Death & Taxes

[Wage Slave]

if you are on a spouse visa or PR and choose to leave Japan you will pay an exit tax on assets.

By the way, first I have heard of this. I don't expect more info immediately because this is just a report on "what some consultant dude told my workplace" but if anyone comes across a concrete source of information for this please post here.

News to me too. Perhaps it just means you are required to settle up when you leave or at least at the end of that tax year. Which seems fair enough to me.

So what if someone just fucks off home, Taro from the tax office is going to follow? Almost as much paranoia as the nipponjin my number bollocks.
Surely depends on where FG stashes his cash does it not?

Perhaps, but that would mean burning your bridges. Rarely a smart move in my experience.

I thought I replied to [settle up when you leave], that's bridges nuked in my book, not just a jolly to Bankok

What? No-one has to settle their taxes before they go on holiday. I thought your point was that if you just left and never returned it would be difficult for the tax office to recover the tax you owed. Which is true but I wouldn't want to burn my bridges.

[wagyl]

No follow up trips to Japan in years to come, even to see in-laws? It would be embarrassing to have difficult questions to answer at Narita* on inward immigration.

* other international airports are available

[chibaka]

What? No-one has to settle their taxes before they go on holiday. I thought your point was that if you just left and never returned it would be difficult for the tax office to recover the tax you owed. Which is true but I wouldn't want to burn my bridges.

Not much new in this story, FG is liable to tax on income, interest on savings, capital gains, and inheritance whether in Japan or overseas from day one of his or her stay in bizzaroland. I was told that many moons ago, fortunately my family is worth fuck all. unfortunately, my family is worth fuck all. So it means nowt....

[Wage Slave]

Fair enough

?

[wagyl]

What? No-one has to settle their taxes before they go on holiday. I thought your point was that if you just left and never returned it would be difficult for the tax office to recover the tax you owed. Which is true but I wouldn't want to burn my bridges.

Not much new in this story, FG is liable to tax on income, interest on savings, capital gains, and inheritance whether in Japan or overseas from day one of his or her stay in bizzaroland. I was told that many moons ago, fortunately my family is worth fuck all. unfortunately, my family is worth fuck all. So it means nowt....

Certain of those items are from day one thousand eight hundred and twenty six or so, but point taken.

[chibaka]

Fair enough

?

Is what I'll end up with when my accounts are settled, and maybe a cat or 2. Coligny can have them...

[Yokohammer]

This sort of thing is likely to get more widespread and restrictive.

Japan Inc. is broke and a bunch of short-sighted, overprivileged little lords are in charge. They are rapidly introducing mechanisms to extract cash from the populace in order to refill the government coffers by any means imaginable, without actually thinking beyond "get money."

Here's another one: If you're the sole operator of a small company, watch out for the Japan Pension Service.

Let us remember that these are the morons who misappropriated public funds to build themselves luxurious resorts and other facilities, and who somehow mysteriously "lost" large sums of public money as well pension records for a huge number of citizens.

Like the rest of Japan, the Japan Pension Service is broke, largely due to inept management, and they have recently managed to get legislation through that will give them access to more of the public's money. The issue that has me scrambling around making "adjustments" is that, until recently if you were the sole operator a small Yugen Kaisha, for example, you only had to pay Kokumin Nenkin & Hoken (public pension and health insurance) rather than the much more expensive Kousei Nenkin & Hoken. If you went to the social services office and asked, that's what they'd tell you to do.

But now the law has been changed so that every company, even if run by only a single person, must join Kousei Nenkin/Hoken. That, unfortunately, will double your yearly rates. So in my case, where I currently pay about 430,000 per year for pension and health insurance, if I am forced to join Kousei Nenkin I will have to pay around 800,000 per year. That's quite a leap.

Now that they have the law on their side, the Japan Pension Service has been sending out threatening letters to all small companies, telling them that if they don't enrol in the more expensive plan by the end of this year they may be audited (which, they are very quick to point out, you cannot refuse) and you may be fined up to two year's back payments (which is sort of ridiculous, because the law is relatively recent). They are really being nasty about it.

So I, and many others like me, have no option but to disband our little companies and go private. Unless your little company is really raking it in, that is, in which case enrolling in Kousei Nenkin might actually give you a small pension advantage. No guarantees, of course. Naturally, closing the company involves a flurry of paperwork and tax accounting (my tax accountant, who I have been with for around 30 years, is also really pissed about this) and expenses, but what option is there? So many little companies, small mom-and-pop operations, etc., are going to throw in the towel over this. I'm sure the Japan Pension Service is going after bigger fry, but in the process they are going to destroy the little guys. Not uncommon in situations like this, but very stupid IMHO. The little guys support the larger economy, so destroying them will have disastrous results.

