights: 78
- Healthcare quality and access: 91
- Education quality: 77
- Human development and quality of life: 85
- Infrastructure and connectivity: 86
- Cost of living and housing: 79
- Business opportunities and economy: 78
- Cultural fit and lifestyle: 14

## Research notes

### Japan — family-office tax dossier

Last reviewed: 2026-10-16
Tax year: 2026
Reviewer: research agent (Claude), unreviewed by a tax adviser

#### Summary

Japan taxes gains on listed shares and listed-company dividends separately at 20.315% (15.315% national including reconstruction surtax plus 5% local), but for 2025 and 2026 a minimum tax of 22.5% applies to aggregate income above JPY 330 million, and from 2027 the threshold is JPY 165 million at 30% (per PwC), so very large realised gains face more. There is no wealth tax. Inheritance and gift tax is among the world's highest: 10% to 55% on each heir's statutory share above a basic deduction of JPY 30 million plus 6 million per statutory heir. Foreigners on working-type visas who have lived in Japan 10 years or less in the last 15 are taxed only on Japanese assets at death, and for the first 5 years non-permanent residents are taxed on foreign income only if it is paid in or remitted to Japan. An exit tax applies to departing residents with JPY 100 million or more of securities.

US citizens: US citizens remain US-taxed; Japan's 20.315% on gains/dividends is creditable against US tax. The US-Japan estate and gift tax treaty coordinates the two inheritance taxes (details not verified). Japanese investment trusts are PFICs.

#### Residence and eligibility

Resident if domiciled (jusho, centre of life) in Japan or with a residence (kyosho) for one year or more. Foreigners are non-permanent residents until their stay exceeds 5 years in the last 10.

- **Business Manager / Highly Skilled Professional and other work-type visas** (EU, US, OTHER): Japan has no passive investor or golden visa; residence requires a work, business-manager or family-based status. Business Manager requires setting up and running a business in Japan (capital and staffing requirements were reportedly tightened in 2025; not verified).

#### Capital gains

##### Standard regime

Gains on listed shares are taxed separately at 20.315% (income tax 15% + 2.1% reconstruction surtax on it + 5% local inhabitant tax). Unlisted shares are also taxed separately at 20.315%, and listed and unlisted losses cannot offset each other. Real estate: 20.315% if held more than 5 years at 1 January of the sale year, 39.63% if shorter. Minimum tax on high earners: for 2025 and 2026, 22.5% of aggregate income (including separately taxed gains) above JPY 330 million, charged to the extent it exceeds regular tax; per PwC, from 2027 the threshold falls to JPY 165 million and the rate rises to 30%.

- **Exemptions and thresholds:** NISA tax-free accounts (limited amounts, not relevant at this scale). Minimum tax threshold JPY 330 million (2025-2026).
- **Important exceptions, statute references and announced changes:** Exit tax (Income Tax Act art. 60-2; NTA Tax Answer 1478): residents who lived in Japan more than 5 of the last 10 years and hold JPY 100 million or more of securities and similar assets are deemed to sell them on departure; payment can be deferred 5 (up to 10) years with a tax agent and collateral. Gifts or bequests of such assets to non-residents trigger the same deemed sale.
- **Tax year / confidence / verification:** 2026 / high / partially_verified (checked 2026-10-15)
- **JSON numbers:** headline 20.32% (0.20315); listed domestic 20.32% (0.20315); listed foreign 20.32% (0.20315); private business sale 20.32% (0.20315); local real estate 20.32% (0.20315); foreign real estate 20.32% (0.20315).
- **How derived:** Separate taxation at 15.315% national + 5% local = 20.315% for listed and unlisted shares and long-term real estate. Foreign listed shares through a Japanese broker are taxed the same way. Not modelled: the minimum tax, which lifts the effective rate towards 22.5% on income far above JPY 330 million (2025-2026) and towards 30% above JPY 165 million from 2027.
- **Holding period:** Real estate: more than 5 years (counted to 1 January of the year of sale) for 20.315%, otherwise 39.63%. No holding period for shares.
- **Trader recharacterisation:** Share gains of individuals remain separately taxed at 20.315% even for active traders; business-scale trading of other assets falls into aggregate income (top about 55.945%).
- **Foreign assets:** Permanent residents are taxed on worldwide gains with a foreign tax credit. Foreign asset report required above JPY 50 million (not verified).

