How to Calculate the Non-Permanent Resident Period in Japan

Under Japanese tax law, whether a foreign resident qualifies as a non-permanent resident can significantly affect how foreign-source income is taxed in Japan.

A non-permanent resident is generally a resident who does not have Japanese nationality and whose total period of domicile or residence in Japan does not exceed five years within the preceding ten years.

The calculation can become less obvious when a person has entered and left Japan multiple times. This article explains how the relevant period is counted, including the starting date, the meaning of the preceding ten years, and how multiple periods of residence are added together.

I am Taisei Koshida, a Japanese certified public accountant and tax accountant. Through my work with foreign clients in Japan, questions about tax residency and non-permanent resident status often arise together with Japanese tax returns, overseas income, remittances, and foreign tax credits.

Under Japanese tax law, a non-permanent resident is a resident who does not have Japanese nationality and who has had a domicile or residence in Japan for an aggregate period of five years or less within the preceding ten years.

The Starting Date for Calculating the Period

For purposes of calculating the relevant period after entry into Japan, the counting generally begins from the day following the relevant entry date.

However, whether a person is treated as having a domicile or residence in Japan for tax purposes depends on the individual’s actual circumstances. The date of entry alone does not necessarily determine Japanese tax residency in every case.

How the Preceding Ten-Year Period Is Determined

For this calculation, the preceding ten-year period runs from the day before the date corresponding to ten years before the judgment date through the day before the judgment date.

The periods during which the individual had a domicile or residence in Japan within this window are then identified and added together.

How Periods of Domicile or Residence in Japan Are Added Together

The period is calculated on a calendar basis, and any period shorter than one month is counted in days.

If there have been multiple periods of domicile or residence in Japan, the years, months, and days for each period are added separately. In calculating the total, 30 days are treated as one month, and 12 months are treated as one year.

Example: Multiple Periods of Residence in Japan

Suppose a person lived in Japan for three years, left Japan for several years, and later returned to Japan.

For non-permanent resident status, the earlier period does not automatically disappear simply because the person left Japan. You need to look at the preceding ten-year period as of the relevant judgment date and add together the periods during which the person had a domicile or residence in Japan within that ten-year window.

This is why someone returning to Japan may need to check their earlier history in Japan rather than counting only from their most recent arrival.

Why Non-Permanent Resident Status Matters

Non-permanent resident status can affect the scope of income subject to Japanese income tax, particularly in relation to certain foreign-source income.

For a non-permanent resident, foreign-source income paid outside Japan may be subject to different Japanese tax treatment depending on whether and to what extent funds are remitted to Japan. This is commonly referred to as remittance-based taxation.

Therefore, correctly determining when the five-year period is exceeded can be important when preparing a Japanese tax return (kakutei shinkoku / 確定申告), especially for individuals who have overseas income or investments.

A Practical Caution

The number of days physically spent in Japan is not always identical to the period during which a person is considered to have a domicile or residence in Japan for tax purposes.

For example, a temporary absence from Japan may in some circumstances still be treated as part of the period of residence if the person’s living arrangements and circumstances indicate that the absence was temporary.

For this reason, where there have been repeated entries and exits or a long history of living in Japan, the immigration record should be reviewed together with the individual’s actual residential circumstances.

Frequently Asked Questions

If I leave Japan and return several years later, does my five-year period start over?

Not necessarily.

Non-permanent resident status is determined by looking at the total period during which you had a domicile or residence in Japan within the preceding ten years. Therefore, an earlier period in Japan may still be included if it falls within that ten-year window.

A long enough period outside Japan can eventually cause an earlier period to fall outside the preceding ten years, but the calculation should be made based on the relevant dates rather than simply starting over from the most recent entry.

Is the five-year test based only on the date shown on my residence card or visa?

No. Japanese income tax rules refer to the period during which you had a domicile or residence in Japan.

Immigration records and passport entry and exit dates can be useful evidence when checking the relevant periods, but tax residency is determined under Japanese tax law based on the individual’s circumstances.

Need Help Determining Your Japanese Tax Residency Status?

The calculation can be straightforward when you have lived continuously in Japan, but it may become more complicated if you have lived in Japan during several separate periods or have income and assets outside Japan.

At Koshida Accounting and Tax Office, we provide tax and accounting support in English for foreign individuals and business owners in Japan, including Japanese tax returns, non-permanent resident issues, foreign income, remittances, and foreign tax credits.

If you are unsure how your previous periods in Japan affect your current tax status, please feel free to contact us.

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