Living and working in Japan is, little by little, becoming a less attractive proposition.

Edited to add: Private offices are exempt as long as they don't employ more than 5 people.

[Samurai_Jerk]

So am I to understand that if I lived in the UK and inherited money from an overseas estate it wouldn't be taxed no matter how much I received?

[Wage Slave]

So am I to understand that if I lived in the UK and inherited money from an overseas estate it wouldn't be taxed no matter how much I received?

My sense is that that is correct - although I haven't checked it carefully. But yes, the estate rather than the recipient is liable for inheritance tax. If the estate is outside the UK, then it isn't UK taxable.

[wuchan]

The small business thing is fucked.

For us gaijin getting moeyz from uncle rich fuck there is an easy not to get taxed in japan: DON'T BRING THE MONEY HERE!

1: put it in your home country bank account. (we all should have one)
2: get credit card from home bank
3: use the credit card
4: ????????
5: Profit.

Japan doesn't have any way of checking your holdings overseas if you are not a citizen. As long as you don't buy anything more than 5 million yen on the card you don't have to worry about the j-gov tracking your spending. Use the card for everything. Most banks today will issue an "international Visa" with greatly lowered international bank fees. Save your earnings here to pay for the big things that are over 5million (which would only be car or home).

[inflames]

The pension thing in Japan has been fucked for years - the nonpayment rate has been an issue for years as people simply don't trust that they will get a pension. I've always thought that Japan needs to make it more like social security in the US (in that everyone must pay for basically any job, and if you're self employed you pay for all of it). I've heard stories from teacher friends whose companies are clearly doing stuff to avoid having to enroll their employees in shakai hoken (as eligibility criteria change next year).

Yokohammer - from what I remember, the only real difference would be that you'd have to pay the extra kosei nenkin payment (instead of just the basic kokumin nenkin amount). Although the rates for health insurance are set by the municipality compared to the national government, the total amounts aren't overly different unless you're making a ton of money (for example, Osaka has a limit of around 500,000). It is very likely the total pension premiums would double, but I very highly doubt the total premiums would double except in strange circumstances (such as being enrolled in some hoken kumiai)

I also highly suspect that companies were always required to enroll in shakai hoken, but Japan Pension Service's people were basically ignoring this and letting people not do it for years, and now the pension service has decided to clamp down on this. I've found that this sort of bs is too common here - the local government people don't want to do any work so will basically tolerate people (and companies) breaking a ton of rules.

[Yokohammer]

The pension thing in Japan has been fucked for years - the nonpayment rate has been an issue for years as people simply don't trust that they will get a pension. I've always thought that Japan needs to make it more like social security in the US (in that everyone must pay for basically any job, and if you're self employed you pay for all of it). I've heard stories from teacher friends whose companies are clearly doing stuff to avoid having to enroll their employees in shakai hoken (as eligibility criteria change next year).

Yokohammer - from what I remember, the only real difference would be that you'd have to pay the extra kosei nenkin payment (instead of just the basic kokumin nenkin amount). Although the rates for health insurance are set by the municipality compared to the national government, the total amounts aren't overly different unless you're making a ton of money (for example, Osaka has a limit of around 500,000). It is very likely the total pension premiums would double, but I very highly doubt the total premiums would double except in strange circumstances (such as being enrolled in some hoken kumiai)

I also highly suspect that companies were always required to enroll in shakai hoken, but Japan Pension Service's people were basically ignoring this and letting people not do it for years, and now the pension service has decided to clamp down on this. I've found that this sort of bs is too common here - the local government people don't want to do any work so will basically tolerate people (and companies) breaking a ton of rules.

For an individual operator like myself, the pension rates actually do double. I would be paying closer to JPY 800,000, and this has been confirmed with my tax accountant.

The idea for corporations that actually employ people is that the company pays half and the employee pays half, so the burden on the employee is about the same as paying Kokumin Nenkin. But when you're the company and the only employee, you're paying double. That's how it works and why Japan is going to have a dwindling supply of small companies to extract money from in the coming years.

[Samurai_Jerk]

So am I to understand that if I lived in the UK and inherited money from an overseas estate it wouldn't be taxed no matter how much I received?

My sense is that that is correct - although I haven't checked it carefully. But yes, the estate rather than the recipient is liable for inheritance tax. If the estate is outside the UK, then it isn't UK taxable.

It's the same in the US for federal estate taxes (yes some states also have additional inheritance or estate taxes) though maybe not if the person who left you the estate is a US citizen or green card holder since worldwide income and assets are taxable regardless of where you live. Of course the exemption for the federal tax is about five-and-half million dollars so most people don't have to worry about it either way.