##### Non-permanent resident + temporary foreigner (first 5 years) (special regime)

Non-permanent residents are taxed on income other than foreign-source income, and on foreign-source income paid in Japan or remitted from abroad (Income Tax Act art. 7(1)(ii)). Since the 2017 reform, gains on securities are treated as non-foreign-source (taxed in full regardless of remittance) when the securities were acquired during a period as a non-permanent resident within the 10 years before the sale. Gains on securities acquired BEFORE becoming resident in Japan ('specified securities') are foreign-source when sold on a foreign exchange, through a foreign broker, or from a foreign custody account, and are taxed only if paid in Japan or remitted (Order art. 17(1)). Foreign listed gains are coded at 20.315% because any portfolio turnover after arrival creates fully taxable holdings.

- **Conditions:** Remittance basis for pre-arrival holdings only: the 0% foreign real estate rate and the remittance-only treatment of pre-arrival foreign securities ASSUME the proceeds are kept abroad and not remitted (remittances are deemed to come first from other foreign-paid taxable income, Order art. 17(4)). Securities bought while a non-permanent resident are taxed at 20.315% regardless of remittance.
- **Tax year / confidence / verification:** 2026 / medium / verified (checked 2026-10-15)
- **JSON numbers:** headline 20.32% (0.20315); listed domestic 20.32% (0.20315); listed foreign 20.32% (0.20315); private business sale 20.32% (0.20315); local real estate 20.32% (0.20315); foreign real estate 0% (0.0).
- **How derived:** listed_securities_foreign 20.315% (15.315% national incl. reconstruction surtax + 5% local): applies to securities acquired while a non-permanent resident (Order art. 17(1), last 10 years) and to remitted gains on pre-arrival holdings; a family that never sells or remits pre-arrival holdings could pay 0% on those, which is not scored. Foreign real estate: foreign-source, taxable only if paid in Japan or remitted (0% if kept abroad). Domestic listed shares, private business and Japanese real estate: as standard.

Open points for this tax: How the 'acquired while a non-permanent resident' test treats funds or ETFs bought abroad before arrival and later reinvested (Order art. 17(2) first-in-first-out matching) was not checked against NTA guidance.

#### Dividends

##### Standard regime

Dividends are in principle aggregate income (top about 55.945%, with a small dividend credit for Japanese dividends), but dividends from listed companies (shareholders under 3%) can be taxed separately at 20.315%, which is final. Foreign listed dividends received through a Japanese payer are taxed at 20.315% after foreign withholding, with a foreign tax credit available by filing.

- **Exemptions and thresholds:** None at this scale.
- **Important exceptions, statute references and announced changes:** Holders of 3% or more of a listed company, and owners of unlisted companies, are taxed at aggregate rates up to about 55.945% on dividends (minus dividend credit).
- **Tax year / confidence / verification:** 2026 / high / partially_verified (checked 2026-10-15)
- **JSON numbers:** headline 55.95% (0.55945); domestic 20.32% (0.20315); foreign gross 20.32% (0.20315); foreign tax relief: credit.
- **How derived:** Listed portfolio dividends: separate taxation 20.315% (domestic and foreign listed). Headline = aggregate top rate 45% x 1.021 + 10% = 55.945% for non-listed/large holdings.
- **Outbound withholding:** 20.42% on dividends to non-residents (15.315% for listed dividends to portfolio holders), reduced by treaty.
- **Treaty network:** Broad network covering the US, EU and Asian partners (count not verified).
- **Holding companies:** Modelled as the structure regime 'asset_management_kk' (a Japanese KK or GK holding the portfolio): about 35.43% effective on all income at the top (Tokyo, small company), no 95% exclusion for portfolio dividends, 20% exclusion for domestic dividends on stakes of 5% or less, foreign withholding creditable; profits paid out are taxed to the family at about 49.4% after the dividend credit. Against 20.315% for an individual this is worse at every step, but advisers still recommend it for inheritance planning and income splitting, so it is shown.

