How to Know if Your Foreign-source Income is Taxable in Japan.

Managing taxes has to be the most taxing chore for any working professional. 

It demands manual and mental work plus precision to make the figures as coherent as possible to one’s financial records.

For foreigners residing in Japan, the difficulty in dealing such laborious, but necessary task is raised up a notch as one has to deal with handling their taxes in the Japanese language. 

Equally essential is it to have up to date knowledge of the government’s frequently changing policies. Taxation in Japan has undergone several modifications especially with regards to taxing foreigners.

The Startuphive Team has this confusions sorted out for all concerned parties, particularly foreigners, reaching out for inquiries about the Japanese taxation system:

Residency classificationResident statusJapanese source incomeNon-Japanese source income paid in / remitted to JapanNon-Japanese source income paid outside of Japan
Non-Residentan individual who has
a residence in Japan
for less than 1 year

Taxed

Not taxed

Not taxed
Non-Permanent Residentan individual who has no Japanese citizenship and who has a domicile or
residence consistently in Japan for less than
5 years within the period of 10 years

Taxed

Taxed

Not Taxed
Permanent Residentan individual who has no Japanese citizenship and who has a domicile or residence consistently in Japan for more than 5 years within the
period of 10 years

Taxed

Taxed

Taxed

Notes for clarity related to the preceding table:

  1. Specifically,  a non-resident  is a foreigner whose scheduled period of stay in Japan is less than 1 year.
  2. In the case of a foreigner who continues to stay in Japan using a short-term visa after the expiration of his/her original one year entry visa, he/she is likely to be treated as a resident.
  3. Even if you leave Japan, you are likely to be treated as a resident:
    – if you plan to re-enter Japan
    – your family still resides within Japan
    – or if you have an ongoing rental contract to an apartment within Japan.

To clarify, the residency status in the table complies in relation to the Japanese tax law, and does not imply visa residency status stipulated by the Japanese immigration law.

In case your non-Japanese source income is taxed, it is required to declare your non-Japanese source income by filing your annual personal (individual) tax return for the period of January 1st to December 31st (one year period).

It must be filed on or before the due date, March 15th, the following year.

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