Japan's inheritance tax is too high and the exemption too low but in a sense it's fairer than allowing certain wealthy individuals to leave everything to their heirs with little or no tax burden by moving themselves and their assets offshore.

There are estate tax treaties between various nations so that's another thing to consider when planning.

[inflames]

For an individual operator like myself, the pension rates actually do double. I would be paying closer to JPY 800,000, and this has been confirmed with my tax accountant.

The idea for corporations that actually employ people is that the company pays half and the employee pays half, so the burden on the employee is about the same as paying Kokumin Nenkin. But when you're the company and the only employee, you're paying double. That's how it works and why Japan is going to have a dwindling supply of small companies to extract money from in the coming years.

Kosei nenkin is a fixed amount of just over 15,000 yen per month (haven't got the payment forms in front of me) - it doesn't depend on your income. Kosei nenkin basically is 17% or so with a minimum of the Kosei nenkin amount, and those are split both ways. Although, actually looking at the amounts, it seems entirely possible that the total could double if you're not operating in a tax advantaged manner (basically doing stuff like deducting everything and paying yourself a shit salary).

[Yokohammer]

For an individual operator like myself, the pension rates actually do double. I would be paying closer to JPY 800,000, and this has been confirmed with my tax accountant.

The idea for corporations that actually employ people is that the company pays half and the employee pays half, so the burden on the employee is about the same as paying Kokumin Nenkin. But when you're the company and the only employee, you're paying double. That's how it works and why Japan is going to have a dwindling supply of small companies to extract money from in the coming years.

Kosei nenkin is a fixed amount of just over 15,000 yen per month (haven't got the payment forms in front of me) - it doesn't depend on your income. Kosei nenkin basically is 17% or so with a minimum of the Kosei nenkin amount, and those are split both ways. Although, actually looking at the amounts, it seems entirely possible that the total could double if you're not operating in a tax advantaged manner (basically doing stuff like deducting everything and paying yourself a shit salary).

Kokumin Nenkin is a little over 15,000 yen per month.

At a salary of around 200,000 per month Kousei Nenkin is about 35,000 per month.
So with the usual company/employee split the employee would see a deduction of around 17,000 yen for his or her pension.

What this means is that if you're a one-man Yugen Kaisha and you're paying yourself a salary of 200,000 yen per month, your Kousei Nenkin bill will be around 35,000 yen per month. Simple.

[legion]

But it is an interesting question of sovereignty, the Japanese are saying they are entitled to assets of foreigners who lived and died abroad. Under British law the tax burden is placed on the deceased before the assets are inherited, the Japanese are claiming their law trumps this, on assets in the UK. So the Japanese are nullifying British inheritance tax law.

The United Kingdom (and most of the rest of the world) has made a decision to levy tax on the estate of the deceased. The tax is paid by the estate before behests are made to the beneficiaries. Japan has (I think uniquely) decided to levy tax on the beneficiaries (jointly and severally) and the tax is paid by the beneficiaries who happen to be tax-resident once the behests have been made. Japanese are not usurping British law: Britain still gets it's take. Are you suggesting that the sovereign nation of Japan should be denied power to levy taxes on people of non-Japanese nationality? It is no longer the days of the Blackships, what hey, old chap! Can I go to the UK and work there tax free?

I think they should not be levying tax on property inherited abroad, I think it is out of their jurisdiction, and I think that a lot of people in the UK will agree, and a lot of expats here. I expect at some point it will become an issue in the UK & USA, and politicians will be called on to take a position.

Perhaps if they made a distinction, say those on PR paid up it would suck but I could see some justification. But this is blanket, if you have an address in Japan you are liable. That means someone here posted by their company for 2 or 3 years is now at risk of a much higher level of taxation than their home country. This is going to cause a lot of businesses here a lot of problems, some people will refuse the posting, Tokyo is a stop up the ladder for execs in multinationals, now it will become the place to avoid.

Will they extend this thinking to companies? You have an office in Japan, so we will tax you on your global profits. This is basically what they are doing to individuals. This doesn't just apply to inheritance, they want a declaration of all assets held abroad, and will tax people on the income.

I expect there will be backroom deals for the very senior execs in multinationals here, I can't imagine they will be paying up like the rest of us. Like the embassies, they will get special treatment, think about that when you are dipping into your savings to pay the taxman to bankroll some amakudari.

[Samurai_Jerk]

I think they should not be levying tax on property inherited abroad, I think it is out of their jurisdiction, and I think that a lot of people in the UK will agree, and a lot of expats here. I expect at some point it will become an issue in the UK & USA, and politicians will be called on to take a position.