##### Non-permanent resident + temporary foreigner (first 5 years) (special regime)

Foreign dividends paid and kept abroad are not taxed for a non-permanent resident; amounts remitted to Japan are taxed. Japanese dividends as standard.

- **Conditions:** Remittance basis: the 0% foreign_gross_rate ASSUMES foreign dividends are paid and kept abroad. Amounts remitted to Japan are taxed (remittances are deemed to come first from other foreign-paid non-foreign-source income, then from foreign-source income, Order art. 17(4)). Dividends paid through a Japanese broker are paid in Japan and fully taxed.
- **Tax year / confidence / verification:** 2026 / medium / partially_verified (checked 2026-10-15)
- **JSON numbers:** headline 55.95% (0.55945); domestic 20.32% (0.20315); foreign gross 0% (0.0); foreign tax relief: exemption.
- **How derived:** Foreign-source dividends not paid in or remitted to Japan are outside the charge; remitted amounts taxed (aggregate rates or 20.315%). Remittance ordering rules are complex.

#### Inheritance and gifts to children

##### Standard regime

Inheritance tax is charged on heirs, but computed on the estate: the basic deduction (JPY 30 million + 6 million per statutory heir) is subtracted, the remainder is divided notionally by statutory shares, each share is taxed at progressive rates from 10% to 55% (above JPY 600 million), and the total is allocated to the actual recipients. Gifts are taxed at similar progressive rates (annual exemption JPY 1.1 million per recipient); gifts within 7 years before death are added back. Heirs who are permanent residents, or foreigners with a residence status who have lived in Japan more than 10 of the last 15 years, are taxed on worldwide property (Inheritance Tax Act art. 1-3(1)(i)).

- **Exemptions and thresholds:** Basic deduction JPY 30 million + JPY 6 million x number of statutory heirs (Inheritance Tax Act art. 15; NTA No.4152). At the modelled second death (spouse already dead, three children) there are 3 statutory heirs: JPY 48 million in total, JPY 16 million per child; this is the coded exemption per child. (With a surviving spouse, 4 heirs, the total would be JPY 54 million.) Spouse credit (tax-free up to the larger of the statutory share or JPY 160 million; general knowledge, not verified).
- **Important exceptions, statute references and announced changes:** Optional inheritance-time settlement gift regime: parents aged 60+ to children aged 18+, 20% flat gift tax above a JPY 25 million lifetime deduction, credited against later inheritance tax. 'Temporary resident' and 'foreign decedent' rules exempt foreign property for foreigners who have lived in Japan 10 years or less in the last 15 (see special regimes).
- **Tax year / confidence / verification:** 2026 / high / verified (checked 2026-10-15)
- **JSON numbers:** basis `beneficiary`, children `taxed`, exemption 16,000,000 JPY, brackets (marginal): from 0 JPY: 10% (0.1); from 10,000,000 JPY: 15% (0.15); from 30,000,000 JPY: 20% (0.2); from 50,000,000 JPY: 30% (0.3); from 100,000,000 JPY: 40% (0.4); from 200,000,000 JPY: 45% (0.45); from 300,000,000 JPY: 50% (0.5); from 600,000,000 JPY: 55% (0.55); other transfer costs 0% (0.0).
- **Gifts:** Progressive gift tax up to 55% above JPY 1.1 million a year per recipient (special lower scale for gifts from parents/grandparents to adult descendants; not detailed), or the elective 20% inheritance-time settlement regime. Gifts within 7 years before death are added to the estate. (same as inheritance: False; tax-free after years: 7)
- **Business relief:** Business succession deferral for unlisted company shares exists (conditions not verified); listed portfolios get no relief.
- **Foreign assets:** Worldwide for Japanese nationals domiciled in Japan within the last 10 years and for foreigners beyond the temporary thresholds; only Japan-situs property for temporary foreigners and their heirs.
- **Residence/domicile rules:** NTA No.4138: temporary resident = holds a residence status and has lived in Japan 10 years or less in the 15 years before inheritance; foreign decedent = held a residence status and Japanese address at death. Japanese nationals stay in worldwide scope for 10 years after leaving.
- **Business relief covers listed shares:** False

##### Non-permanent resident + temporary foreigner (first 5 years) (special regime)

While the decedent is a 'foreign decedent' and the heirs are temporary residents, only Japan-situs property is subject to inheritance tax; foreign property (e.g. a portfolio held with a foreign custodian in foreign securities) is outside the charge. Japanese property is taxed on the standard scale.

- **Conditions:** The decedent is a 'foreign decedent': holds a residence status (Table 1 of the Immigration Control Act) and has a Japanese address at death; since the 2021 reform no year count applies to the decedent (Inheritance Tax Act art. 1-3(3)(ii)). Each heir is a 'temporary resident': holds a Table 1 residence status and has lived in Japan 10 years or less in the 15 years before death (art. 1-3(3)(i)); an heir who has passed 10 of 15 years is taxed on worldwide property whoever the decedent was (art. 1-3(1)(i)(a)).
- **Tax year / confidence / verification:** 2026 / medium / partially_verified (checked 2026-10-15)
- **JSON numbers:** basis `beneficiary`, children `exempt_with_conditions`, exemption 16,000,000 JPY, brackets (marginal): from 0 JPY: 10% (0.1); from 10,000,000 JPY: 15% (0.15); from 30,000,000 JPY: 20% (0.2); from 50,000,000 JPY: 30% (0.3); from 100,000,000 JPY: 40% (0.4); from 200,000,000 JPY: 45% (0.45); from 300,000,000 JPY: 50% (0.5); from 600,000,000 JPY: 55% (0.55); other transfer costs 0% (0.0).
- **Gifts:** Gift tax likewise only on Japan-situs property for temporary foreigners. (same as inheritance: False; tax-free after years: 7)
- **Foreign assets:** Foreign-situs property exempt (shares/bonds situs = issuer's head office; deposits = branch).
- **Residence/domicile rules:** Brackets apply only to Japan-situs property.
- **Business relief covers listed shares:** False

##### Temporary foreigner for inheritance tax (years 6 to 10) (special regime)

Foreign property outside inheritance tax; Japanese property taxed on the standard scale. Income tax as standard.

- **Conditions:** 10 years or less of residence in the past 15 years; Table 1 residence status.
- **Tax year / confidence / verification:** 2026 / medium / partially_verified (checked 2026-10-15)
- **JSON numbers:** basis `beneficiary`, children `exempt_with_conditions`, exemption 16,000,000 JPY, brackets (marginal): from 0 JPY: 10% (0.1); from 10,000,000 JPY: 15% (0.15); from 30,000,000 JPY: 20% (0.2); from 50,000,000 JPY: 30% (0.3); from 100,000,000 JPY: 40% (0.4); from 200,000,000 JPY: 45% (0.45); from 300,000,000 JPY: 50% (0.5); from 600,000,000 JPY: 55% (0.55); other transfer costs 0% (0.0).
- **Gifts:** Only Japan-situs property. (same as inheritance: False; tax-free after years: 7)
- **Foreign assets:** Foreign-situs property exempt.
- **Residence/domicile rules:** Brackets apply only to Japan-situs property.
- **Business relief covers listed shares:** False

**Surviving spouse:** Spouse's tax credit: no tax on the net estate the spouse actually receives up to the greater of JPY 160 million or the spouse's statutory share (half the estate when there are children), provided a return is filed and the estate is divided, or a division-expected form is filed and division follows within 3 years (Inheritance Tax Act art. 19-2; NTA Tax Answer No. 4158). Anything above that is taxed on the normal scale.

#### Wealth tax

##### Standard regime

No net wealth tax.

- **Tax year / confidence / verification:** 2026 / high / verified (checked 2026-10-15)
- **JSON type:** `none`
- **Property tax (not a wealth tax):** Fixed asset tax of 1.4% a year on the appraised value of real property (plus city planning tax in urban areas, not verified); registration and licence tax 0.1-2% on registration.