Perhaps if they made a distinction, say those on PR paid up it would suck but I could see some justification. But this is blanket, if you have an address in Japan you are liable. That means someone here posted by their company for 2 or 3 years is now at risk of a much higher level of taxation than their home country. This is going to cause a lot of businesses here a lot of problems, some people will refuse the posting, Tokyo is a stop up the ladder for execs in multinationals, now it will become the place to avoid.

Will they extend this thinking to companies? You have an office in Japan, so we will tax you on your global profits. This is basically what they are doing to individuals. This doesn't just apply to inheritance, they want a declaration of all assets held abroad, and will tax people on the income.

I expect there will be backroom deals for the very senior execs in multinationals here, I can't imagine they will be paying up like the rest of us. Like the embassies, they will get special treatment, think about that when you are dipping into your savings to pay the taxman to bankroll some amakudari.

Remember they only tax worldwide income if you've lived in Japan for a total of 5 years or more during any 10 year period so people posted here for a couple of years shouldn't be affected by this. It's perfectly reasonable to tax worldwide income regardless of the source. It has nothing to do with jurisdiction. It's not like the Japanese government is going to be stepping on the toes of authorities in other countries. Using your logic if I live in Japan but only have income from offshore sources, I shouldn't have to pay any income tax.

[legion]

You'd pay income tax at source.

[Samurai_Jerk]

You'd pay income tax at source.

Not necessarily.

[Wage Slave]

You'd pay income tax at source.

Not necessarily.

Correct. And under the current regime if you have paid income tax at source then you can deduct that from your liabilities in Japan. There are double taxation agreements with just about everyone.

Legion, I have to say I am not impressed by the results of your company's training course at all. And, what was the "exit tax" you mentioned?

[wagyl]

I think they should not be levying tax on property inherited abroad, I think it is out of their jurisdiction, and I think that a lot of people in the UK will agree, and a lot of expats here. I expect at some point it will become an issue in the UK & USA, and politicians will be called on to take a position.

I expect you have an inflated view of how much politicians care about citizens who are not living in the country. I look at the problems faced by US citizens especially in Eastern Europe under FATCA where they are denied a bank account as a result and consequently can not act as adults within the economies they live in -- for example they are unable to pay an electricity bill themselves. No politician is going in to bat for them.

[chibaka]

Japan doesn't have any way of checking your holdings overseas if you are not a citizen.

Yet.......but not for long. List of signed up cuntries http://www.oecd.org/ctp/exchange-of-tax ... tories.pdf

Tax Co-operation and Disclosure


OECD Common Reporting Standard (CRS)


The environment for tax reporting between international jurisdictions has been undergoing significant change in recent years, resulting in much closer cooperation on the exchange of information.

CRS is an international initiative based on the development of a single global standard for the automatic exchange of information between tax authorities. It is designed to improve tax transparency and the proper use of information exchanged.

In November 2013, the Isle of Man Government announced that it would be among those countries committed to being an early adopter of CRS legislation. CRS is effective from 31 December 2015 and all accounts open as of that date, and any opened thereafter, will be subject to the exchange of information with the relevant tax authority for countries party to CRS.

As of June 2015, 61 countries had committed to implement the CRS legislation, with a growing number of countries indicating their intention to adopt it.

Click here to see a list of the countries that have committed to adopt the CRS legislation.

[Wage Slave]

Japan doesn't have any way of checking your holdings overseas if you are not a citizen.

Yet.......but not for long. List of signed up cuntries http://www.oecd.org/ctp/exchange-of-tax ... tories.pdf

Tax Co-operation and Disclosure


OECD Common Reporting Standard (CRS)


The environment for tax reporting between international jurisdictions has been undergoing significant change in recent years, resulting in much closer cooperation on the exchange of information.

CRS is an international initiative based on the development of a single global standard for the automatic exchange of information between tax authorities. It is designed to improve tax transparency and the proper use of information exchanged.

In November 2013, the Isle of Man Government announced that it would be among those countries committed to being an early adopter of CRS legislation. CRS is effective from 31 December 2015 and all accounts open as of that date, and any opened thereafter, will be subject to the exchange of information with the relevant tax authority for countries party to CRS.

As of June 2015, 61 countries had committed to implement the CRS legislation, with a growing number of countries indicating their intention to adopt it.

Click here to see a list of the countries that have committed to adopt the CRS legislation.

Yes. The key words in that are "the automatic exchange of information". Information on request is already available as attested by people who have been audited (See Super Grover of GP fame). The truth is that Taro at the tax office will soon be able to log on to a website, input your details and see what you have and where within seconds.