#### Special regimes

- **Non-permanent resident + temporary foreigner (first 5 years)** (`non_permanent_resident`; EU, US, OTHER; duration 5 years): A foreign national resident in Japan for 5 years or less in the last 10 is a non-permanent resident: taxed on Japan-source income and on foreign-source income only if paid in or remitted to Japan. During this time (and up to 10 years in the last 15) a foreigner holding a work-type residence status is a 'temporary' person for inheritance tax: foreign property is outside Japanese inheritance and gift tax. Eligibility: Non-Japanese national with a Japanese domicile; aggregate stay 5 years or less in the previous 10. For inheritance: holder of a residence status listed in Table 1 (work/business-type visas such as Business Manager; not permanent resident or spouse visas) with 10 years or less of residence in the past 15. A non-working family needs a qualifying visa; the Business Manager visa requires running a real business in Japan (requirements not verified).
  - Metrics that differ from standard: capital_gains, dividends, inheritance (details in the tax sections above).
- **Temporary foreigner for inheritance tax (years 6 to 10)** (`temporary_foreigner_years_6_10`; EU, US, OTHER; duration 5 years): After 5 years the foreigner becomes a permanent-resident taxpayer for income tax (worldwide income at standard rates), but remains outside inheritance and gift tax on foreign property until more than 10 years of residence in the last 15, provided the residence status remains a Table 1 (work-type) status. Eligibility: As for the non-permanent resident regime, years 6 to 10 of residence; not available to holders of permanent residence or spouse-type visas.
  - Metrics that differ from standard: inheritance (details in the tax sections above).

- **Asset-management company** (`asset_management_kk`; structure regime; EU, US, OTHER; no duration): see Holding structures below.

Only the non-permanent resident regime changes income tax; `temporary_foreigner_years_6_10` changes only the inheritance scope, and since the model's deaths are in years 30 and 60 it is not used as a path.

#### Holding structures

**Modelled: asset-management company (`asset_management_kk`, type `structure`).** The parents own a Japanese company (KK or GK) that holds the portfolio. It is the vehicle Japanese advisers recommend for inheritance planning and income splitting, so it is shown even though it costs more tax every year than direct holding.

- **Company tax (JSON 0.3543):** national corporate tax 23.2% (Corporation Tax Act art. 66(1); 15% on the first JPY 8 million for capital of JPY 100 million or less, NTA No.5759), local corporate tax 10.3% of it (Local Corporation Tax Act art. 10), Tokyo corporate inhabitant tax 10.4% of the national tax (7.0% only if capital is JPY 100 million or less and the national tax is JPY 10 million a year or less), enterprise tax at the Tokyo excess rate 7.48% on income above JPY 8 million plus special corporate enterprise tax of 37% of the 7.0% standard-rate amount, defense special corporate tax 4% of the national tax above JPY 5 million (from fiscal years beginning 1 April 2026). Enterprise tax is deductible when paid, which gives the effective rate (0.232 x 1.207 + 0.1007) / 1.1007 + 0.04 x 0.232 / 1.1007 = 35.43%, equal to PwC's figure for a Tokyo company with capital of JPY 100 million or less.
- **No relief for portfolio shares:** the 95% exclusion for foreign dividends needs a 25% stake (PwC); domestic dividends on stakes of 5% or less are 20% excluded and on stakes up to one third 50% (art. 23). JSON: foreign dividends 0.3543, domestic dividends 0.28344, gains 0.3543.
- **Foreign tax credit:** withholding is credited against the national corporate tax (art. 69). The local corporate tax, the defense special corporate tax and the corporate inhabitant tax are all computed on the corporate tax before the credit (Local Corporation Tax Act art. 6(1)(i); Act No. 69 of 2023 art. 10; Local Tax Act art. 23(1)(iv)), so a 15% withholding offsets only the national tax.
- **Payout (JSON 0.4944):** dividends are aggregate income: (45% - 5% dividend credit) x 1.021 + (10% - 1.4%) = 49.44% for taxable income above JPY 40 million and JPY 10 million respectively (NTA No.2260, No.1250; Chuo ward page for the 1.4%).
- **Retained-earnings tax:** a special family company with capital of JPY 100 million or less is outside it (art. 67(1)); with larger capital the tax adds 10%-20% on retained profits above the allowance.
- **Why not a foundation:** a general incorporated foundation (ippan zaidan hojin) with family directors is taxed as if it received the net assets on a director's death (Inheritance Tax Act art. 66-2), and art. 66(4) taxes a transfer to a non-share corporation that unduly reduces the family's inheritance tax. A family trust (kazoku shintaku) is tax-transparent: the beneficiary is treated as the owner, so it changes neither income nor inheritance tax; no path is modelled for it.
- **Inheritance:** inherited from the standard regime. The shares of a company whose assets are mostly shares are valued at net asset value (listed shares at the market price) less 37% of the unrealised gains (Basic Valuation Circular, not opened); a company funded at today's value has no latent gain, so the value is the portfolio. Growth inside the company would earn the 37% reduction; the engine cannot express it (see open questions).
- **Setup and costs:** contributing shares in kind is a sale at market value (gain taxed at 20.315%). Running costs (accounting, the per-capita inhabitant tax of at least JPY 70,000) were not sourced and are omitted. A foreigner needs a residence status that allows running the company (Business Manager in practice; requirements not verified).

#### Company taxation (kept separate from personal tax)

Headline CIT rate: 31.52% (0.3152). National CIT 23.2%; combined effective rate about 31.52% for large companies in Tokyo (32.71% statutory before deducting enterprise taxes); smaller companies have reduced national rates on the first JPY 8 million. Defense special corporate tax of 4% of national CIT (after a JPY 5 million deduction) from fiscal years in 2026. Pillar Two: IIR from fiscal years beginning 1 April 2024; QDMTT and UTPR from 1 April 2026.

#### Cost of living notes

City: Tokyo.
- Prime rent, monthly: 438,000 JPY (2026). Median asking rent of 205 current SUUMO listings of 100 m2 or more with 4 or more rooms (4LDK/4SLDK/5LDK and larger; mostly apartments plus some houses) in Setagaya, Meguro and Suginami wards, Tokyo, read from all result pages on 15 October 2026 (313 listings in the three wards before the 100 m2 filter, median JPY 350,000); first quartile JPY 300,000, third quartile JPY 680,000; median floor area 127 m2. Setagaya, Meguro and Suginami are the sought-after family districts (Chofu/Setagaya for ASIJ), well below the Minato expat-luxury segment (JPY 1.65 million, replaced). Rent excludes management fees; deposits and key money are extra.
- International school, annual per child: 4,076,000 JPY (2026). The American School in Japan (Chofu campus), Grades 9-12 tuition 2026-27 JPY 3,826,000 plus annual capital assessment JPY 250,000. One-time fees: registration JPY 300,000 and building maintenance JPY 1,525,000. Source: Tuition & Fees (2026-27 Schedule of Tuition & Fees).
Purchase prices, health insurance and housekeeper costs not sourced. ASIJ is in Chofu; families choosing it often live in Chofu/Setagaya, where the family rent in the figure above is taken.

#### Open questions

- Minimum tax on ultra-high income (22.5% of income above JPY 330 million in 2025-2026; 30% above JPY 165 million from 2027, per PwC) is not reflected in the CGT rates. It is charged only to the extent it exceeds the regular tax, so with a 20.315% regular rate it bites only above roughly JPY 3.4 billion of income in 2026 and roughly JPY 511 million from 2027 (30% x (I - 165m) > 20.315% x I); the reference family (about JPY 100 million of dividends plus gains) is below both. The statute was not opened (PwC only).
- Non-permanent residents' foreign securities gains now verified against Income Tax Act art. 7 and Order art. 17 (e-Gov); the treatment of reinvested funds bought before arrival is not confirmed.
- Inheritance exemption per child is coded as JPY 16 million: the basic deduction (JPY 30 million + 6 million x 3 statutory heirs = JPY 48 million, Inheritance Tax Act art. 15) at the modelled second death with three children and no surviving spouse. At a first death with a surviving spouse (4 heirs) the total would be JPY 54 million, but the spouse's tax credit then takes the spouse's share, so the children's share is what the engine taxes.
- Business Manager visa requirements not verified; cost of living: purchase prices, health insurance and housekeeper wages not sourced.
- Valuation of unlisted shares in a family asset-management company for inheritance tax (net asset value less 37% of unrealised gains, Basic Valuation Circular) is not modelled; see the asset_management_kk regime.