We aren't particularly targets but people with income abroad who pay no tax on it even though they live here are the subject of special attention. We can get caught up in the dragnet. So instead of allowing liability to build up year on year why not just declare the income and pay a little tax every year And then forget about it.

[chibaka]

The truth is that Taro at the tax office will soon be able to log on to a website, input your details and see what you have and where within seconds.

Not quite sure it's that simple. What you have isn't relevant, what you earn probably is.

[Wage Slave]

The truth is that Taro at the tax office will soon be able to log on to a website, input your details and see what you have and where within seconds.

Not quite sure it's that simple. What you have isn't relevant, what you earn probably is.

The latter follows from the former, assuming we are not talking about income from work. Anyway I would expect tax authorities would be interested in and get information on both. I would if I were them. Apart from anything else there is capital gains tax to consider. Also tax on gifts and inheritance.

[chibaka]

The truth is that Taro at the tax office will soon be able to log on to a website, input your details and see what you have and where within seconds.

Not quite sure it's that simple. What you have isn't relevant, what you earn probably is.

The latter follows from the former, assuming we are not talking about income from work. Anyway I would expect tax authorities would be interested in and get information on both. I would if I were them. Apart from anything else there is capital gains tax to consider. Also tax on gifts and inheritance.

The latter does indeed follow the former, but the former is of no relevance if it has been in a bank account for years, otherwise known as savings. I'm sure Taro isn't going to question everyone about the source of 30 year old cash. If banks start giving out information on individual balances, then it's back to under the bed storage for many. Income earned through interest or investments I understand.

If, unlike me, anyone has cash, start investing in classic cars, no capital gains... in the UK at least

[chibaka]

I could of course be talking through my arse, or assuming too much
http://www.oecd.org/ctp/exchange-of-tax ... andard.pdf

Under the standard, jurisdictions obtain financial information from their financial institutions and
automatically exchange that information with other jurisdictions on an annual basis. The standard consists of
two components: a) the CRS, which contains the reporting and due diligence rules and b) the Model CAA,
which contains the detailed rules on the exchange of information. To prevent circumventing the CRS it is
designed with a broad scope across three dimensions:

- The financial information to be reported with respect to reportable accounts includes all types of
investment income (including interest, dividends, income from certain insurance contracts and
other similar types of income) but also account balances and sales proceeds from financial assets.
- The financial institutions that are required to report under the CRS do not only include banks and
custodians but also other financial institutions such as brokers, certain collective investment
vehicles and certain insurance companies.

[wagyl]

I presume you are aware that if you have foreign assets over a certain amount you are already required to declare them to the National Tax Authority in Japan, no matter how long you have held those assets for. And I also presume you are aware that banks are already giving out information on individual balances to the United States Internal Revenue if you have US citizenship. https://www.gov.uk/guidance/the-foreign ... toms-fatca so it is not something the banks and government will never ever do.

[chibaka]

I presume you are aware that if you have foreign assets over a certain amount you are already required to declare them to the National Tax Authority in Japan, no matter how long you have held those assets for. And I also presume you are aware that banks are already giving out information on individual balances to the United States Internal Revenue if you have US citizenship. https://www.gov.uk/guidance/the-foreign ... toms-fatca so it is not something the banks and government will never ever do.

Interesting that, they started this year..

You will be asked whether there are payments to report. In accordance with section 9.3 of
the guidance, payments are only reportable from 2015 onwards. For 2014 returns, all FIs
can select no to this question.

[legion]

I think they should not be levying tax on property inherited abroad, I think it is out of their jurisdiction, and I think that a lot of people in the UK will agree, and a lot of expats here. I expect at some point it will become an issue in the UK & USA, and politicians will be called on to take a position.

I expect you have an inflated view of how much politicians care about citizens who are not living in the country. I look at the problems faced by US citizens especially in Eastern Europe under FATCA where they are denied a bank account as a result and consequently can not act as adults within the economies they live in -- for example they are unable to pay an electricity bill themselves. No politician is going in to bat for them.

I dunno, I think the Daily Fail could whip up some outrage. Johnny Foreigner stealing our homes.

Inheritance tax used to be a real burden in the UK, but it became a voters' issue, and more importantly a Tory heartland issue. I guess we can just hope the Japanese wake up and realise they have a vote and can use it to pressure their politicians.

In the meantime I think I will ask my parents to put a provision in to limit the amount I inherit and pass it to my older brother instead, he's the one closest to them geographically anyway.

I guess a lot of people will do that if they can, or just limit their stay to 5 years, which I think may be a considered an added bonus by the xenophobes here.