#### Sources

- Japan - Individual - Income determination (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/individual/income-determination
- Japan - Individual - Taxes on personal income (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/individual/taxes-on-personal-income
- No.1478 Exit taxation (国外転出をする場合の譲渡所得等の特例) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1478.htm
- Japan - Individual - Other taxes (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/individual/other-taxes
- No.4155 Inheritance tax rates (相続税の税率) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/sozoku/4155.htm
- No.4138 Heirs living abroad and scope of inheritance tax (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/sozoku/4138.htm
- Japan - Individual - Residence (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/individual/residence
- Income Tax Act (Act No. 33 of 1965), Article 7 (scope of taxable income) (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/340AC0000000033
- Order for Enforcement of the Income Tax Act (Cabinet Order No. 96 of 1965), Article 17 (scope of taxable income of non-permanent residents) (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/340CO0000000096
- No.2010 Taxpayers who are individuals (residents, non-permanent residents, non-residents) (National Tax Agency, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/2010.htm
- No.2875 Determination of residents and non-residents (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/gensen/2875.htm
- Japan - Corporate - Taxes on corporate income (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/corporate/taxes-on-corporate-income
- SUUMO rental search: Setagaya-ku, Meguro-ku and Suginami-ku, Tokyo, 4K-5K+ layouts (SUUMO (Recruit Co., Ltd.), other): https://suumo.jp/jj/chintai/ichiran/FR301FC001/?ar=030&bs=040&ta=13&sc=13112&md=11&md=12&md=13&md=14&pc=50
- Tuition & Fees (2026-27 Schedule of Tuition & Fees) (The American School in Japan, other): https://www.asij.ac.jp/admissions/tuition-fees
- Japan - Corporate - Income determination (PwC Worldwide Tax Summaries, professional): https://taxsummaries.pwc.com/japan/corporate/income-determination
- NTA Tax Answer No.4158 Spouse's tax credit: https://www.nta.go.jp/taxes/shiraberu/taxanswer/sozoku/4158.htm
- Corporation Tax Act (Act No. 34 of 1960): arts. 23, 41, 66, 67, 69, 132 (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/340AC0000000034
- Local Corporation Tax Act (Act No. 11 of 2014): arts. 6, 9, 10, 12 (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/426AC0000000011
- Act on Special Measures for Securing Financial Resources for Strengthening Defense Capabilities (Act No. 69 of 2023), arts. 9-14 (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/505AC0000000069
- Local Tax Act (Act No. 226 of 1950), art. 23(1)(iv) (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/325AC0000000226
- Corporate enterprise tax and corporate metropolitan tax (Tokyo rates) (Tokyo Metropolitan Bureau of Taxation, government): https://www.tax.metro.tokyo.lg.jp/kazei/work/houjinji
- No.5759 Corporate tax rates (法人税の税率) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/hojin/5759.htm
- No.5800 Tax measures for SMEs: companies not eligible (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/hojin/5800.htm
- No.1250 Dividend credit (配当控除) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1250.htm
- No.2260 Income tax rates (所得税の税率) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/2260.htm
- Dividend credit against resident tax (Chuo ward, Tokyo) (Chuo City Office, Tokyo, government): https://www.city.chuo.lg.jp/a0009/kurashi/zeikin/juuminzei/zeigakukoujo.html
- No.1331 Separate taxation of listed-share dividends (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1331.htm
- No.1463 Gains on sale of listed and general shares (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1463.htm
- No.1240 Foreign tax credit (外国税額控除) (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/shotoku/1240.htm
- No.4152 Basic deduction for inheritance tax (National Tax Agency Japan, tax_authority): https://www.nta.go.jp/taxes/shiraberu/taxanswer/sozoku/4152.htm
- Inheritance Tax Act (Act No. 73 of 1950): arts. 1-3, 15-17, 66, 66-2 (e-Gov Japanese Law (Digital Agency), legislation): https://laws.e-gov.go.jp/law/325AC0000000073

#### Change log

- 2026-10-15: initial research.
- 2026-10-15: reviewed special-regime durations: non-permanent resident 5 years and temporary foreigner years 6-10 (5 years), unchanged.
- 2026-10-15 (data-quality pass): non-permanent-resident capital gains verified against Income Tax Act art. 7 and Order art. 17 (e-Gov): securities bought while a non-permanent resident are taxed regardless of remittance, pre-arrival holdings sold abroad only if remitted; confidence raised from low to medium, rate unchanged at 20.315%. Remittance assumptions now stated in eligibility_conditions for capital gains and dividends. Added cost of living: Minato 4-5 bedroom asking rent JPY 1,650,000 a month (SUUMO, n=59) and ASIJ Grades 9-12 fee JPY 4,076,000 (2026-27, tuition plus capital assessment).
- 2026-10-15: inheritance scope set to local assets only for non_permanent_resident, temporary_foreigner_years_6_10 in the structured data (foreign-situs property of temporary foreigners and their heirs is exempt); previously the scoring applied the rates to the worldwide estate, which overstated the tax.
- 2026-10-15: reviewed holding structures; none modelled (asset-management company taxed more heavily than direct holding); added a Holding structures section.
- 2026-10-15: family rent re-checked against the upper-middle-class standard: changed from JPY 1,650,000 (Minato) to JPY 438,000 (Setagaya/Meguro/Suginami, 205 listings of 100 m2 or more).
- 2026-10-16: added surviving-spouse treatment.
- 2026-10-16 (recipe pass): inheritance exemption per child changed from JPY 13.5 million to JPY 16 million in all three regimes: at the modelled second death there are three statutory heirs, so the basic deduction is JPY 30 million + 6 million x 3 = JPY 48 million (Inheritance Tax Act art. 15), JPY 16 million per child; JPY 13.5 million had assumed a surviving spouse (4 heirs).
- 2026-10-16: corrected the non-permanent resident inheritance condition: the decedent needs only to be a 'foreign decedent' (residence status and Japanese address at death, no year count); the 10-of-15-year test applies to the heir (Inheritance Tax Act art. 1-3(1)(i), (3)).
- 2026-10-16: minimum-tax open question clarified (it bites only above roughly JPY 3.4 billion of income in 2026 and JPY 511 million from 2027, because it counts only to the extent it exceeds the regular tax).
- 2026-10-16: added the structure regime `asset_management_kk` (Japanese asset-management company: about 35.43% on all income, payout 49.44%) and the Holding structures section; the foundation and family-trust alternatives were considered and rejected.


## Residence and succession sources

- [Japan revises Business Manager visa requirements (Feb 2026)](https://www.bakermckenzie.com/en/insight/publications/2026/02/japan-revises-business-manager-visa-requirements) — Baker McKenzie
- [Designated Activities (digital nomad)](https://www.moj.go.jp/isa/applications/status/designatedactivities53_00001) — Immigration Services Agency of Japan (Ministry of Justice)
- [How to Get a Permanent Resident Visa in Japan: 2026 Guide](https://cotoacademy.com/permanent-resident-visa-japan-apply-guide-explanation-highly-skilled-foreign-professional-point-system/) — Coto Academy
- [Immigration Services Agency of Japan: Status of residence](https://www.moj.go.jp/isa/applications/status/index.html) — Immigration Services Agency of Japan (Ministry of Justice)
- [HCCH status table: Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition](https://www.hcch.net/en/instruments/conventions/status-table/?cid=59) — Hague Conference on Private International Law
- [Japanese Law Translation database (Civil Code, Trust Act, Act on General Rules of Application of Laws)](https://www.japaneselawtranslation.go.jp/en/) — Ministry of Justice, Japan